Viva Aiming To Innovate Mortgage Financing

April 11, 2018 | 14 Comments

A new company is aiming to offer innovative mortgage financing to the world, with the Viva platform set to offer a “mortgage crowdlending network powered by blockchain technology.”

CEO Nick Thompson said, “In 2017, our team began working on a blockchain-based technology that introduces a novel P2P [crowdfunding] mortgage financing system. Without going into the particular technical details, there is a fundamental problem that we believe we can solve.

“Around the world there are many countries in which their mortgage rates are derived [at least] in part by inefficient local financial systems, rather than what they should be derived from – being the net risk associated with the investment [including macro-economic risk, inflation risk, market risk, default risk, etc.].

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“Financial systems are now global and value can [now more than ever] be transferred across national borders with ease, so why are there still many nations with highly inefficient lending environments? Case in point: why are Bermuda mortgage rates often upward of 5-6% when in many [higher net risk] nations around the world, the mortgage rates are sub 4%?

“The answer is, in part, market inefficiency – insufficient competition in the mortgage lending industry which, by economic theory and in reality, leads to higher prices [rates]. Where there is inefficiency, there is opportunity, and we set out to compile a team with the mission being to develop an alternative financing system that can introduce the free market, and eliminate many of these inefficiencies on a global scale.

“We believe there are many investors, perhaps most, who would be very interested in including these collateralized, and often very safe 5-6% [and potential much higher] fixed returns in their portfolios, but there simply has not been a viable method or system for investors to participate in these returns without the interference of high fees and unreasonable margin retentions by a multitude of “middlemen” in between the home buyer and the investor.

“With our extremely capable team of software engineers, entrepreneurs, and financial/economic idealists, we have developed a system that we believe can effectively allow for everyday investors to participate in these kinds of asset-back returns.

“In summary, Viva Network is a platform that seeks to fractionalize the principal requirement of a home loan into Fractionalized Mortgage Shares [FMS] and represents these fractions using the immutable smart contract protocol found in blockchain systems like Ethereum.

“This can be thought of as an individual and decentralized version of a Mortgage Backed Security. Once the principal amount of the mortgage is fractionalized into FMS, investors can purchase them and own them in their Viva Network account.

“Each of these FMS will then represent the proportional rights to the pre-agreed upon monthly cash flows [fixed income], derived from principal and interest payments associated with the mortgage, and the collateral which underpins the mortgage [the value of the home].

“Effectively, this FMS crowdfunding system enables home loans to be originated directly from investors [P2P], and without the need for traditional financial institutions. This system also brings the benefit of liquidity, as we will develop a secondary market exchange platform for these FMS investments.

“Viva Network will also include related proprietary technologies that seek to solve other problems in this industry, including a decentralized property valuation application which uses predictive algorithms and machine learning insights to calculate an unbiased market appraisal of residential properties based on current and past market data. Our prototype is currently available on our website vivanetwork.org and will be available to the public until the conclusion of our Token Generation Event.

“This concept and our initial group began with Christian Fiddick, William Lewis, and I – three Bermudians – and it has now expanded to a team of almost 30 people located from London to California. We’ve kept this development particularly confidential until very recently, and since then we have already received many compelling institutional investment offers.

“We have developed a smart contract on the Ethereum blockchain to allow for early believers of our vision to contribute Ethereum and autonomously receive our proprietary ERC20 token “VIVA”, in recognition of their contribution.

“The VIVA token will be incorporated into all of our systems and applications as a utility token, it will be required to obtain home valuations, participate in Fractionalized Mortgage Shares and the other novel applications that we will develop going forward. It is important to note that VIVA tokens are not investments or securities, and they are also not Fractionalized Mortgage Shares.

“We are seeking support from our Bermudian community by way of promotion and advice from experienced professionals or anyone who is simply interested in our model. All feedback is very welcome, and support from our community would really help us make a difference and, hopefully, have a meaningful impact on the world.

“Our vision is to incorporate the free market and improve the current and outdated system. We believe we can help regular people around the world to be able to afford a home, where they may not have been able to otherwise.”

For more information, please visit Vivanetwork.org.

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Comments (14)

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  1. Rocky5 says:

    To me this appears to be very naive. Financing real estate is complicated, very risky and requires mountains of personal information & extensive due diligence to be successful in the long term. I might be wrong, but my gut tells me that this is a high tech version of what brought on the Great Recession starting in 2007

    • Stephen Thomson says:

      I disagree.
      I think it’s a perfect time to disrupt this one industry that has,so far, not been challenged.
      With the banks making it more and more difficult to access capital and compliance requirements causing massive fees on account holders, this industry is ripe to be challenged.
      15% mortgage rates in some countries and 2% in others is partly because capital had no access. This form of competition is coming and coming fast.
      Well done Viva for launching and good luck.

      • Know It All says:

        How about we set up a blockchain system to assist in importing goods from other countries without a middleman involved, since the fee’s charge by some importers are very high, which allows the owners to profit off the everyday person given the limited supply available. I wonder who might be in this situation – sounds like a perfect time to disrupt the importing industry!

        • Come correct says:

          You clearly just have a bone to pick with no actual substance to your views, but:

          The difference is that an importing service cannot be automated on the blockchain, whereas mortgage brokering can be, at benefit to investors and home-seekers alike.

    • Bdaguy45 says:

      @Rocky5 — it doesn’t seem like you have read the white paper document on their website. I would recommend doing research before commenting.

  2. sandgrownan says:

    “Case in point: why are Bermuda mortgage rates often upward of 5-6% when in many [higher net risk] nations around the world, the mortgage rates are sub 4%?”

    I dunno, because BNTB are a bunch of tossers?

    And they know we have no choice, so anything that sticks on the eye for BNTB (and the other traditional local Banks) is a good thing.

    • Politricks says:

      “Case in point: why are Bermuda mortgage rates often upward of 5-6% when in many [higher net risk] nations around the world, the mortgage rates are sub 4%?”

      probably because the jurisdictions which have such low rates have a central bank and a discount window along with Government backed housing agencies (Fannie Mae & Freddie Mac etc) that allows the banks to offer lower rates as their risks are diminished.

      If you think 5%-6% is high try mortgage rates down south in the Caribbean and Latin America. Most of hose jurisdictions have mortgage rates which are double digits.

  3. No CHance says:

    STAY CLEAR. This is a mortgage market it needs to be regulated. And throwing in a crypto token? Collect everyone’s ether, dump it and move on.

    Id love to apply for a mortgage, default on it, and watch as they try to come after me for their money back to no success being that I can just turn back on them for operating as a loan shark/unregulated lender.

  4. You are going to bring a whole lot of hurt to the local market . If you can deliver better , faster services , what will be left for the local banks to do ? 7+2 is the going INTEREST rate . The BMA are toothless to help the little man . While on the side better interest rates are offered to preferred clients . And how do I know !!!!!! We welcome your new business to Bermuda .

  5. Do Right says:

    Steve, with respect, are you not a little bias here, after-all, is not Nick your son? For all we know, you may be an investor! My point is, you have interest in this, so you should declare this fact. That said, I like this idea as it represents a serious effort by a Bermudian firm within the FINTECH space to produce a service that has global demand. If successful, this can be ONE example of a local job creator within FINTECH. As such, I wish them all the best.

  6. financelady says:

    I have 20+ years experience with financial derivatives. This is an excellent idea! WOW!

  7. Vortex says:

    Good luck to them, but this is high stakes, and I’m not trusting my mortgage to the sixth form. This is for grown ups.

  8. jty says:

    To a hammer everything looks to be a nail.

    To a crypto kid everything can be solved by the blockchain.

    Perhaps a bottom up analysis of the problem would result in a more effective solution. Private lending and funds exist already as a model and competitor to traditional banking. And by the way, mortgages are hard – various interests in the property (who manages the sale if there’s a default?) and underwriting of the borrower’s willingness and ability to pay (is the borrower misleading the lender?). Finally, BMA as regulator oversees the Banks’ base rates- understanding their role would be a good place to start.

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