(Bloomberg) -- Spring Labs, the blockchain startup, is set to create a registry to track liens in the $5.6 billion energy-efficiency loan market to cut fraud and improve lending.
Ygrene Energy Fund California LLC and three other lenders under the Property Assessed Clean Energy program, or PACE, are participating, Spring Labs said in a statement. The Spring Labs system, set to begin in the first quarter of 2020, will allow lenders to share lien information without revealing other secrets, Ygrene Chief Operating Officer Stephen Tich said.
“We are worried about a property owner, together with a contractor, having multiple liens on a property,” Tich said “It was something that we could all agree to and we don’t always agree,” he said of Ygrene’s rivals.
Homeowners and businesses have been accessing loans through PACE since 2010 to help finance upgrades or renewable-energy installations. The loans are collateralized by property taxes and sit senior to the mortgage, enabling a lower interest rate.
Blockchain, developed as the ledger technology that powers Bitcoin, is promising for corporations if they can figure out how to use it. Most corporate efforts are still in early development or testing, which is what makes the PACE project different, said Adam Jiwan, chief executive officer of Spring Labs.
“This is an example of a blockchain solution in the financial-services industry that’s going into real production,” he said in an interview. “Our solution provides anonymity and privacy assurances.” The company combined elements of cryptography, blockchain and privacy-enabling technology to create the registry, Jiwan said.
California legislation recently recommended that the PACE market improve its ability to identify lien issues, Tich said. Other lenders spearheading the project are Renovate America Inc., Energy Efficient Equity Inc. and PACE Funding Group LLC.
“This lien registry can be morphed over time to a national mortgage registry,” Jiwan said. The Mortgage Electronic Registrations Systems, or MERS, which already tracks nationwide mortgages, is “not necessarily something that’s immutable or authoritative,” he said.
Intercontinental Exchange Inc. bought MERS owner Merscorp Holdings Inc. and has said it has plans to digitize it.
Tich said blockchain will allow for a more “technologically secure” registry because it won’t rely on a centralized database provider. “The real intangible is creating more confidence in the industry as a whole,” he said.
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