Figure Challenges Fannie Mae and Freddie Mac With Blockchain
Figure Technologies is challenging Fannie Mae and Freddie Mac in the first-lien mortgage market by running loan origination on its proprietary blockchain platform, CoinDesk reported on May 5. The company says the approach cuts origination costs sharply, which it argues can translate directly to lower rates for borrowers.
Fannie Mae and Freddie Mac together guarantee roughly half of all outstanding U.S. mortgages, making the market Figure is targeting one of the largest in global finance.
Figure’s Blockchain Mortgage Approach
Figure operates a lending platform built on its own blockchain, called Provenance Blockchain, which records mortgage origination and servicing data on-chain rather than through legacy paper and database systems. The company says on-chain settlement removes several layers of intermediary processing that add cost and time to standard mortgage origination.
Figure argues this infrastructure allows it to offer first-lien mortgage products at meaningfully lower cost than government-sponsored enterprise backed loans.
The company has not published specific rate comparisons between its product and GSE-backed mortgages. The CoinDesk report did not include comment from Fannie Mae or Freddie Mac.
Figure CEO Mike Cagney has previously argued that blockchain-based mortgage infrastructure represents a structurally cheaper alternative to the existing U.S. secondary mortgage market.
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Background
Figure Technologies entered the home equity lending market in 2018, positioning itself as a faster and cheaper alternative to bank-issued HELOCs by using blockchain for origination. Provenance Blockchain, which Figure spun out as a separate entity, now underpins several financial products beyond home equity, including personal loans and private fund administration.
Figure’s push into first-lien mortgages, the dominant product guaranteed by Fannie Mae and Freddie Mac, represents its most direct competition with the existing GSE-backed secondary market structure. The GSE conservatorship model, in place since 2008, has been a recurring subject of reform proposals under multiple administrations.
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What Comes Next
Figure’s ability to scale in the first-lien market depends on whether it can attract institutional buyers for the blockchain-originated loans it issues.
GSE backing gives conventional mortgages a liquidity advantage that purely on-chain products currently lack. If Figure builds a secondary market for Provenance-settled loans, the cost comparison with GSE products becomes more meaningful.
Regulatory treatment of on-chain mortgage records under federal housing finance rules remains an open question.
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