Mortgage on the Blockchain: Better-com's Tokenized Home Loan Play Could Rewrite How America Borrows

Better.com has never been a company that does things quietly. The digital mortgage lender founded by Vishal Garg made international headlines in 2021 for the wrong reasons — a Zoom call in which Garg fired approximately 900 employees in a single session became one of the defining corporate communications disasters of that year. The company then navigated a prolonged and painful SPAC merger process, finally going public on Nasdaq under ticker BETR in August 2023 after a series of valuation write-downs that compressed its peak USD 7 billion private valuation dramatically. By 2025, Better had restructured, reduced its cost base, and refocused on the technology-first mortgage origination model that was always its core thesis. Now, in early 2026, the company is quietly making a move that could define its second act far more decisively than its turbulent first: exploring the tokenization of mortgage assets on decentralized finance infrastructure.

The Mortgage Market's Structural Problem That DeFi Could Solve

To understand why tokenized mortgages matter, it is necessary to understand how profoundly inefficient the conventional mortgage market remains despite decades of technological investment. A standard U.S. mortgage origination process involves a minimum of 14 to 20 distinct institutional touchpoints — title search, appraisal, underwriting, compliance review, closing, recording, securitization, servicer assignment — each involving manual documentation, legacy database queries and bilateral reconciliation between systems that do not natively communicate. The Mortgage Bankers Association estimated in its 2025 industry cost study that the average cost to originate a single mortgage in the United States exceeded USD 11,600, a figure that has risen consistently over the past decade as compliance requirements have grown faster than technology efficiency gains.

The secondary market — where mortgages are pooled, tranched and sold as mortgage-backed securities (MBS) — is similarly opaque. Government-sponsored enterprises Fannie Mae and Freddie Mac dominate the conforming MBS market, but the process of transferring, settling and tracking beneficial ownership of individual mortgage loans within those pools remains dependent on the Mortgage Electronic Registration Systems (MERS) database, a private registry that has been the subject of persistent legal disputes about its standing as a legitimate title chain. Settlement of MBS trades runs on T+2 or longer cycles. Fractional ownership of individual mortgage loans by multiple investors — a natural risk distribution mechanism — is legally complex and operationally near-impossible in the current framework. Blockchain tokenization, at its core, proposes to solve each of these problems simultaneously.

What Better.com's Tokenization Exploration Actually Involves

Better.com's exploration of decentralized finance for mortgage assets centers on converting the legal and economic rights associated with a mortgage loan into a digital token on a blockchain — most likely a permissioned or hybrid public-private chain — that can be transferred, fractionalized, used as collateral in DeFi protocols, and settled in real time without a central clearing counterparty. The token would represent a beneficial interest in the underlying mortgage, with the borrower's payment obligations, the property lien, and the servicer's rights all encoded and tracked on-chain. Smart contracts would automate payment distribution to token holders, trigger default proceedings if payment conditions are breached, and update lien status upon payoff — replacing manual servicer workflows with self-executing code.

Better.com's digital-native origination infrastructure makes it structurally better positioned to execute this than a traditional bank lender. The company has digitized its entire origination stack — from application through underwriting to closing — meaning the data architecture that tokenization requires already exists in structured digital form rather than in the PDF documents and scanned paper files that define legacy mortgage origination. Better's AI-powered underwriting engine, Tinman, processes applications with significantly less human intervention than industry-standard workflows, generating clean, machine-readable loan data that maps directly onto the data fields a blockchain token record would require. The company's existing technology investment, in other words, is not a precondition for tokenization — it is already more than halfway there.

"The mortgage is the largest financial transaction most Americans will ever make, and it runs on infrastructure that was designed in the 1970s. Tokenization is not a novelty — it is the inevitable outcome of applying modern financial architecture to the world's largest asset class."

— Vishal Garg, Chief Executive Officer, Better.com — on the company's digital finance and technology transformation strategy

The Real World Asset Tokenization Wave Better.com Is Joining

Better.com's exploration does not emerge in isolation — it rides the largest institutional wave in DeFi's short history. Real World Asset (RWA) tokenization has become the dominant narrative in institutional blockchain adoption in 2025 and 2026, with total on-chain RWA value exceeding USD 17 billion by early 2026 according to RWA.xyz's tracking dashboard, up from approximately USD 8 billion at the start of 2025. The asset classes leading this growth include U.S. Treasury bills — where BlackRock's BUIDL fund on Ethereum and Franklin Templeton's BENJI product on Polygon have collectively attracted billions in institutional deposits — private credit, commodities, and real estate. Mortgages, despite representing the single largest asset class in the U.S. financial system at USD 13.5 trillion in outstanding balances per the Federal Reserve's Z.1 Financial Accounts report, have been notably absent from the tokenization wave. The legal complexity of property rights, the state-by-state variation in recording and lien law, and the regulatory sensitivity of residential lending have all acted as barriers. Better.com's move signals that the barrier is beginning to break.

BlackRock's Larry Fink stated in his 2025 annual chairman's letter that "the tokenization of every financial asset is inevitable," and that within a decade, all stocks, bonds and real assets would exist as digital tokens on unified blockchain ledgers. JPMorgan's Onyx division has processed over USD 700 billion in repo transactions through its JPM Coin and Tokenized Collateral Network since launch, demonstrating that institutional-grade blockchain settlement is operational at scale. Citigroup's Treasury and Trade Solutions division published a report in 2023 projecting that USD 4 to 5 trillion in tokenized assets would exist by 2030. Better.com's mortgage tokenization exploration places it at the frontier of the asset class that no major financial institution has yet cracked — which is simultaneously the greatest opportunity and the greatest technical and regulatory challenge in the entire RWA space.

The DeFi Liquidity Opportunity: Why On-Chain Mortgages Attract Protocol Capital

For DeFi protocols, tokenized mortgages represent a category of collateral that has been structurally absent from the ecosystem: long-duration, amortizing, real-economy assets with predictable cash flows backed by hard collateral — residential real estate. Current DeFi lending protocols including Aave, Compound and MakerDAO are heavily dependent on crypto-native collateral — ETH, WBTC, stablecoins — whose correlated volatility creates systemic risk during market stress. Introducing tokenized mortgage assets as collateral would allow DeFi protocols to diversify their collateral base into real-economy assets whose value is anchored to housing markets rather than crypto sentiment, dramatically improving their risk profiles and making them viable for institutional capital that currently cannot participate due to the crypto-only collateral pool.

MakerDAO — now rebranded as Sky Protocol — has already moved aggressively in this direction, with its RWA collateral portfolio including tokenized U.S. Treasuries, institutional private credit facilities and Centrifuge-originated real-world loan pools representing over 60% of the DAI stablecoin's backing collateral as of early 2026. Centrifuge, the RWA tokenization protocol, has already tokenized trade receivables, invoice financing and some real estate-adjacent assets through its Tinlake pools. A Better.com integration with infrastructure providers in this ecosystem — whether Centrifuge, Maple Finance, or a purpose-built mortgage tokenization protocol — would bring the residential mortgage asset class into DeFi's collateral universe for the first time, potentially unlocking billions in protocol liquidity directed at an asset class that the U.S. economy already relies upon as its primary household wealth vehicle.

Regulatory Architecture: Where the Hard Problems Live

The regulatory complexity of tokenized mortgages is genuinely formidable, and Better.com's legal and compliance teams will have mapped every dimension of it before any public announcement is made. Residential mortgages in the United States are subject to a dense overlay of federal regulation — the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Dodd-Frank mortgage servicing rules administered by the Consumer Financial Protection Bureau (CFPB), and the federal securities laws if the tokenized instrument constitutes a security under the Howey Test. State-level regulation adds another layer: property recording requirements, lien perfection rules, foreclosure procedures and transfer tax implications vary across all 50 states, and a mortgage token transfer on a blockchain does not automatically constitute a legally recognized transfer of the underlying lien in states that require physical recording with a county clerk.

The MERS model — which attempted to solve the recording problem by acting as a universal nominee for mortgage lien holders — has faced decades of legal challenge and remains contested in multiple state jurisdictions. A blockchain-based successor to MERS would need either explicit federal legislation recognizing on-chain lien records as legally equivalent to county recording, or a state-by-state legislative program that would take years to complete. The Securities and Exchange Commission's evolving position on tokenized securities — shaped by the ongoing implementation of the Trump administration's pro-crypto executive orders and the SEC's newly constituted Digital Assets Task Force — will also determine whether tokenized mortgage interests constitute securities requiring full registration or can be structured as exempt instruments under Regulation D or Regulation A+. Better.com's exploration is therefore as much a legal engineering challenge as a technological one.

What Success Would Mean for Borrowers, Investors and the Housing Market

If Better.com successfully navigates the regulatory and technical complexity of mortgage tokenization, the downstream effects for ordinary homebuyers could be substantial. Competition among DeFi liquidity pools for high-quality mortgage collateral would drive down the cost of capital for originators, potentially reducing mortgage rates at the consumer level. Faster settlement and automated servicing would compress the USD 11,600 average origination cost significantly — savings that a competitive market would pass through to borrowers in the form of lower fees and rates. Fractional ownership of mortgage assets would democratize access to one of the most consistently reliable yielding asset classes in American financial history, historically accessible only to institutional investors through GSE-backed MBS. A homeowner in Ohio's mortgage could be partially held by a DeFi protocol in Singapore, a family office in Abu Dhabi, and a retail investor in São Paulo — all settling payments in real time through a smart contract with zero counterparty risk.

Ethers News Summary and Editorial Perspective

Better.com's exploration of DeFi-integrated tokenized mortgages positions the digital lender at the intersection of the two most significant structural trends in 2026 finance: the RWA tokenization wave — which has driven on-chain real-world asset value beyond USD 17 billion per RWA — and the ongoing digitization of America's USD 13.5 trillion residential mortgage market per Federal Reserve Z.1 data. Better.com's AI-native origination stack, built around its Tinman underwriting engine, provides the clean digital data architecture that tokenization requires. The regulatory obstacles — TILA, RESPA, CFPB servicing rules, state recording requirements and SEC securities classification — are real but not insurmountable, particularly in a policy environment shaped by the Trump administration's pro-digital asset executive orders and the SEC's reconstituted Digital Assets Task Force. DeFi protocols including Sky Protocol (MakerDAO), Centrifuge and Maple Finance provide the liquidity infrastructure into which tokenized mortgage collateral could flow. BlackRock, JPMorgan and Franklin Templeton have already validated institutional blockchain finance at scale. Better.com's move, if executed, brings the last and largest asset class into the on-chain economy.

Better.com is a company that has survived near-death to find itself holding a genuinely consequential position in financial technology history. The tokenized mortgage is not a speculative concept — it is the logical conclusion of a decade of simultaneous progress in digital lending, blockchain infrastructure and institutional DeFi maturation. What has been missing is a lender with the digital origination architecture to generate the clean data that tokenization requires, the regulatory appetite to work through the complex legal engineering, and the strategic desperation of a post-restructuring company that needs a differentiating second-act narrative. Better.com has all three. At Ethers News, we believe the tokenized mortgage will be the defining RWA product of the next three years — not tokenized Treasuries, not tokenized private credit, but the instrument that sits in the balance sheet of every American household. Whoever cracks it first does not just win a product category. They restructure the plumbing of the entire housing finance system. Better.com has announced its intention to be first. The question is whether its balance sheet, regulatory relationships and technology stack are deep enough to get there before a Goldman Sachs, a JPMorgan or a BlackRock decides the category is worth owning. The race, quietly, has begun.

Key Sources and References

• Federal Reserve — Z.1 Financial Accounts of the United States: federalreserve.gov/releases/z1 — USD 13.5 trillion outstanding U.S. residential mortgage balance data

• Consumer Financial Protection Bureau — Mortgage Servicing Rules: consumerfinance.gov — TILA, RESPA and Dodd-Frank mortgage servicing compliance framework

• SEC — Digital Assets Task Force: sec.gov/digital-assets — SEC's evolving framework for tokenized securities classification

• Mortgage Bankers Association — 2025 Cost to Originate Study: mba.org — USD 11,600 average mortgage origination cost figure

• RWA.xyz — Real World Asset Tokenization Dashboard: rwa.xyz — USD 17 billion+ on-chain RWA value tracking across all asset classes

• Better.com Investor Relations — Nasdaq BETR: investor.better.com — Better.com public company disclosures, Tinman AI underwriting, origination technology architecture