Transforming Scratch & Dent Mortgages from a Liability into an Opportunity

What is Allonge?

Allonge is a mortgage investment platform that democratizes access to the Scratch & Dent mortgage class for accredited and qualified investors, unlocking liquidity and increasing market efficiency via transparent and compliant security tokens.

The Problem with Scratch & Dent

Loans with minor errors break the business model of mortgage originators.

Underwriting issues prevent the sale of these loans to the typical secondary market buyers, tying up capital for new loans, impacting cash available for day-to-day operations, and making future loans more expensive for customers.Wholesale buyers move slowly and drive prices down by monopolizing the buy side.The result: a $25 billion dollar a year segment of the mortgage market plagued by inefficiency and illiquidity.

At the same time, these assets are inaccessible to most investors.

S&D loans typically perform on par with conforming mortgages, but can be bought at a discount.Retail and non-specialized investors have no affordable or actionable way to discover and purchase S&D assets.The result: the majority of investors are effectively locked out of the S&D market segment, missing out on both the acquisition discounts and the strong annualized returns.

Allonge Democratizes Access to a Valuable Asset Class

Blockchain technology enables Allonge to cost-effectively make investing in Scratch & Dent mortgages available to a much larger market—increasing demand and reducing losses for loan originators.Fractionalization reduces the capital required for investors to gain access to the S&D asset class, from hundreds of thousands of dollars to amounts retail investors can easily manage.Smart contracts automate revenue distribution and other administrative functions, reducing overhead costs.