Fannie Mae and Freddie Mac to Recognize Crypto as Mortgage Asset
Federal Agency Encourages Fannie Mae and Freddie Mac to Accept Cryptocurrency for Home Loans
Overview of New Proposal
The leader of the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, is advocating for the inclusion of cryptocurrency holdings in the evaluation criteria for mortgage purchases from banks.
Directive from FHFA Director
William Pulte, who took the helm of the FHFA in March, has instructed both agencies to draft a proposal that would allow cryptocurrencies to be recognized as valid assets when assessing the financial stability of potential homebuyers. This initiative aims to broaden the criteria used by banks when determining mortgage eligibility.
Guidelines for Cryptocurrency Consideration
In his recent directive, Pulte emphasized that mortgage risk evaluations should not mandate the conversion of cryptocurrency assets into U.S. dollars. He specified that only digital currencies that are securely stored and can be verified on U.S.-regulated exchanges will be eligible for consideration in the proposed framework.
Personal Financial Interests
Public records indicate that as of January 2025, Pulte’s spouse holds significant investments in cryptocurrencies, including between $500,000 and $1 million in Bitcoin and a comparable amount in Solana’s SOL token.
Shifting Perspectives on Borrower Creditworthiness
Traditionally, banks have not factored in a borrower’s cryptocurrency assets unless they were liquidated into cash. This new policy aims to encourage financial institutions to adopt a more inclusive approach to assessing creditworthiness, potentially enabling a larger number of prospective homebuyers to secure loans.
Implications for the Housing Market
The FHFA’s directive is designed to prompt banks to rethink how they evaluate borrowers, acknowledging the increasing acceptance of cryptocurrencies as viable investment alternatives to conventional assets like stocks and bonds.
Next Steps for Fannie Mae and Freddie Mac
The agencies are expected to formulate their proposals promptly, as outlined in Pulte’s order. Fannie Mae and Freddie Mac, which have been under government oversight since the financial crisis of 2008, play a crucial role in the U.S. housing market by purchasing qualifying mortgages from banks, thereby ensuring liquidity. Together, they guarantee approximately half of the $12 trillion home loan market, making them integral to the nation’s economy.
