The Trump administration is paving the way for cryptocurrency usage in the mortgage market. On June 25, the Federal Housing Finance Agency (FHFA) instructed Fannie Mae and Freddie Mac to create systems enabling borrowers to count their cryptocurrency holdings when applying for a mortgage. This policy, if implemented, could significantly assist more Americans in qualifying for home loans.

This initiative aims to bridge the gap between digital assets and traditional finance.

Changing the Approach to Crypto in Underwriting

Currently, borrowers are often required to convert their cryptocurrency into cash before using it as proof of financial stability. This is largely due to the perceived volatility of crypto assets. However, the FHFA has indicated a need to rethink how digital assets are included in assessing mortgage eligibility.

“After significant studying, and in keeping with President Trump’s vision to make the United States the crypto capital of the world, today I ordered the Great Fannie Mae and Freddie Mac to prepare their businesses to count cryptocurrency as an asset for a mortgage.”
Translation: The administration is looking to integrate cryptocurrency into financial assessments to better reflect current asset holdings.

Director William Pulte believes this move aligns with a larger strategy to legitimize crypto in mainstream finance while acknowledging the inherent risks involved.

Fannie and Freddie’s Responsibilities

While they do not issue loans directly, Fannie Mae and Freddie Mac play a crucial role in the mortgage market. They are tasked with developing a framework that allows lenders to factor cryptocurrency into borrowers’ financial profiles while ensuring that these assets are held on regulated exchanges.

Industry Reactions

The response within the mortgage industry has been varied. The Mortgage Bankers Association welcomes the modernization of asset verification processes. However, concerns persist regarding the volatility of cryptocurrency and potential risks like fraud.

If this proposal moves forward, it may ease access to mortgage credit for crypto holders, allowing them to retain their assets during market fluctuations. The upcoming months will be critical as Fannie Mae and Freddie Mac finalize the operational requirements and as regulations are scrutinized to adapt to this evolving financial landscape.

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Key Points:

• The administration has initiated discussions to include crypto in mortgage applications.
• Crypto must be held on regulated exchanges, with rules addressing volatility.
• Responsible lending standards remain a priority.