Fannie Mae and Freddie Mac guarantee half of the $12 trillion US mortgages
Federal Housing Finance Agency (FHFA) head William Pulte has directed Fannie Mae and Freddie Mac to consider cryptocurrency holdings of loan applicants while assessing mortgage risk.
The two firms work directly with banks and, after assessing risk criteria, buy mortgages from them. Fannie and Freddie guarantee half of the $12 trillion in US mortgages.
Pulte’s new directive sees cryptocurrency as a significant driver of wealth creation and states that crypto holdings should not be converted into dollars. Currently, home loan borrowers have to sell their digital assets for dollars to secure a mortgage.
However, only crypto held on US-regulated centralized exchanges would qualify.
The directive asks Fannie and Freddie to discount crypto assets for volatility, similar to how they treat individual stocks.
Economists say the move could encourage banks to recognize crypto as a legitimate part of homebuyers’ asset portfolios. It could open the door for more buyers, especially as housing remains sluggish.
As the digital asset gains more credibility, experts are yet to see how the move would impact the two firms’ risk profile.
Home sales hit a 30-year low last year. An April Redfin survey found home sellers in the US outnumbered buyers by nearly 500,000.