Why the Trump administration wants to allow crypto-backed mortgages
It’s no secret that buying a home is expensive. The median sales price of US homes has been hovering around $400,000 since the end of 2021. According to the Federal Reserve Bank of St. Louis.
Many home buyers looking to cover this cost turn to mortgage lenders, who examine financial details like wages, bank balances and retirement accounts to determine how risky it is to lend the money.
This review process generally excluded crypto assets. But for this Nearly 15% of Americans invest in digital assetsThis may change soon.
In June, a directive issued by the Federal Housing Finance Agency ordered mortgage giants Fannie Mae and Freddie Mac to develop proposals to consider crypto as an asset in single-family home risk assessments.
Agency director Bill Pulte wrote: Publish on X It ordered the two companies to prepare their businesses to count cryptocurrency as an asset for mortgages. Pulte said the directive comes “after significant study and in line with President Trump’s vision of making the United States the crypto capital of the world.”
Redfin chief economist Daryl Fairweather said the process would be similar to how lenders account for stocks and other investments.
“A lender would look at the assets that a potential borrower had, and before they were just considering stocks and bonds and those traditional types of investments, but now they’re considering cryptocurrency investments, which are less traditional. It might be a little bit difficult for them to evaluate risk, but I think they’re used to evaluating riskiness,” Fairweather said. “There are stocks that are more volatile and risky than some of the long-standing cryptocurrencies, so I think it would be pretty easy for lenders to adapt their frameworks to include crypto in that.”
FHFA’s move found immediate support from Sen. Cynthia Lummis, R-Wyo., who introduced a bill to sign the directive into law.
The federal lender’s directive also faced criticism from those who argued that backing loans with crypto could add new stress to the mortgage market.
In July, a group of Democratic senators sent a letter to Pulte addressing its “risky proposals” to allow unconverted crypto assets to be used in mortgage loan underwriting. Senators requested information on the directive to Fannie Mae and Freddie Mac and expressed concerns that cryptocurrency is more volatile than traditional assets. They emphasized that Congress and the public need to better understand the agency’s decision-making process to evaluate the potential risks and benefits of the order and its effects on the housing market.
Watch the video above to hear why the Trump Administration wants to allow crypto-backed mortgages and what it could mean for the housing market.
