Federal regulators have issued a significant directive to the nation’s leading housing finance entities. The regulator overseeing Fannie Mae and Freddie Mac has ordered the government-sponsored enterprises (GSEs) to begin considering cryptocurrency holdings when assessing risk for single-family mortgage loans.
This move could potentially open new avenues for borrowers looking to use their digital asset wealth to help qualify for a home loan, signaling a notable shift in how traditional financial institutions might view emerging asset classes.
FHFA Orders Crypto Consideration
According to a social media post by William Pulte, the Director of the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac have been instructed to “prepare their businesses to count cryptocurrency as an asset for mortgage.” Pulte indicated this aligns with a broader vision of establishing the U.S. as a leader in the crypto space.
The FHFA is the federal regulator responsible for overseeing Fannie Mae and Freddie Mac, which play a critical role in the U.S. housing market. Having operated under government conservatorship since the 2008 financial crisis, these entities guarantee over half of the nation’s mortgages, providing crucial liquidity to the market.
Why the Change?
In a signed directive, Director Pulte explained that incorporating additional borrower assets, such as cryptocurrencies, would allow Fannie and Freddie to gain a more comprehensive understanding of a borrower’s full financial health. The goal is to “facilitate sustainable homeownership to creditworthy borrowers” by assessing their complete asset picture.
This development comes amidst a period where cryptocurrencies like Bitcoin have seen significant price movements, including reaching new all-time highs earlier this year, albeit with notable periods of volatility. Critics often point to the inherent volatility of digital assets as a potential risk factor.
The directive from Pulte did not specify which particular cryptocurrencies Fannie and Freddie should consider, leaving the specifics of implementation open for now. This order marks an initial step, tasking the housing giants with the preparation needed to incorporate crypto holdings into their risk assessment frameworks.
