Mortgage evaluations to now incorporate cryptocurrency holdings
The Federal Housing Finance Agency (FHFA) has taken a significant step in the world of real estate and finance, announcing that it will consider crypto in mortgage assessments. This decision, made by FHFA Director Bill Pulte, could potentially revolutionise the industry.
Fannie Mae and Freddie Mac, two key players in the housing market, will be tasked with developing a proposal to incorporate cryptocurrencies. These government-sponsored enterprises buy mortgages from banks, providing much-needed liquidity in the housing market. With assets totalling $7.8 trillion, their inclusion of crypto could have far-reaching effects.
The move towards digital assets comes after President Trump's initiative to make America the global crypto hub. The FHFA's decision is a significant step towards achieving this goal.
The FHFA's instruction follows a statement by Bill Pulte, two days prior, expressing his interest in exploring this matter. The real estate and mortgage industry was forever changed yesterday with the inclusion of cryptocurrencies.
Matt Cole, CEO of the asset manager Strive, highlighted the importance of this decision for two reasons. Firstly, the document shared by Pulte states that cryptocurrencies are an emerging asset class that offers the potential to build wealth outside of the stock and bond markets. Secondly, the question arises as to why coins in one's own wallet should not be considered, given that self-custody of crypto assets is an American value.
However, it's important to note that any changes must be approved by the boards of Fannie Mae and Freddie Mac and then submitted to the FHFA for review. The specific proposals from Fannie Mae and Freddie Mac are yet to be seen.
In a tweet, Bill Pulte emphasised the significance of yesterday's action, stating that Bitcoin could become an even more attractive asset class if BTC holdings improve homebuyer creditworthiness and are supported by the world's largest economy.
The FHFA's decision means that cryptocurrencies, such as Bitcoin, will no longer be disregarded in the risk assessment of mortgage loans without being converted to U.S. dollars before the loan is originated. This could open up new opportunities for homebuyers and investors alike.
Notable reactions to this announcement include Bitcoin bull Michael Saylor, who linked the decision to the "American Dream." As the industry awaits the proposals from Fannie Mae and Freddie Mac, it's clear that this decision has the potential to change the face of the mortgage industry.
