Fannie Mae to accept Crypto
Who is Fannie Mae?
Fannie is a quasi-Gov agency that acts as mortgage securitizer. Fannie is backed by the federal government and overseen by the Federal Housing Finance Agency.
Fannie / Freddie use creditworthiness to establish ability to repay mortgage, typically for a conforming loan.
Rise of Digital Assets (DA)
Instead of making a cash down payment, the buyer gets a separate loan, backed by either bitcoin or USDC, a popular stablecoin. comparable to typical Fannie Mae mortgages to 1.5 percentage points higher.
Better Home & Finance Holding Co. and crypto exchange Coinbase teamed up to allow home buyers to pledge Bitcoin or the USDC stablecoin
Gotcha - that separate loan will increase the overall cost of the mortgage over its lifespan. No details were released as to how that crypto would be secured or monitored. Something to consider
What would happen IF the USA had another 2008 housing crisis and the mortgage was in trouble? Historically the customer holding the mortgage could ask for loan rate modification (aka flex modification) for loans owned by Freddie/Fannie Mac. However, I was not able to find details for this new digital asset mortgage.
How does the new process work?
Customer pledges (AKA locked) their crypto holdings when getting a Fannie-backed mortgage, instead of selling the crypto to make a cash down payment. This product is designed to present options as a 2025 poll showed that 14% of American adults owned cryptocurrencies. When / IF the value of the crypto in the account falls, the mortgage loans aren’t affected as long as the owner keeps making monthly payments. Given Crypto's volatility I believe the amount of crypto locked will have to be substantial.
https://www.zerohedge.com/crypto/fannie-mae-set-accept-crypto-collateral-home-loans-first-time
Summary
Sure its nice to demonstrate your crypto prowess by leveraging your digital assets for an asset purchase. However, not sure its worth the higher price due to a secondary loan. Nor the inability to sell said digital asset when it hits your price target. Not sure I am fully on board with this type of offering but my role is to bring you this news not to think for you!
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