The Federal Housing Finance Agency (FHFA) announced today that it will consider applicants’ crypto holdings in determining their eligibility for a mortgage loan. The agency regulates Fannie Mae and Freddie Mac, two of the biggest pillars of the US mortgage market.
The FHFA will only consider tokens stored on US-regulated exchanges for this assessment. However, it won’t mandate applicants convert them to USD, giving crypto another interesting use case.
Can Crypto Help You Get a Mortgage Loan?
Although it may not look crucial, this development marks a major win for crypto’s relationship with TradFi. For most Americans, home ownership is the bedrock of long-term financial stability, which is why the FHFA was founded in the 1930s.
If crypto can help people qualify for federal mortgage loans, it could greatly expand market access to real security.
William Pulte, Director of the FHFA, has already been exploring his ability to support friendly regulations. For example, he suggested accepting crypto as mortgage collateral earlier this week.
Although several private institutions offer this service, the federal government hasn’t joined the trend yet.
Still, this new directive is a major breakthrough. When potential homebuyers apply for a mortgage loan from Fannie Mae or Freddie Mac, the FHFA assesses their total assets to determine their eligibility.
For many Americans, crypto holdings could be the difference between getting a mortgage and not.
Additionally, applicants won’t need to convert their assets to USD for the assessment. They’ll even get to retain custody since the FHFA won’t actually accept tokens as collateral.
To be clear, this program has a few limitations. The FHFA won’t consider every token, especially because market caps can be artificially inflated.
To qualify for a mortgage loan, the Agency will only consider crypto that can be stored on US-regulated CEXs. Pulte also mentioned considering “additional risk mitigants,” but didn’t specify what this entails.
Luckily, the impending new regulatory frameworks could help clarify these criteria. The community is already reacting positively to the news, and it’s clear to see why.
Crypto is a gateway to economic stability for users worldwide, and it could help enthusiasts secure mortgage loans. This move could do a lot to legitimize Web3 for ordinary people.
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