Prospective homebuyers may utilize cryptocurrency for mortgage purposes under the latest Trump administration proposal
Based on recent announcements, homebuyers in the US might be granted the opportunity to leverage their cryptocurrency assets when applying for a mortgage, making significant waves in the US housing market.
In a game-changing decision, the Federal Housing Finance Agency (FHFA) Director, Bill Pulte, ordered Fannie Mae and Freddie Mac to get ready to accept cryptocurrency as a mortgage asset, according to a social media post. This directive follows an extensive study and aligns with President Trump's vision to turn the US into a global crypto powerhouse.
Several years ago, under the Biden administration, both Fannie and Freddie deemed homebuyers' income paid in cryptocurrency as unacceptable for mortgage qualification due to the unpredictable nature of cryptocurrencies. However, Trump's stance on crypto has evolved significantly over the years. He now openly embraces digital currencies, even owning a digital token and having a stake in the crypto venture named World Liberty Financial.
This move would be advantageous for potential homebuyers unwilling to swap their cryptocurrency holdings for US dollars in order to secure a government-backed mortgage. It's worth noting that home sales prices have been accelerating nationwide – hitting a record high for May – while average mortgage rates stubbornly remain high.
Last month, Trump expressed intentions to take Fannie and Freddie public, potentially ending 17 years of federal government conservatorship over the two crucial players in America's housing finance system. However, some experts argue that this plan could lead to increased borrowing costs for homebuyers, as lenders might demand higher rates to compensate for the additional risks without a government bailout guarantee.
It remains uncertain how accepting cryptocurrencies, a volatile asset class, as income for mortgage considerations might affect how investors perceive risks associated with Fannie and Freddie in the event of a public offering. In his directive, Pulte urged the entities to "consider additional risk mitigants per their own assessment, including adjustments for market volatility."
For now, Fannie Mae and Freddie Mac are working on preparing proposals regarding the acceptance of cryptocurrency as a mortgage asset. These proposals will require approval from the board of directors and the FHFA before going into effect.
The Federal Housing Finance Agency (FHFA) Director, Bill Pulte, has ordered Fannie Mae and Freddie Mac to prepare proposals for accepting cryptocurrency as a mortgage asset, marking a shift in US politics and finance. This decision is in line with President Trump's vision to establish the US as a global leader in cryptocurrency, and could potentially benefit homebuyers unwilling to liquidate their cryptocurrency holdings for US dollars in the mortgage application process.
