Top US Housing Official Says Cryptocurrencies Can Be Used as Mortgage Criteria
## Lead Story
Mortgage Criteria Evolution: FHFA Director Calls for Accepting Cryptocurrencies
On Tuesday, William J. Pulte, Director of the United States Federal Housing Finance Agency (FHFA), announced the directive to Fannie Mae and Freddie Mac to consider adapting their mortgage evaluation criteria to include cryptocurrencies as an acceptable asset indicator. The decision, made during a directive on June 25th, marks a significant shift in the long-established criteria used by the two primary government-sponsored mortgage guarantors.
“The Director today ordered Fannie Mae and Freddie Mac to prepare their businesses to count cryptocurrency as an asset for a mortgage,” Pulte stated in a post on social media platform X.
The potential impact on mortgage applications is highlighted, as assets like cryptocurrency holdings could positively influence borrower assessments.
Context and Significance
This move aligns with former President Donald Trump’s administration efforts to position the United States as the “crypto capital of the planet.” Trump, who is reportedly investing in several crypto-branded ventures, has championed the crypto industry throughout his tenure.
The significance carries considerable weight as the US housing market represents an asset base valued at approximately $50 trillion, roughly equivalent to the combined GDP of the US, China, and Germany. Furthermore, the market comprises over $11 trillion in mortgage-backed securities, attracting substantial investor capital.
Risk Assessment and Market Reaction
The decision has immediately drawn concern among financial analysts regarding the risks involved. Altering fundamental risk metrics in a sector historically seen as stable triggers debate, particularly given the extreme volatility inherent in cryptocurrencies, which analysts noted contrast significantly with assets like stocks, bonds, and real estate.
Recalling the lessons of the 2008 financial crisis, which stemmed from misjudging risks associated with subprime mortgages, many analysts see this directive as potentially destabilizing.
“While acknowledging the need for technological progress, this step is exceptionally precarious given the widespread adoption of volatile crypto assets and potential systemic ramifications,” industry commentator Sean Tuffy told DL News, contextualizing Pulte’s proposal as part of a larger government engagement with the crypto sphere, following recent events like the SEC’s favorable decision regarding Ripple stock.
Trial Balloon or Substantive Change?
The process initiated by Pulte is not a final directive but rather a request for Fannie Mae and Freddie Mac to “prepare a proposal” for the agency’s consideration regarding cryptocurrency asset evaluation. Many financial experts interpret this as a potential trial balloon rather than an immediate policy change.
However, the mere suggestion of altering the criteria for assessing qualified assets carries immediate and wide-reaching implications for the entire ecosystem of the American housing market.
Wider Regulatory Scope
Amidst the focus on Pulte’s announcement, the article also briefly touches upon related crypto developments:
ICYMI
“There’s definitely reasons to be concerned,” explained Sean Tuffy, regarding Pulte’s directive.
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Monero-only hacker IntelBroker caught after accepting Bitcoin from FBI. Authorities arrested a suspect accused of selling stolen data, who reportedly agreed to take Bitcoin but then refused his $1.5 million payout after being informed FBI analysis found the crypto was likely government-related.
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In regulatory news, Judge Torres rejected a key piece of evidence proposed by the SEC, prompting former SEC Senior Adviser Corey Frayer to quip: “The SEC made the unprecedented decision… to reverse course on pending litigation. And today their leadership got a taste of what their hubris, incompetence, and crypto fealty results in.”
