Summary
- A couple in Michigan has completed the first conventional mortgage backed by Fannie Mae, using Bitcoin as collateral, according to Coinbase.
- Mortgage lender Better confirmed that daily fluctuations in the market will not lead to margin calls or immediate liquidations.
- This initiative follows a shift in policy by FHFA director Bill Pulte, who directed the agency to acknowledge cryptocurrencies held on centralized exchanges.
In a groundbreaking move, a couple from Michigan has successfully secured the first-ever government-backed mortgage utilizing Bitcoin as collateral, as reported by Coinbase on Thursday.
Through collaboration with mortgage lender Better, the couple, Joe and Amy, was able to obtain a Fannie Mae-backed home loan by leveraging Bitcoin for their down payment, thus benefiting from the safety net provided by the government-sponsored enterprise.
Coinbase indicated that this product, first revealed in March, is anticipated to be available to eligible borrowers nationwide in the coming months, also initially supporting Circle’s USDC stablecoin. This offering allows homebuyers to utilize their cryptocurrency holdings without having to sell their digital assets, according to Coinbase.
Mark Troianovski, Head of Consumer and Platform Partnerships at Coinbase, stated, “Tens of millions of Americans have built real wealth in digital assets. That wealth now has a direct path to homeownership, creating new opportunities for the next generation.”
Historically, the mortgage industry has considered cryptocurrencies too unstable to be used as a down payment for conventional mortgages. However, following a policy shift last year by Bill Pulte, the director of the Federal Housing Finance Agency, the agency was encouraged to align more closely with President Trump's vision of establishing the U.S. as the “crypto capital of the world.”
At that time, the agency specified that only digital assets held on centralized exchanges would be acceptable, while those in self-custodial wallets would not qualify. Traditionally, lenders have focused on evaluating assets like stocks and bonds for homebuyers.
By using Bitcoin as collateral, Coinbase explained that cryptocurrency holders can sidestep capital gains taxes and retain potential future gains. Furthermore, unlike the exchange's previous Bitcoin-backed lending product, which was reintroduced last year, fluctuations in price will not result in liquidations, and “price volatility has absolutely no impact,” as noted on Better’s website.
Borrowers using Coinbase’s service will receive two loans: one that follows the federal government’s and Fannie Mae’s regulations, and another that connects to the crypto asset as a second lien on the property.
For example, Better allows clients to secure a $100,000 down payment on a Fannie Mae-backed mortgage by placing a second lien on the property and providing $250,000 in Bitcoin. If payments are not made for 60 days, Better reserves the right to liquidate the pledged cryptocurrency.
In January, national wholesale lender Newrez announced plans to start accepting Bitcoin and Ethereum, positioning itself as a pioneering provider in this space. Initially, their offering was restricted to “non-agency products” and applied significant discounts to the value of crypto holdings.
Pulte remarked on social media at the time that this initiative was just the beginning.
Nonetheless, Pulte’s directive has faced criticism from some lawmakers. Senator Elizabeth Warren (D-MA) expressed concerns in January that this change could introduce “unnecessary risks to consumers and pose serious safety and soundness concerns for the U.S. housing and financial markets.”