Fannie Mae to Accept Bitcoin as Collateral for Mortgages

Fannie Mae, a prominent American mortgage agency, is set to accept digital currencies as collateral for mortgage loans. This initiative is being launched in partnership with Better Home & Finance and Coinbase.

Homebuyers will have the option to use Bitcoin and the stablecoin USDC for their down payments, eliminating the need to liquidate their assets. This approach helps borrowers sidestep capital gains taxes and early withdrawal penalties from their investment accounts. Importantly, the mortgages will still comply with traditional Fannie Mae standards.

A standout feature of this offering is the lack of margin calls. If Bitcoin’s value declines, borrowers will not be required to provide additional collateral, ensuring that loan terms remain stable despite market fluctuations. The collateral will only be forfeited if the borrower falls behind on payments by more than 60 days.

For USDC contributions, the assets will yield passive income, which borrowers can use to reduce their loan balance, effectively decreasing their interest rates.

This product is primarily aimed at younger investors, particularly millennials and Gen Z, who collectively represent about 52 million digital asset owners in the U.S. Many of these individuals struggle to save for a traditional down payment amid soaring housing costs but possess significant capital in cryptocurrencies.

Looking ahead, Fannie Mae and its partners plan to broaden the types of collateral accepted, including tokenized stocks, bonds, and shares in real estate.

In related news, ETHZilla recently acquired a portfolio of 95 modular home loans for $4.7 million in February.