The American mortgage agency Fannie Mae will start accepting digital assets as collateral. This new product is being launched in collaboration with the lending company Better Home & Finance and the exchange Coinbase.
Real estate buyers will be able to use Bitcoin and the stablecoin USDC for their down payments. There’s no need to sell assets, allowing borrowers to avoid capital gains taxes and penalties for early withdrawals from investment accounts. The mortgage itself will still meet traditional Fannie Mae standards.
A key feature of this new crypto product is the complete absence of margin calls. If the price of Bitcoin drops, borrowers won’t need to provide additional collateral, and the loan terms will remain unchanged. Market volatility will not trigger liquidation. The company will only write off the collateral if the client is more than 60 days late on their mortgage payment.
Special conditions apply for contributions in USDC. The locked assets will generate passive income, which borrowers can use to pay down their loans, effectively lowering their real interest rates.
This new product primarily targets young investors (millennials and Gen Z). According to statistics, around 52 million Americans own digital assets. Many find it challenging to save for a traditional cash down payment due to high housing prices, but they do have capital in cryptocurrency.
In the future, the companies plan to expand the range of collateral assets. Clients will be able to secure loans with tokenized stocks, bonds, and shares in other real estate.
Recall that in February, the company ETHZilla acquired a portfolio of 95 loans for modular homes for $4.7 million.