FHFA Directs Fannie Mae and Freddie Mac to Consider Crypto in Mortgage Risk Assessments
In a groundbreaking move, the Federal Housing Finance Agency (FHFA) has instructed mortgage giants Fannie Mae and Freddie Mac to begin factoring cryptocurrencies into their risk evaluations when issuing mortgages. This directive signals a potential shift in how the housing market views digital assets.
FHFA Director William Pulte announced the decision, emphasizing its alignment with a broader vision to establish the United States as a global cryptocurrency hub. The order represents a significant step towards integrating digital assets into the federal financial system.
“The FHFA… hereby directs each Enterprise to prepare a proposal to consider cryptocurrency as an asset for reserves in their respective single-family mortgage underwriting risk assessments, without conversion of said cryptocurrency to U.S. dollars,” Pulte stated.
Fannie Mae and Freddie Mac play a crucial role in the housing market by purchasing mortgages from lenders, bundling them into securities, and guaranteeing payments to investors.
Key Considerations
- While the directive doesn’t specify which cryptocurrencies should be considered, it suggests focusing on digital assets “that can be evidenced and stored on a U.S. regulated centralized exchange subject to all applicable laws.”
- Industry experts speculate that Bitcoin, given its growing prominence in traditional finance, is likely to be a primary focus.
Industry Reactions
The move has sparked considerable discussion within the financial community.
Matt Cole, CEO of Strive Funds, highlighted the potential benefits for investors, noting that it “substantially facilitates Bitcoin holders buying a home without selling their Bitcoin.” He also suggested that the U.S. government is “assuming the risk of Bitcoin on its own book” by “implicitly guaranteeing the mortgage loans” of Fannie Mae and Freddie Mac.
Michael Saylor, CEO of MicroStrategy, a major Bitcoin holder, hailed the decision as a recognition of Bitcoin as a “reserve asset by the U.S. housing system.”
“A truly historic day. The U.S. mortgage industry leads — and the global banking system will follow,” Saylor commented.
Saylor also offered to share a Bitcoin Credit Model developed by MicroStrategy with Director Pulte, who expressed interest in reviewing it.
Precedent for Crypto Integration
This isn’t the first instance of major corporations exploring the integration of cryptocurrencies into their financial assessments. Earlier this month, reports surfaced that JPMorgan Chase would begin accepting Bitcoin ETFs as collateral for client loans, starting with BlackRock’s iShares Bitcoin Trust (IBIT).
Stay ahead of the curve in the fast-paced crypto world – explore the latest updates and trends at Cryptonewsfeeds.com.
