Regulator orders Fannie, Freddie to consider crypto holdings in loan assessments

Audio By Carbonatix

Enlarge

By Hannah Lang

(Reuters) -The regulator overseeing Fannie Mae and Freddie Mac on Wednesday ordered the housing giants to consider cryptocurrency as an asset for single-family mortgage loan risk assessments, a move that could potentially open the door to borrowers using crypto investments to qualify for home loans.

William Pulte, the director of the Federal Housing Finance Agency, said in a social media post that he had ordered Fannie and Freddie to “prepare their businesses to count cryptocurrency as an asset for mortgage,” which he said would be in line with President Donald Trump’s vision of making the U.S. “the crypto capital of the world.”

The FHFA oversees Fannie Mae and Freddie Mac, which have operated under U.S. government control since 2008 after suffering heavy losses during the subprime mortgage crisis. They guarantee over half of the nation’s mortgages.

Cryptocurrencies are known for being highly volatile and are often subject to wild price swings, sometimes for no clear reason. In February, bitcoin — the largest cryptocurrency — suffered its biggest weekly fall in two years, dropping 16%, although it has since recovered.

Trump has sought to overhaul U.S. cryptocurrency policy after courting cash from the industry on the campaign trail. Trump has appointed industry-friendly regulators and has hosted industry leaders at the White House. Cryptocurrencies have reacted favorably, with bitcoin reaching all-time highs this year.

In a directive signed Wednesday, Pulte said that considering additional borrower assets — such as cryptocurrencies — could enable Fannie and Freddie to assess the full financial picture of a borrower and could “facilitate sustainable homeownership to creditworthy borrowers.”

Pulte’s order did not specify which cryptocurrencies Fannie and Freddie should consider.

(Reporting by Hannah Lang in New York, Editing by Franklin Paul)