US Federal Housing Finance Agency (FHFA) Director William J. Pulte made a groundbreaking decision on June 25th that will have a significant impact on the mortgage industry. Pulte ordered that Fannie Mae and Freddie Mac, two government-sponsored enterprises, must now consider cryptocurrency reserves as eligible assets when assessing risk on single-family mortgage loans. This directive is effective immediately and marks a major shift in how digital assets are viewed in the realm of home financing.
Under Pulte’s directive, Fannie Mae and Freddie Mac are required to develop plans outlining how they will incorporate borrower crypto holdings into their risk assessment without converting the coins to dollars first. The directive also imposes strict rules on the type of cryptocurrency that can be recognized, limiting it to assets held in wallets controlled by US-regulated centralized exchanges. Additionally, the enterprises must account for market volatility, maintain reserve ratios that reflect the collateral held in digital assets, and obtain board approval before submitting their proposals for review.
Fannie Mae and Freddie Mac play a crucial role in the US residential mortgage market, purchasing and securitizing the majority of conforming loans. By allowing crypto reserves to be factored into their risk models, Pulte aims to expand the range of assets considered during the underwriting process, ultimately making homeownership more accessible to credit-worthy borrowers.
The directive also instructs each enterprise to develop risk-adjusted frameworks that integrate crypto reserves into their existing loan risk assessment processes. This includes determining how cryptocurrency will be valued, applying appropriate adjustments for price fluctuations, and analyzing how these reserves interact with other borrower assets and liabilities. Once approved by the board, the proposals will be sent to the FHFA for final approval before implementation.
Pulte’s decision aligns with President Donald Trump’s vision to position the US as a leader in the cryptocurrency space. The directive was announced on social media, with Pulte stating that it marks a historic day for the industry. This move follows months of internal study and is a significant step towards establishing a national crypto policy that promotes innovation and growth in the sector.
The order does not specify which cryptocurrencies will qualify, but the requirement for assets to be held on US-regulated exchanges narrows the field to tokens that adhere to federal regulations. Both Fannie Mae and Freddie Mac are tasked with developing their proposals promptly, with the FHFA committed to reviewing each plan before implementation.
Overall, Pulte’s directive represents a bold move towards integrating cryptocurrency into the traditional mortgage lending process. By recognizing digital assets as eligible reserves, Fannie Mae and Freddie Mac are paving the way for a more inclusive and innovative approach to homeownership in the US.