FHFA Orders Fannie Mae Freddie Mac to Consider Crypto in Mortgage Risk Assessments

The Federal Housing Finance Agency (FHFA) has issued a directive to Fannie Mae and Freddie Mac, instructing them to consider cryptocurrency holdings as part of the mortgage risk assessment process. This move marks a significant shift in how digital assets like Bitcoin and Ethereum are evaluated within the underwriting process of single-family loans.

For years, borrowers with substantial cryptocurrency holdings have faced challenges in qualifying for mortgages. These assets were effectively invisible unless converted into U.S. dollars, creating tax events and liquidity issues. The new directive recognizes the growing role of cryptocurrency in personal finance and aims to address these challenges. The directive, signed by FHFA Director William J. Pulte, notes that cryptocurrency is an emerging asset class that may offer opportunities to build wealth outside of traditional stock and bond markets.

Key highlights of the directive include the requirement for Fannie Mae and Freddie Mac to prepare proposals on how to include crypto assets in their single-family loan risk assessments. The directive specifies that these assets can be considered without converting them to U.S. dollars prior to closing, reducing friction for borrowers. However, the assets must be stored on a U.S.-regulated, centralized crypto exchange and must be verifiable. Each agency must also consider risk adjustments for volatility and the proportion of reserves held in crypto, and submit their plans for board approval and FHFA review.

This strategic move aims to future-proof the mortgage industry while maintaining prudence around asset volatility and risk exposure. For buyers who have invested heavily in cryptocurrency, this development could be significant. Instead of liquidating digital assets to qualify for a loan, eligible borrowers could soon count their crypto toward their reserves, particularly helpful for meeting reserve requirements on conventional or jumbo loans. Self-employed tech entrepreneurs, investors, and early crypto adopters stand to benefit the most from this proposed change.

The order is effective immediately, but it does not mean that crypto will count toward a mortgage today. Fannie Mae and Freddie Mac now have the responsibility to draft their proposals, complete internal assessments, and gain approvals. More guidance is expected in the coming months as the agencies publish their formal approaches. Once these are approved by the FHFA and their boards, lenders and brokers will begin seeing updates in eligibility guidelines. This directive signals a progressive shift in the mortgage industry, recognizing the evolving nature of financial wealth and the need for lending standards to adapt accordingly.

Stuart Alderoty, Chief Legal Officer at Ripple, commented that this move could benefit around 55 million Americans who currently own Bitcoin. He emphasized that recognizing crypto for mortgage qualifications introduces a major opportunity for broader access to homeownership through digital assets.

Michael Saylor, cofounder of Strategy and a prominent Bitcoin advocate, called this development a defining step in Bitcoin’s integration into American financial systems. He stated that the move marks the beginning of Bitcoin’s alignment with core aspects of the American dream, such as homeownership.

Market analysts, including Eric Coleman, view this action as validation of Bitcoin’s credibility within traditional financial infrastructure. The new plans indicate that Bitcoin will not need to be converted into U.S. dollars before being used in mortgage-related transactions, enhancing its utility as a direct payment asset.

The ability to count Bitcoin holdings during mortgage assessments could help younger adults and first-time homebuyers qualify more easily. The flexibility in asset consideration may reduce barriers that have historically prevented crypto holders from accessing home loans.

Despite enthusiasm, some Bitcoin users expressed concern over potential centralized custody requirements. To qualify for mortgage consideration, crypto assets may need to be held on regulated platforms. Although supporters highlight the financial inclusivity, others remain watchful of market volatility and custodial risks.