Lummis Bill to Allow Crypto as Mortgage Collateral Citing FHFA Guidance Aims to Boost Homeownership for Young Americans with 36% Ownership Rate

Senator Cynthia Lummis (R-Wyo.) has introduced the 21st Century Mortgage Act, a legislative proposal designed to integrate digital assets like Bitcoin into the mortgage underwriting process. The bill would require government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac to assess cryptocurrencies and other digital assets as qualifying collateral for single-family home loans. This initiative aligns with a June directive from the U.S. Federal Housing Finance Agency (FHFA), which urged GSEs to consider crypto holdings in mortgage risk evaluations. By eliminating the need to convert digital assets into fiat currency, the legislation aims to expand homeownership opportunities for younger Americans, particularly those with limited traditional financial resources. Lummis cited U.S. Census data indicating 36% homeownership among Americans under 35, framing the bill as a tool to bridge this gap [1].

The FHFA’s directive has drawn scrutiny from Democratic lawmakers, who argue that crypto’s volatility and liquidity challenges could pose risks to borrowers. In a July 24 letter to FHFA Director William Pulte, Senate Democrats warned that price fluctuations might hinder borrowers’ ability to liquidate assets during defaults, potentially destabilizing the housing market [1]. Lummis’ bill, however, positions the integration of crypto as a forward-looking measure to modernize mortgage systems for digital asset holders. The legislation also aligns with broader Republican efforts to shape U.S. crypto policy, including Lummis’ co-leadership on a bill to establish a digital asset market structure and her opposition to a Federal Reserve central bank digital currency (CBDC) proposal [1].

Parallel efforts are emerging at the state and international levels. Rep. Nancy Mace (R-S.C.) introduced the American Homeowner Crypto Modernization Act, which would require lenders to evaluate digital assets in brokerage accounts linked to crypto exchanges. Meanwhile, Australia-based Block Earner recently launched Bitcoin-backed mortgages following a court ruling that clarified regulatory boundaries for crypto lending [1]. These developments highlight growing interest in leveraging digital assets for real estate financing, though critics emphasize the need for caution. Democrats’ letter to Pulte underscores that even as the crypto market matures, persistent volatility could undermine its reliability as collateral, advocating for further analysis of its implications for housing stability [1].

The Senate’s August recess may delay further legislative action, but the debate reflects broader tensions in U.S. financial policymaking between innovation and risk management. If enacted, the bill could redefine mortgage eligibility criteria, enabling crypto holders to access homebuying opportunities without liquidation. However, it also raises questions about systemic risks and regulatory oversight. Proponents argue the legislation aligns with the FHFA’s mandate to adapt to evolving economic landscapes, while opponents stress the importance of safeguarding financial stability [1].

Source: [1] https://www.lummis.senate.gov/press-releases/lummis-introduces-bill-to-revolutionize-mortgage-lending-make-homeownership-more-accessible-for-young-americans/