The nation’s largest mortgage finance firms will begin accepting crypto as an asset on a mortgage application, another significant step by the Trump administration to bring digital currencies into mainstream finance.

This week, President Donald Trump’s housing director, William Pulte, said he would direct Fannie Mae and Freddie Mac — the nation’s big mortgage finance firms — to consider homebuyers’ crypto investments as part of their overall wealth in assessing whether they can afford a mortgage. Traditionally, a homebuyer’s cash savings and stock investments are what mortgage lenders consider.

Fannie and Freddie, which are a critical cog in the housing market, buy mortgages from banks and establish a set of criteria for which borrowers’ mortgages they will accept.

The announcement by Pulte, director of the Federal Housing Finance Agency, on Wednesday comes as an increasing number of Americans have been using digital currencies to buy houses and new companies have formed to help them take advantage of their crypto holdings to buy real estate.

The crypto market and its many supporters have been pushing regulators in this direction for several years, raising concerns among consumer advocates that this lightly regulated and highly volatile investment asset is being tied to something as vital to the economy as the housing market.

Homebuyers Eye Crypto for Down Payment

In a recent survey, roughly 14% of homebuyers said they planned to sell crypto assets to help get the cash to cover a down payment on a home, up from 5% in 2019, according to Redfin, the residential real estate brokerage company.

Several startups are already pitching crypto as a way to cut through the market’s current morass and jump-start home sales. One firm, Milo, offers investors a way to use bitcoin as collateral for getting a home mortgage.

The interest tends to be a few percentage points higher than a normal mortgage, but the customer gets the benefit of not having to sell any crypto or pay capital gains. When the mortgage is paid off, Milo returns the bitcoin to the investor.

Other firms are helping homeowners’ tap their home’s equity to buy crypto. The strategy is similar to so-called home equity investment contracts, which provide lump-sum cash payments to a homeowner in return for the right to share in the appreciation in a home’s value.

This article originally appeared in The New York Times.

By Matthew Goldstein

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