Fannie Mae will now Accept a New Type of Crypto backed Mortgage, Developed by Better Home & Finance, and Coinbase, marking the First Time such Loans can be Purchased by a Government-Backed Entity.
The Product allows Homebuyers to use Cryptocurrencies like Bitcoin and USD Coin, as Collateral instead of Selling Them for a Down Payment.
Borrowers take out a Traditional Mortgage along with a Second Loan backed by their Crypto, which is held in Custody and Cannot be Traded during the Loan Term.
As long as Monthly Payments are made, Fluctuations in Crypto Value do Not Affect the Loan Terms.
While this Approach can be more Expensive because Borrowers Pay Interest on Two Loans, it Allows them to Keep their Crypto Investments and Avoid Taxes from Selling.
Fannie Mae’s Backing Signals Growing Acceptance of Crypto in Housing Finance and could Lead to Broader use of Asset-Backed Mortgages in the Future.
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