U.S. analysis on cryptocurrency influence in mortgage lending by FHFA
The U.S. Federal Housing Finance Agency (FHFA) is delving into the impact of cryptocurrency ownership on mortgage eligibility, as the digital currency Bitcoin continues to push into the traditional financial market.
The FHFA, which oversees the U.S. housing market, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, is examining the use of cryptocurrency ownership in connection with the granting of mortgages. This investigation comes as Bitcoin is increasingly being accepted in the financial sector, with large banks like JPMorgan accepting ETF shares as collateral for loans or including customers' crypto wealth in the creditworthiness calculation.
One notable figure in this evolving landscape is Andrew Hohns, the founder and CEO of asset manager Newmarket Capital. Hohns has used part of a loan amount to invest in Bitcoin. Similarly, Bill Pulte, the director of the FHFA, announced in 2019 that he had bought 11 BTC. According to his latest financial disclosure from February, Pulte holds between 500,001 and 1,000,000 US dollars in Bitcoin. Pulte is also the founder of the investment firm Pulte Capital Partners.
Michael Saylor, founder of the "Bitcoin Treasury Company" Strategy, offered a Bitcoin lending model to the FHFA. The FHFA head, Bill Pulte, acknowledged receiving the offer and promised to review it. Meanwhile, Pulte's grandfather, William Pulte, the founder of the third-largest home building company in the U.S., would likely be intrigued by the growing role of Bitcoin in the housing market.
The value of held Bitcoin or other cryptocurrencies may affect the creditworthiness of borrowers. This is a significant factor as the U.S. housing market is worth hundreds of trillions of dollars. The FHFA's investigation aims to shed light on this issue and eliminate regulatory uncertainty around cryptocurrencies.
In a related development, the Federal Reserve has withdrawn its anti-crypto guidelines for banks, indicating a more welcoming stance towards cryptocurrencies in the financial sector. MicroStrategy, the largest corporate holder of Bitcoin, is currently issuing preferred shares secured by the 592,345 BTC on its balance sheet and paying an annual dividend.
Hohns, along with Matthew Pines, the managing director of BPI, presented the concept of BitBonds, further highlighting the potential of Bitcoin in the traditional financial market. As the FHFA's investigation continues, it remains to be seen how the U.S. housing market will integrate cryptocurrencies in the future.
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