Important Highlights
- Legalists are questioning the plan to use crypto into a mortgage without converting borrowers to the borrowers.
- They are concerned about crypto’s instability, scams and ability to confront interest.
- FHFA has until August 7 to explain how this plan would work and who it really helps.
Crypto in Mortgages? Lawmakers Ask: What Could Go Wrong?
A group of Senate Democrats is pumping the brakes on a new government proposal that could let people use crypto in mortgages.
That’s right digital assets like Bitcoin or Ethereum might soon be considered when applying for a home loan.
But not everyone’s sold on the idea.
Led by Senator Jeff Merkley, five lawmakers including Elizabeth Warren, Bernie Sanders, Chris Van Hollen, and Mazie Hirono sent a letter to the Federal Housing Finance Agency (FHFA), asking for some serious clarification.
They want to know exactly how and why this is happening and what it could mean for regular Americans trying to buy a home.
They’ve given FHFA Director William Pulte until August 7 to answer their questions.
Crypto in Mortgages? It’s Not That Simple
So here’s the deal. Right now, if you want to use crypto to qualify for a mortgage backed by Fannie Mae or Freddie Mac, you’d have to convert it into U.S. dollars first.
That helps lenders understand what your assets are actually worth.
But FHFA Director Pulte recently told Fannie and Freddie to come up with a new plan one where crypto could count as-is, without being cashed out.
On the surface, that sounds like a modern move, especially with so many younger buyers holding crypto.
But senators aren’t convinced. They say this change could be risky for borrowers and the entire housing market.
Why? Because crypto is famously volatile.
If someone uses crypto to qualify for a loan, and the market crashes, they might suddenly not have enough assets to cover their mortgage.
That’s not just a problem for them it’s a potential ripple effect for the whole financial system.
On top of that, crypto can be hard to sell quickly. If someone needs cash fast say, after losing a job they might not be able to convert their crypto in time.
And let’s not forget the fraud and hacking issues that still plague the crypto world.
If someone’s assets are stolen, there’s often no way to recover them.
Who’s Benefiting from Crypto in Mortgages?
The senators also raised ethical concerns.
Public disclosures indicate that Pulte’s wife owns up to $2 million in cryptocurrency.
That alone raises eyebrows. But there’s more: Pulte also chairs the boards of both Fannie Mae and Freddie Mac the same agencies being asked to draft this new crypto policy.
Lawmakers argue this could create a serious conflict of interest.
They also pointed to connections between the Trump family and the crypto industry, saying there needs to be clear rules to make sure no one with inside ties is shaping policies that could benefit them or their businesses.
In short, they’re asking: Who really gains if crypto gets a green light in mortgages?
Where’s the Transparency?
If this all sounds rushed to you, you’re not alone. Lawmakers say the FHFA’s order came with zero details about how the plan would work, how risks would be managed, or how public feedback would be gathered.
They brought up the 2023 banking crisis, when several banks failed partly due to their exposure to crypto-related firms. That, they say, should be a cautionary tale.
Even Fannie Mae itself said back in 2021 that using crypto for home financing was one of the least promising applications of blockchain in the industry.
So why the sudden shift now? That’s exactly what the senators want to find out.