July 28, 2025
5 min read
Jesse Coghlan
Senate Democrats question FHFA director William Pulte on risks and conflicts in considering crypto assets for mortgage approvals.
Democrats Probe Housing Regulator Over Considering Crypto in Mortgages
Five US Senate Democrats have questioned Federal Housing Finance Agency (FHFA) director William Pulte regarding his directive for Fannie Mae and Freddie Mac to explore how cryptocurrency holdings could be factored into mortgage underwriting. Led by Senator Jeff Merkley, the group sent a letter to Pulte requesting detailed explanations about the plan, urging a thorough assessment of its risks and benefits for the U.S. housing market and financial system. Senators Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders co-signed the letter, which demands a response by August 7. Last month, Pulte ordered Fannie Mae and Freddie Mac—government-backed mortgage purchasers—to prepare proposals on how to consider crypto assets in risk assessments for single-family mortgage loans without requiring conversion of crypto into US dollars. The FHFA has supervised Fannie Mae and Freddie Mac since 2008, following the financial crisis triggered by the collapse of the subprime mortgage market.Concerns Over Crypto Risks for Homebuyers
The senators expressed concerns that Pulte’s plan "could introduce unnecessary risks to consumers and pose serious safety and soundness concerns for the U.S. housing and financial markets." Currently, federally-backed mortgage issuers do not allow lenders to consider cryptocurrency holdings in mortgage decisions unless those assets are first converted to US dollars. The letter highlights cryptocurrency’s historical volatility and liquidity challenges, warning that borrowers relying on crypto might struggle to liquidate assets at favorable prices to avoid mortgage default. It also notes heightened risks of loss from scams, cyber hacks, or theft, which could leave homeowners vulnerable with little chance of recovery.Allegations of Conflict of Interest
The senators raised concerns about potential conflicts of interest, pointing to Pulte’s spouse reportedly holding up to $2 million in cryptocurrency. They also referenced ties between FHFA leadership and the crypto industry, including former President Donald Trump and his family, who have various crypto-related business interests. They criticized Pulte’s dual role as FHFA director and chair of the boards of Fannie Mae and Freddie Mac, arguing this concentration of power could unduly influence the mortgage agencies’ proposals. The senators also accused Pulte of stacking the boards with industry allies.Calls for Greater Transparency
The letter criticized the order for lacking clarity on how Fannie Mae and Freddie Mac would develop their proposals, how risks and benefits would be assessed, and how public feedback would be incorporated. The senators emphasized the importance of transparency, especially given FHFA’s prior shortcomings in overseeing crypto-related activities, citing the 2023 banking crisis where three banks collapsed partly due to cryptocurrency-related risks. They also referenced a 2021 Fannie Mae report that found the use of crypto and stablecoins for deposits, payments, or collateral to be the "least appealing application" of blockchain technology in the mortgage industry. The senators requested detailed responses from Pulte, including communications about crypto, the approval process for the order, and measures to address conflicts of interest.Source: Democrats probe housing regulator over considering crypto in mortgages on July 28, 2025.