Senate Dems Raise Concerns Over FHFA Directive On Crypto In Mortgage Underwriting

Five Senate Democrats have raised concerns over the Federal Housing Finance Agency (FHFA) Director William J. Pulte’s recent directive that instructs Fannie Mae and Freddie Mac to explore the use of cryptocurrency assets in mortgage underwriting. In a letter sent last week, Senators Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Mazie Hirono (D-HI), and Bernie Sanders (I-VT) urged FHFA to justify the directive, warning that expanding underwriting criteria to include unconverted cryptocurrency assets could pose significant risks to the stability of the housing market and the broader financial system. Key concerns highlighted by the senators include:

• The FHFA directive conflicts with existing federal mortgage standards, which only allow crypto assets once converted to U.S. dollars with proper documentation.
• Borrowers holding crypto reserves may face liquidity challenges, unable to convert assets to cash at necessary times or prices, increasing default risk.
• Cryptocurrency assets are vulnerable to fraud, theft, and hacking, with limited consumer protections.
The senators also pointed to potential ethical conflicts, noting FHFA Director Pulte’s dual role as both FHFA Director and Chairman of the boards of Fannie Mae and Freddie Mac. The letter mentions reports that Pulte’s spouse holds up to $2 million in crypto assets. Further, the letter criticizes the FHFA for a “lack of transparency” regarding the directive’s development, including absence of risk analysis, stakeholder input, or a clear timeline. The senators recommend that the government-sponsored enterprises (GSEs) consult with independent regulators or experts without crypto-related financial conflicts. Referencing the failures of crypto-exposed banks in 2023, the senators expressed concern that the directive echoes prior regulatory lapses. They requested responses by August 7, 2025, including whether FHFA has conducted formal risk assessments or consulted third-party market participants such as mortgage insurers or mortgage-backed securities (MBS) investors. “Any change to Enterprise policies can have market-shifting effects,” the letter concluded, emphasizing the need for oversight and public clarity. FHFA Director Pulte, who issued the directive in late June, stated that the matter had undergone "significant" study. He framed the directive as aligned with a vision to make the U.S. a global crypto capital and expressed a desire for cryptocurrency owners to have equal access to homeownership. “I want people who own cryptocurrency to be able to buy homes like everyone else. I believe cryptocurrency is an asset,” Pulte said in a follow-up post on X (formerly Twitter). “I believe Americans should be able to use their crypto if they want to — it's time the housing system caught up.”

National Mortgage Professional

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FAQs

What is the FHFA directive about using cryptocurrency in mortgage underwriting?

The directive from FHFA instructs Fannie Mae and Freddie Mac to consider including unconverted cryptocurrency assets in mortgage underwriting processes.

Why are Senate Democrats concerned about this directive?

Democrats are worried that incorporating cryptocurrency in underwriting could pose risks to housing market stability and the broader financial system due to issues like liquidity challenges and vulnerability to fraud or theft.

How does this directive conflict with existing mortgage standards?

Current federal mortgage standards require conversions of crypto assets to U.S. dollars with proper documentation before they can be used in underwriting.

What ethical conflicts are highlighted in the directive?

Ethical concerns include the dual roles of FHFA Director Pulte and reports of his spouse holding significant crypto assets.

What was the response of the FHFA Director to these concerns?

Director Pulte stated that the directive aligns with making the U.S. a global crypto capital, ensuring cryptocurrency holders have the same access to homeownership as other asset holders.

Crypto Market's Take

The exploration of using cryptocurrency in mortgage underwriting resonates with our mission at AI Crypto Market to revolutionize financial systems by integrating digital assets. Our platform offers advanced market analysis and AI-powered trading tools, aligning with the transformative vision of modern finance. As regulatory landscapes evolve, platforms like ours are committed to providing cutting-edge solutions while ensuring compliance with global standards. For more insights into market trends and regulatory news, visit our dedicated News Hub.

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