Five U.S. Senate Democrats have approached the head of the Federal Housing Finance Agency (FHFA) regarding his proposal to consider cryptocurrency in mortgage approval processes.
Senators' Inquiry to FHFA
Senators, led by Jeff Merkley, sent a letter to FHFA Director William Pulte requesting an explanation of his order to examine the potential inclusion of cryptocurrency in mortgage assessments. Pulte recently directed Fannie Mae and Freddie Mac to develop proposals on how to incorporate crypto assets in their risk evaluations.
Concerns Over Cryptocurrency Risks
The senators expressed concern that Pulte's plan could introduce unnecessary risks to consumers and pose severe safety issues for both housing and financial markets. Current policy prevents the consideration of cryptocurrency in mortgage lending unless converted to U.S. dollars, highlighting the volatility and liquidity issues associated with cryptocurrencies.
Call for Clarity on FHFA Order
The senators also emphasized that the FHFA order was vague, lacking details on how Fannie Mae and Freddie Mac would create their recommendations and how the FHFA plans to assess risks and benefits. They noted that Fannie Mae had already classified the use of cryptocurrencies in banking as unappealing back in 2021.
With the growing interest in cryptocurrencies and their potential impact on the financial sector, the FHFA directive raises significant concerns among senators who seek more transparency and clarity regarding the future incorporation of crypto assets in U.S. mortgage lending.
