Fannie Mae to Back Crypto-Backed Mortgages Through Better and Coinbase
Fannie Mae will now accept crypto-backed mortgages through a new product from Better Home and Finance and Coinbase.
It is not the first crypto-backed mortgage, but it is the first accepted by Fannie Mae, which is under government conservatorship. The product lets buyers use crypto as collateral, and Fannie Mae will purchase the loans like any other conforming mortgage.
Better CEO Vishal Garg said that the platform allows assets to be pledged to help buy a home, starting with bitcoin and USD Coin and potentially expanding to stocks, mutual funds, bond funds, or IRA holdings.
The product is aimed at Americans who have enough crypto for a down payment but do not want to sell, avoiding taxes and loss of future gains. It lets them keep their crypto while securing financing.
Borrowers must have a Coinbase account and take out a standard mortgage with Better plus a second loan backed by bitcoin or USD Coin, which funds the down payment. Both loans are held by Better, and pledged crypto cannot be traded. If its value falls, loan terms do not change as long as payments are made.
For example, on a $500,000 home, a borrower can pledge $250,000 in bitcoin and receive a $100,000 loan for the down payment. The crypto is held in Better’s Coinbase Prime account for the life of the loan and returned once it is repaid.
