Crypto industry moves into the US housing market

By Matthew Goldstein

The nation’s largest mortgage finance firms will begin accepting crypto as an asset on a mortgage application, another significant step by the Trump administration to bring digital currencies into mainstream finance.

This week, President Donald Trump’s housing director, William Pulte, said he would direct Fannie Mae and Freddie Mac — the nation’s big mortgage finance firms — to consider homebuyers’ crypto investments as part of their overall wealth in assessing whether they can afford a mortgage. Traditionally, a homebuyer’s cash savings and stock investments are what mortgage lenders consider.

Fannie and Freddie, which are a critical cog in the housing market, buy mortgages from banks and establish a set of criteria for which borrowers’ mortgages they will accept.

The announcement by Pulte, director of the Federal Housing Finance Agency, on Wednesday comes as an increasing number of Americans have been using digital currencies to buy houses and new companies have formed to help them take advantage of their crypto holdings to buy real estate.

The crypto market and its many supporters have been pushing regulators in this direction for several years, raising concerns among consumer advocates that this lightly regulated and highly volatile investment asset is being tied to something as vital to the economy as the housing market.

And Trump has gone from a crypto critic to a big booster.

“In a world where regulatory enforcement has been largely taken off the table, the boundaries are getting pushed very quickly,” said Tyler Gellasch, a former lawyer at the Securities and Exchange Commission, who runs the Healthy Markets Association, a financial industry trade group.

But from homebuyers and crypto enthusiasts, there is growing demand. In a recent survey, roughly 14% of homebuyers said they planned to sell crypto assets to help get the cash to cover a down payment on a home, up from 5% in 2019, according to Redfin, the residential real estate brokerage company.

Crypto is gaining traction in the housing market as home sales have stagnated, leaving many unable to sell or buy a home or tap into their home’s equity through loans.

Several startups are already pitching crypto as a way to cut through the market’s current morass and jump-start home sales.

One firm, Milo, founded by Josip Rupena, a former financial adviser at Morgan Stanley, offers investors a way to use bitcoin as collateral for getting a home mortgage.

For a $1 million home, an investor posts $1 million worth of bitcoin, which Milo puts into a secure account. The firm provides $1 million in cash to buy the home.

Milo then writes an equivalent mortgage that the homebuyer is ultimately responsible to pay off. The interest tends to be a few percentage points higher than a normal mortgage, but the customer gets the benefit of not having to sell any crypto or pay capital gains. When the mortgage is paid off, Milo returns the bitcoin to the investor.

Rupena said he had already underwritten $65 million of such mortgages, and he welcomed the FHFA’s policy shift on crypto.

Unlike most bank mortgages — like the ones Fannie and Freddie buy — Rupena’s firm does not require a homeowner to make a down payment. His firm finances 100% of the transaction, which most banks will not do and that is not likely to change with the new FHFA rule on crypto.

“This is the first step in getting crypto parity with other assets,” Rupena said of the FHFA decision.

Other firms are helping homeowners’ tap their home’s equity to buy crypto. The strategy is similar to so-called home equity investment contracts, which provide lump-sum cash payments to a homeowner in return for the right to share in the appreciation in a home’s value.

But instead of the homeowner using cash from the deal to pay for home improvements or a child’s college tuition, they are using it to buy only one thing: bitcoin.

“Turn your home into a bitcoin acquisition engine,’’ one of the startup firms called Horizon, said in a post on the social media platform X.

Here is how it typically works: Some of the firms loan the homeowner cash to buy bitcoin based on the value of the equity in their homes. The firms typically make money by sharing in the appreciation in the value of a house when an owner sells it.

The deals are attractive because the homeowner does not need to make monthly payments during the life of the agreement, as they would with a traditional home equity loan.

As protection, some of the firms also place a lien on a house during the length of the contract — some of which can last for a decade.

Horizon debuted its offering at the bitcoin conference last month in Las Vegas, where two of Trump’s sons were headline speakers.

Consumer advocates see reason for concern.

“My general impression is that taking any lien on your house to buy crypto is a terrible idea,” said Andrew Pizor, a senior attorney at the National Consumer Law Center, who specializes in mortgage financing. “This is the roof over your head, and you have to be cautious.”

All of these programs are in their infancy, so it’s too soon to say how much traction they will ultimately get.

Representatives for the companies said concerns about consumers being taking advantage of were overstated. Most prospective customers are wealthy investors. The firms also said they intended to be compliant with existing federal and state laws.