Senate Democrats Probe FHFA Crypto Mortgage Proposal Risks

Five Senate Democrats, led by Jeff Merkley, are probing Federal Housing Finance Agency (FHFA) Director William Pulte's plan to allow Fannie Mae and Freddie Mac to consider unconverted cryptocurrency assets in mortgage underwriting. The senators have expressed concerns about the risks this poses to the housing market and financial stability, citing cryptocurrency's high volatility, liquidity issues, and vulnerability to scams and hacks. They emphasize that current regulations require crypto to be converted to U.S. dollars before being counted as an asset in mortgage assessments. The lawmakers warn that including unconverted crypto assets could increase the risk of mortgage defaults and destabilize the market, recalling lessons from the 2008 financial crisis. Proponents argue that crypto-backed mortgages could expand credit access, but critics highlight ethical, governance, and safety concerns, including potential conflicts of interest by FHFA leadership. The senators have requested detailed information from FHFA by early August to better understand the implications of the proposal.