Senate Democrats are issuing a strong warning against efforts by the Federal Housing Finance Agency (FHFA) to enable mortgage underwriters to consider Bitcoin holdings during loan approvals.
They expressed deep concerns that allowing mortgage lenders to base decisions on crypto assets like Bitcoin, without requiring conversion to U.S. dollars first, poses significant risks. This approach could increase borrower defaults due to cryptocurrency’s well-documented volatility and liquidity issues, potentially destabilizing the housing market and leaving homeowners financially vulnerable if asset values plummet.
Simultaneously, the lawmakers have raised serious conflict of interest questions regarding FHFA Director William Pulte. They pointed to Pulte reporting personal cryptocurrency holdings valued up to $2 million and his direct role in developing and approving the proposal. The conflict is further amplified because the proposal requires final approval by Fannie Mae and Freddie Mac, whose boards are chaired by Pulte, directly implicating governance and impartiality.
In response, the senators have formally demanded that the FHFA provide detailed explanations of the risk assessments conducted regarding cryptocurrency use in mortgages, outline the exact process undertaken to develop the proposal, and disclose feedback received from involved stakeholders throughout the process. This pushback highlights the volatility and novelty of crypto as collateral and intensifies scrutiny over regulatory governance in emerging financial technologies.