Crypto News – US Senators Warn Against Risks of Crypto in Federal Mortgage Approvals
Crypto News – Five prominent US Senate Democrats, led by Senator Jeff Merkley, have formally questioned the head of the Federal Housing Finance Agency (FHFA), William Pulte, over his controversial plan to include cryptocurrency holdings in mortgage approval processes. The senators, including Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders, sent a letter demanding a detailed explanation of the potential risks and benefits of this move by August 7.
Last month, Pulte directed mortgage giants Fannie Mae and Freddie Mac to draft proposals on how to consider crypto assets in their risk assessments for single-family home loans—without converting the crypto into US dollars first.
Concerns Over Crypto Risks for Homebuyers
The senators voiced serious concerns that this plan could expose consumers to unnecessary financial risks and threaten the stability of the U.S. housing and financial markets. Currently, federally-backed mortgage issuers do not allow crypto to be counted unless converted to cash due to the high volatility and liquidity issues historically associated with cryptocurrencies.
The letter highlights that crypto’s susceptibility to scams, cyber hacks, and theft could leave homeowners vulnerable to significant losses, increasing the risk of mortgage defaults if borrowers cannot liquidate their assets in time.
Conflict of Interest Worries and Transparency Demands
Another critical issue raised by the senators involves possible conflicts of interest. Pulte’s financial disclosures reveal his spouse holds up to $2 million in crypto assets, raising questions about his impartiality. Additionally, as chair of Fannie Mae and Freddie Mac boards—organizations he’s accused of stacking with industry allies—Pulte’s authority over the approval process is under scrutiny.
The senators also criticized the lack of clarity in Pulte’s order, demanding transparency on how risk assessments will be conducted, feedback gathered, and conflicts managed, especially in light of FHFA’s previous oversight failures in crypto-related banking crises.
