The US Senate is reviewing legislation to require mortgage lenders to consider cryptocurrency holdings as assets in loan applications, potentially easing homeownership for young Americans with digital assets.
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Wyoming Senator Cynthia Lummis introduced the 21st Century Mortgage Act to codify crypto asset inclusion in mortgage assessments.
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Senate Democrats express concerns about crypto volatility impacting mortgage default risks.
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Similar bills in the House and international crypto mortgage initiatives highlight growing acceptance of digital assets in real estate finance.
US Senate debates crypto mortgage bill to include digital assets in loan evaluations, supporting young homeowners. Stay informed with COINOTAG.
What is the 21st Century Mortgage Act and its impact on crypto assets in mortgage lending?
The 21st Century Mortgage Act, introduced by Senator Cynthia Lummis, aims to require mortgage purchasers like Fannie Mae and Freddie Mac to consider cryptocurrency holdings as part of mortgage loan risk assessments. This legislation could modernize lending practices by recognizing digital assets as collateral, potentially increasing homeownership opportunities for younger Americans who hold crypto.
How do Senate Democrats view the inclusion of cryptocurrency in mortgage applications?
Several Senate Democrats have raised concerns about the volatility and liquidity risks associated with cryptocurrencies. They argue that fluctuating crypto prices may increase the risk of mortgage defaults if borrowers cannot quickly convert assets to cash. A letter to FHFA Director William Pulte urged a thorough evaluation of these risks before implementing the policy.
What are the broader legislative developments related to crypto and mortgages in the US?
Alongside the 21st Century Mortgage Act, the Senate is considering bills to establish a digital asset market structure and to prohibit the Federal Reserve from issuing a central bank digital currency. The House has introduced a similar proposal, the American Homeowner Crypto Modernization Act, which would require mortgage lenders to evaluate digital assets in brokerage accounts during credit assessments.
What international trends support the integration of crypto in mortgage lending?
Internationally, companies like Australia’s Block Earner are pioneering Bitcoin-backed mortgages, offering crypto holders new ways to leverage their assets without liquidating them. The Federal Court of Australia recently ruled that such crypto lending products do not fall under traditional financial product regulations, signaling evolving legal frameworks worldwide.
Frequently Asked Questions
How will the 21st Century Mortgage Act affect young Americans seeking home loans?
The Act could make it easier for younger borrowers to use their cryptocurrency holdings as collateral, increasing their chances of qualifying for mortgages without converting crypto to fiat currency.
Why are some lawmakers cautious about including crypto in mortgage assessments?
Lawmakers worry about crypto’s price volatility and liquidity, which might lead to increased mortgage default risks if borrowers cannot quickly access cash during market downturns.
Key Takeaways
- Legislative Innovation: The 21st Century Mortgage Act proposes integrating crypto assets into mortgage risk assessments.
- Market Concerns: Lawmakers debate the risks of crypto volatility affecting mortgage default rates.
- Global Trends: International initiatives like Bitcoin-backed mortgages reflect growing acceptance of crypto in housing finance.
Conclusion
The US Senate’s consideration of the 21st Century Mortgage Act marks a significant step toward recognizing cryptocurrency as a legitimate asset in mortgage lending. While concerns about volatility remain, this legislation could expand homeownership opportunities for younger Americans holding digital assets. COINOTAG will continue to monitor these developments as the crypto and housing markets evolve.
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The US Senate is actively debating legislation to integrate cryptocurrency holdings into mortgage loan risk assessments, aiming to modernize lending practices.
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Senator Cynthia Lummis’ 21st Century Mortgage Act follows a June order from the Federal Housing Finance Agency requiring mortgage purchasers to consider crypto assets.
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Democrats have voiced concerns about crypto volatility, while similar bills in the House and international crypto mortgage products highlight growing acceptance of digital assets.
US Senate advances crypto mortgage bill to support young homeowners by including digital assets in loan evaluations. Stay updated with COINOTAG.
The Senate is about to go on August recess; crypto bills are incoming
The Senate is preparing for a month-long recess, with several crypto-related bills pending consideration. The 21st Century Mortgage Act is among three key proposals, alongside legislation to establish a digital asset market framework and to restrict the Federal Reserve from issuing a central bank digital currency.
What similar legislation exists in the House of Representatives?
The House has introduced the American Homeowner Crypto Modernization Act, which mandates mortgage lenders to factor in digital assets held in brokerage accounts linked to cryptocurrency exchanges during credit evaluations. This bill aligns with Senate efforts to modernize mortgage lending.
Australia’s Block Earner recently announced plans to offer Bitcoin-backed mortgages, signaling international momentum in crypto-backed housing finance. The Federal Court of Australia ruled that such crypto lending products are not classified as financial products under existing regulations, easing their market entry.
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