Lawmakers Raise Alarms Over Potential Risks to Housing Market
A group of U.S. Senate Democrats is pressing Federal Housing Finance Agency (FHFA) director William Pulte for answers after he directed Fannie Mae and Freddie Mac to consider crypto assets in mortgage risk assessments. The lawmakers warn the plan could introduce unnecessary financial risks and conflicts of interest.
“Senators are concerned the move could threaten U.S. housing market stability by incorporating volatile, unregulated crypto assets into federally-backed loan evaluations.”
The letter, signed by Jeff Merkley, Elizabeth Warren, Bernie Sanders, and others, requests a detailed response from Pulte by August 7, including information on the proposal’s development, conflict safeguards, and risk assessment methodology.
Crypto Holdings Could Impact Mortgage Eligibility
Under current FHFA guidelines, crypto holdings must be converted to U.S. dollars before being considered in mortgage applications. Pulte’s directive, however, seeks to explore whether crypto can be evaluated directly—a move that diverges from decades of risk-averse housing finance practices.
Lawmakers argue this shift exposes borrowers to new vulnerabilities. They cited concerns about crypto volatility, liquidity constraints, and the risk of default if assets crash before loan payments are due.
“Crypto cannot be relied on as stable collateral,” the senators stated, referencing prior collapses linked to digital assets.
Conflict of Interest Concerns Surface
The senators also flagged potential conflicts of interest within the FHFA and its oversight. Notably, financial disclosures show that Pulte’s spouse holds up to $2 million in crypto, raising ethical concerns about the order’s origin.
“Pulte serves as board chair for both Fannie Mae and Freddie Mac, giving him direct influence over the institutions expected to carry out the crypto integration,” the letter added.
They also pointed to the Trump family’s crypto ties, warning about undue influence from individuals connected to the industry.
Calls for Transparency in Crypto Mortgage Policy
Lawmakers say the FHFA must provide a clear roadmap, including public feedback mechanisms, conflict mitigation steps, and a detailed risk-benefit analysis.
“We need transparency before altering decades of mortgage lending standards,” the letter concluded.
The debate underscores the ongoing tension between innovation and regulation in the intersection of crypto and traditional finance.
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