Fannie Mae Approves Bitcoin-Backed Mortgages for First Time

Fannie Mae, one of the largest mortgage financing companies in the US, has taken a significant step forward in embracing digital assets by announcing its acceptance of Bitcoin-backed mortgages. The new structure, developed in partnership with Coinbase and Better Home & Finance, allows borrowers to pledge their cryptocurrency as collateral for a separate loan covering the down payment on a Fannie Mae-backed mortgage.

The structure is designed to let buyers retain exposure to their digital assets rather than selling them to raise cash. This means that borrowers can continue to hold onto their Bitcoin or USDC without having to liquidate them, while still securing a mortgage. The primary mortgage in the arrangement is a standard conforming loan backed by Fannie Mae, while the overcollateralized loan secured by the pledged crypto funds the down payment.

Coinbase will hold the pledged assets in custody through Coinbase Prime for the life of the loan, and borrowers cannot trade their collateral while it is locked in the arrangement. Mortgage terms are fixed once the loan is active and are not affected by movements in crypto prices. This marks a significant shift in Fannie Mae's underwriting standards and sets a new precedent for the broader mortgage market.