Five Senate Democrats, led by Jeff Merkley, have challenged the U.S. Federal Housing Finance Agency (FHFA) Director William Pulte over his recent order to Fannie Mae and Freddie Mac to come up with proposals for considering crypto in mortgage applications. Senators Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders co-signed the letter. The senators expressed concerns that William’s proposal could introduce unnecessary risks to consumers and threaten the stability of the U.S. housing and financial markets.
The senators sent a letter to William Pulte requesting detailed explanations of FHFA’s risk assessment process and the potential implications for housing market stability. They highlighted the volatility of cryptocurrency prices, default risks, potential for scams, and limited traceability as factors that could increase mortgage default rates and systemic risks.
In the letter, the senators stated, “Under current policy, neither the Enterprises nor any other channel for federally backed, insured, or guaranteed mortgages permits mortgage lenders to consider cryptocurrency when determining whether they can afford a mortgage, unless that cryptocurrency has been converted to U.S. dollars and is accompanied by appropriate documentation…. Expanding underwriting criteria to include the consideration of unconverted cryptocurrency assets could pose risks to the stability of the housing market and the financial system.”
The senators also questioned the conflict of interests between the Trump Administration, the cryptocurrency industry, and the Enterprises’ Boards in the letter.
Meanwhile, several Republicans and crypto industry experts have supported this proposal, whereas the Democrats want more clarity and say that a lack of a comprehensive risk analysis could lead to another 2008 financial crisis.
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