The American mortgage agency Fannie Mae is set to accept digital assets as collateral. This new product is being launched in collaboration with the lending company Better Home & Finance and the exchange Coinbase.
Property buyers will be able to use Bitcoin and the stablecoin USDC for their down payments without needing to sell their assets. This approach allows borrowers to avoid capital gains taxes and penalties for early withdrawal from investment accounts. The mortgage itself adheres to traditional Fannie Mae standards.
The key distinction of this new crypto product is the complete absence of margin calls. Should the price of Bitcoin fall, borrowers will not be required to provide additional collateral, and the loan terms will remain unchanged. Market volatility will not trigger liquidation. The company will only seize the collateral if the client is more than 60 days late on their mortgage payment.
Special conditions apply to contributions in USDC. The locked assets will generate passive income, which borrowers can use to repay the loan, effectively reducing the real interest rate.
The new product primarily targets young investors, including millennials and zoomers. Statistics indicate that around 52 million Americans own digital assets. Many of them find it challenging to save for a traditional cash down payment due to high housing prices, yet they possess capital in cryptocurrency.
In the future, the companies plan to expand the range of collateral assets. Clients will be able to secure loans with tokenized stocks, bonds, and shares in other real estate.
Back in February, ETHZilla acquired a portfolio of 95 modular home loans for $4.7 million.