In a significant move toward mainstream acceptance of digital assets, Newrez has announced plans to incorporate cryptocurrencies as qualifying assets in its mortgage underwriting process. This policy change aims to enhance access to homeownership for crypto holders, particularly among younger generations increasingly invested in digital assets.
Key Policy Details
- •Newrez will recognize Bitcoin, Ethereum, spot ETFs backed by these assets, and US dollar-backed stablecoins in mortgage applications.
- •Eligible crypto holdings must be stored with US-regulated exchanges, fintech platforms, brokerages, or banks.
- •The valuation of crypto assets may be adjusted for market volatility, but mortgage payments and closing costs will continue to be in US dollars.
- •The policy change is part of broader discussions on integrating digital assets into mortgage risk assessments, influenced by regulatory considerations.
Implications for Cryptocurrency and Mortgage Markets
Beginning February, Newrez will incorporate cryptocurrencies into its mortgage evaluation process for non-agency products, which include home purchases, refinancings, and investment properties. Previously, borrowers could include assets like stocks and bonds in their applications, but crypto holdings often required liquidation before qualifying. This shift allows crypto owners to retain their assets while leveraging them for home financing.
The assets to be recognized include Bitcoin and Ethereum, along with spot ETFs backed by these cryptocurrencies and stablecoins backed by the US dollar. To qualify, holdings must be stored with US-regulated exchanges, fintech platforms, brokerages, or banks, ensuring regulatory compliance and investor protection. Additionally, the valuation of crypto assets may be adjusted to account for market volatility, but borrowers will still need to cover closing costs and ongoing payments in US dollars.
Leslie Gillin, Newrez’s chief commercial officer, stated that approximately 45% of Generation Z and Millennial investors own cryptocurrencies, adding that the policy broadens homeownership access among younger, crypto-involved buyers. This move coincides with ongoing regulatory discussions at federal agencies in the US, including the Federal Housing Finance Agency, which has tasked entities like Fannie Mae and Freddie Mac to explore how cryptocurrencies can be incorporated into mortgage risk assessments without conversion to USD. Meanwhile, legislative efforts such as the 21st Century Mortgage Act aim to formalize these emerging considerations, although progress remains pending.
Despite regulatory uncertainties, a nascent market already exists for crypto-backed real estate financing, with some investors using Bitcoin or Ethereum as collateral to fund property acquisitions without liquidating their holdings.