Simply put
- Newrez will start recognizing Bitcoin and Ethereum as mortgage loans.
- This applies when digital assets are managed centrally.
- The company also plans to adjust the value of cryptocurrencies due to their volatility.
It seems young Americans are facing more challenges in buying homes these days, but Newrez, a national wholesale mortgage lender, thinks Bitcoin and Ethereum could help change that.
As of last year, Newrez managed a portfolio worth $778.3 billion, consisting of 3.7 million loans, and has recently announced that it will begin assessing both cryptocurrencies for mortgage eligibility. Last week, it became the first major mortgage provider in the U.S. to take this step.
What this means is that Newrez will consider Bitcoin and Ethereum as reserves that potential homeowners could use to meet their mortgage payments. Normally, applications for mortgages ask borrowers to declare liquid assets like cash, as well as other current assets such as stocks.
In an interview, Baron Silverstein, president of Newrez, stated that the aim of this initiative is to capture the interest of Generation Z, mentioning that “future homebuyers are increasingly including crypto assets as part of their investments compared to previous generations.”
“We want to support first-time homebuyers,” he added.
However, when looking at a borrower’s digital assets, Newrez intends to implement a “haircut,” effectively valuing Bitcoin and Ethereum at a rate lower than their current market value. Silverstein didn’t specify the percentage but mentioned that it would reflect the asset’s volatility.
Newrez’s move into the realm of digital assets has garnered attention, as Federal Housing Finance Agency Commissioner Bill Pulte noted that regulators will begin assessing how cryptocurrency holdings might influence U.S. mortgage eligibility this June.
Pulte remarked, “It begins.”
Some lawmakers, including Sen. Elizabeth Warren (D-Mass.), have expressed concerns that this measure could introduce unnecessary risks to consumers and might endanger the stability of the housing and financial markets.
As Silverstein explained, “As we evaluated the program, we pressure tested a lot of things. What we launched is much closer to what we consider today to be a bread-and-butter business.”
It’s worth noting that Newrez currently doesn’t permit borrowers to use digital assets for mortgage payments; that’s something they might consider later. This same rule applies to Bitcoin and Ethereum stored in self-custody wallets, which won’t be included in the program.
For digital assets to qualify, they need to be held at a U.S.-regulated cryptocurrency exchange, fintech app, brokerage firm, or nationally chartered bank. This means assets in personal wallets, like MetaMask or on a flash drive, won’t hold any value in this context.
Starting in February, Newrez plans to introduce “non-agency products,” which will differ from those backed by government entities like Fannie Mae and Freddie Mac. The program will also accept cash-backed stablecoins.
“We will keep evaluating the expansion of our guidelines, the addition of crypto assets, and possibly the expansion of these custodians,” Silverstein mentioned. “This is a great starting point for us, and we’ll continue to learn from it.”
