Lawmakers Raise Red Flags Over FHFA’s Crypto Mortgage Directive

A group of U.S. Senators is calling into question a controversial move by the Federal Housing Finance Agency (FHFA) that could open the door to cryptocurrency being considered in mortgage underwriting. In a letter addressed to FHFA Director William Pulte, Senators Jeff Merkley, Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders expressed alarm over the potential risks such a policy could pose to the housing market and financial system.

Pulte, who recently directed government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to explore ways to incorporate unconverted cryptocurrency assets into their mortgage underwriting processes, is facing bipartisan scrutiny. Currently, federally-backed mortgage programs only recognize crypto holdings if they’ve been converted into U.S. dollars and are held in regulated financial institutions.

The senators argue that allowing unconverted digital assets to be counted as qualifying assets introduces significant volatility and security risks.

“Expanding underwriting criteria to include unconverted cryptocurrency could destabilize the housing market and increase systemic financial risk,” the senators warned in their letter.

A Crypto Push from the Top

Pulte’s directive is part of a broader push aligned with President Trump’s declared goal of making the U.S. a global leader in cryptocurrency adoption. Public disclosures show that Pulte himself owns up to $1 million in bitcoin, raising further questions about potential conflicts of interest.

The senators voiced concern about Pulte’s dual role as FHFA Director and Chair of the Boards of both Fannie Mae and Freddie Mac. They pointed out that Pulte appointed FHFA-aligned personnel to key positions on the boards and now has authority to both issue the directive and approve the Enterprises’ responses to it.

“This creates a troubling feedback loop,” the letter stated. “You are in a position to issue orders, approve proposals, and shape outcomes without independent oversight.”

Strict Parameters, But Concerns Persist

Under Pulte’s guidance, any crypto assets considered in mortgage underwriting must be held in U.S.-regulated exchanges and accompanied by verifiable documentation. The policy also requires GSEs to account for crypto market volatility in their risk assessments.

Still, lawmakers warned that digital currencies are subject to sudden value drops, scams, and cyberattacks making them an unstable foundation for determining a borrower’s ability to repay a mortgage.

“Crypto’s volatility and vulnerability to fraud could leave borrowers exposed to financial hardship and increase their risk of default,” the senators wrote.

A Risky Precedent?

The FHFA has asked Fannie Mae and Freddie Mac to submit detailed proposals for how they would implement the new directive. These will first need approval from their boards and then from the FHFA itself, raising further questions about objectivity and oversight.

With cryptocurrency still in a regulatory gray area and mortgage default rates a key concern in a cooling housing market, critics say now may be the wrong time to integrate such high-risk assets into mortgage lending standards.

The senators’ letter signals potential future legislative or legal challenges to the FHFA’s move and underscores broader concerns about the growing influence of cryptocurrency on federal housing policy.

For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.