US Senators Sound Alarm Over Crypto-Backed Mortage Plan

A crypto mortgage policy initiative is facing growing resistance, as lawmakers warn of potential shocks to the housing finance system.

Senators raise red flags

Five U.S. Senators, Jeffrey Merkley, Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders, have issued a formal letter to Federal Housing Finance Agency (FHFA) Director William Pulte, voicing concerns about a new policy that allows unconverted crypto holdings to be considered in mortgage underwriting.

The July 24 letter demands full documentation and transparency regarding a June 25 directive that instructed Fannie Mae and Freddie Mac to begin evaluating verified crypto assets held on U.S.-regulated exchanges as eligible reserves in single-family home mortgage applications.

Risk to housing market stability

Lawmakers argue that this directive could reintroduce vulnerabilities reminiscent of the 2023 regional bank crises, where crypto exposure contributed to systemic instability. They’re requesting the FHFA release:

• A full risk assessment behind the policy
• The approval timeline and governance process
• Criteria used to determine which cryptocurrencies are eligible
• Any internal or external meetings on the matter, including participants
• Ethics safeguards to prevent conflicts of interest

In particular, the Senators flagged Pulte’s dual role as both FHFA Director and Chair of the Enterprises’ Boards, suggesting this structure compromises internal oversight. They also pointed out that Pulte’s spouse allegedly holds up to $2 million in crypto assets, and asked whether he has sought ethics guidance or taken steps to divest.

Limited scope, high stakes

While the FHFA emphasized that the directive only applies to centralized exchanges regulated in the U.S., lawmakers remain skeptical. The policy could set a precedent that blends volatile digital assets into America’s $12 trillion housing market.

Crypto advocates argue that the move could modernize underwriting practices and expand homeownership opportunities for crypto-native individuals. They note that crypto is increasingly a core part of young investors’ balance sheets and deserves recognition in financial products like mortgages.

Still, the Senators insist that any crypto-related policy must undergo “rigorous, independent scrutiny” before being implemented, especially when it intersects with one of the most sensitive sectors of the economy.