mortgages

According to Bloomberg, the New Hampshire Department of Business and Economic Affairs plans to issue municipal bonds backed by Bitcoin, with a total scale of approximately $100 million. This product has received a Ba2 rating from Moody's Investors Service (two notches below investment grade).The principal and interest of the bonds will be repaid using funds generated from the Bitcoin collateral, providing additional returns when Bitcoin prices rise, and there are price-triggered liquidation clauses to ensure repayment; the related debt is not supported by state government credit or taxes.

Economist Peter Schiff posted on the X platform that mortgage structures backed by crypto assets could significantly increase home buying costs.Borrowers not only have to pay traditional mortgage interest but also bear the interest on the "second loan" secured by crypto assets. This model essentially amounts to 100% financing for the property, thereby amplifying leverage levels and potentially increasing overall default risk.

Coinbase and mortgage platform Better Home & Finance announced a partnership to launch a home loan product secured by Bitcoin or USDC, guaranteed by Fannie Mae. Borrowers do not need to sell their crypto assets; they can use them as collateral to apply for an independent loan to pay the down payment while also being approved for a standard mortgage, ultimately holding two loans with the same interest rate and repayment period, with monthly payments combined.The product complies with Fannie Mae guidelines, with interest rates significantly lower than traditional crypto-backed loans. If the price of Bitcoin drops, the collateral will not face forced liquidation due to market fluctuations, only facing liquidation risk after 60 days of overdue payments. Borrowers using USDC as collateral can offset part of the loan interest with the earnings generated from the collateral.Coinbase One members can complete transactions through Better and receive a rebate on transaction fees equivalent to 1% of the mortgage amount, capped at $10,000. The two companies stated that they plan to expand the range of eligible collateral to include tokenized stocks and fixed-income assets in the future.

Fannie Mae will accept cryptocurrency mortgages for the first time.

ChainCatcher news, according to ledgerinsights, after the Director of the Federal Housing Finance Agency (FHFA) William J. Pulte ordered in June to allow Fannie Mae and Freddie Mac to consider cryptocurrency as collateral for mortgages, Republican Senator Lummis recently proposed the "21st Century Mortgage Act" to legislate this policy. The bill stipulates that compliant custodial digital assets held by borrowers can be directly counted as reserves without the need to convert to USD, but must undergo volatility valuation adjustments.Democratic senators collectively sent a letter opposing this, pointing out that the high volatility and security risks of crypto assets could threaten the stability of the real estate market. The focus of the dispute between the two sides centers on whether to include crypto assets as collateral and how to scientifically set the valuation discount rate to hedge against volatility risks.

ChainCatcher news, according to market news, Ark Invest CEO Cathie Wood stated, "Bitcoin holders are likely to have invested a large portion of their net worth into cryptocurrencies, making them ineligible for mortgage loans. I wouldn't be surprised if they transfer some Bitcoin to Coinbase as collateral for a once-unreachable new home."Previously, crypto journalist Eleanor Terrett revealed that Fannie Mae and Freddie Mac have been instructed to explore counting cryptocurrencies as reserves in mortgage applications, which means that cryptocurrencies will not need to be converted into dollars but will be counted as reserves in their spot form. Additionally, according to relevant requirements, only cryptocurrencies listed on U.S. regulated trading platforms are eligible to be included in Fannie Mae and Freddie Mac's mortgage reserves, and the related assets must also have volatility protection measures in place.

ChainCatcher news, Ledn CEO Adam Reeds, a company providing Bitcoin lending services, stated that Bitcoin-backed loans can significantly accelerate the flow of money and capital. Reeds explained that many Bitcoin holders are reluctant to sell BTC for liquidity, and traditional financial institutions typically do not accept Bitcoin as collateral, which leads to ineffective utilization of Bitcoin assets. By taking out loans with Bitcoin as collateral, holders can obtain fiat liquidity for business, consumption, real estate, or purchasing more BTC. Reeds noted that Bitcoin loans are efficient, allowing borrowers to secure financing within days, which is a significant advantage compared to the weeks or months processing time of traditional financial institutions. Furthermore, Reeds believes that the risk of using Bitcoin as collateral is lower than that of real estate or stock loans, as there is no GAAP risk. He also pointed out that Bitcoin-backed loans help address the issue of inadequate banking infrastructure in some regions, particularly in high-inflation countries like Argentina and Nigeria, providing fair financing opportunities for these areas.

ChainCatcher news, the Bank for International Settlements (BIS) published two papers on Friday stating that DeFi could lead to more turbulence in financial markets and may not resolve the dominance of large intermediaries. One paper examined a unique dataset on collateral liquidation from two major DeFi applications, Aave and Compound, where such liquidation requires arbitrageurs to repay loans in exchange for discounted collateral. The article states: "This contagion to other exchanges can lead to negative feedback loops. Our findings illustrate a new form of systemic vulnerability arising from collateralized loans under DeFi architecture."Another research paper indicated that DeFi can reduce financial transaction costs but cannot fully address the issue of centralized intermediaries charging excessive fees for services, and it may also evade scrutiny. Without proper rules, regulators will have to rely on "goodwill and voluntary cooperation," or countries may run their own versions of blockchains independently. The paper states: "The current design of DeFi applications poses significant challenges for tax enforcement and exacerbates money laundering issues and other types of financial misconduct." (Source link)