On December 1, Freddie Mac posted Bulletin 2021-36 inform lenders of changes in loan eligibility requirements. While it is not unusual for Freddie Mac to publish such bulletins, this newsletter contained some cryptocurrency-related changes.
Specifically, the bulletin stated that Freddie Mac had updated his seller / repairer guide (the guide) to address “the use of cryptocurrency in the mortgage qualification process.” These updates indicate the following:
- Income paid to the borrower in cryptocurrency cannot be used to qualify for the mortgage;
- For income types that require evidence of sufficient remaining assets to establish a probable continuation (for example, distributions from retirement accounts, trust income, and dividend and interest income, etc.), these assets may not be in the form of cryptocurrency;
- Cryptocurrency cannot be included in the calculation of assets as the basis for repayment of bonds;
- Monthly payments on debts secured by cryptocurrency should be included in the borrower’s debt-to-income ratio and are not subject to the Guide’s provisions for installment debt secured by financial assets; and
- The cryptocurrency must be exchanged for US dollars if it will be needed for the mortgage transaction (that is to say, all funds to be paid by the borrower and the borrower’s reserves).
Despite increased consumer interest in cryptocurrency, these new statements demonstrate that Freddie Mac still sees a “high level of uncertainty associated with cryptocurrency” and expressly wishes to limit its use as part of the qualification process. Mortgages. Freddie Mac concluded, however, by stating that he “will continue to monitor cryptocurrency developments and may update these requirements as appropriate in the future.”