Homebuyers who have dabbled in cryptocurrency should know that some lenders will allow you to use those assets – with a proviso – as part of your down payment when applying for financing.
Under rules promulgated by Fannie Mae and Freddie Mac, which purchase mortgages from lenders on the secondary market, bitcoin and similar currencies must be converted to cash, which must be parked in a bank account for at least two months to be counted as fungible funds.
Fannie Mae “does not have a policy specific to cryptocurrency,” according to a company spokesperson, other than requiring all assets to be converted to U.S. currency and sourced from an eligible asset account. Freddie Mac, however, is somewhat more specific. It will not permit income paid to borrowers in crypto to be used to qualify for financing. Assets such as retirement accounts, trust income and dividend and interest income can’t be counted if they are in such forms, either. They must be exchanged for good old American greenbacks.
The mortgage giant also said cryptocurrency can’t be included when calculating assets used as a basis for repayment of assets. But monthly payments on debt secured by crypto must be included as part of your debt-payment-to-income ratio.
The crypto market hit the skids in mid-January. Still, according to the Redfin realty brokerage, nearly 1 in 8 first-time buyers sold cryptocurrency during last year’s fourth quarter to help with their down payments – almost as many as those who used cash gifts from their families.
Realty broker Ryan Serhant of “Million Dollar Listing New York” on the Bravo network has told his clients and colleagues he expects half of all future transactions to be in crypto. In his annual letter, he said his agents are already working on “many crypto transactions.”
Indeed, several companies are jumping into the cryptocurrency mortgage arena:
- Milo, a Miami-based lender, is coming to market with a crypto-based mortgage that allows borrowers to pledge their digital assets to purchase property. With Milo’s loan, borrowers can finance 100 percent of the cost without using any dollars for a down payment.
- United Wholesale Mortgage has test-driven its version of a digital mortgage, and said it is ready to move forward once “regulatory uncertainties” are removed.
- Ledn, a Toronto-based digital asset platform, has announced plans to offer a bitcoin-backed home loan.
- Harbor Custom Development has begun taking “digital currencies as payment” for lots, houses, condos and apartments. Calling the move “a logical step,” the company said it’s accepting bitcoin and more than a dozen other cryptocurrencies.
No More Crime Stats
Fearing they might run afoul of anti-discrimination laws, some real estate outfits are removing crime data from their listings.
Realtor.com, the official listing site of the politically powerful National Association of Realtors, has done so, as has the Zillow-owned site, Trulia. And Redfin, which has never posted crime information, is leading the charge to have others drop the statistics as well.
All are concerned the numbers not only promote racial bias, but are also unreliable.
“We know that one of the questions [buyers have] is whether they’ll feel safe in a given home or neighborhood,” said Redfin’s Christian Taubman. “But the data available don’t allow us to speak accurately to that question, and given the long history of redlining and racist housing covenants in the United States, there’s too great a risk of this inaccuracy reinforcing racial bias.”
In calling on others to follow Redfin’s lead, Taubman explains that crime data is tainted because many crimes go unreported. “The fact that most crimes are missing creates a real possibility that the crimes that show up in the data set skew one way or another,” he said.
You Want How Much?
In the pursuit of affordable housing, some people have found the answer to their quest in mobile homes. And the good news is that not only are they more affordable, they tend to appreciate faster than single-family houses that are site-built.
There may be a stigma attached to homes built in a factory and trailered to their eventual resting places. (Unlike manufactured houses, which are placed on a foundation and become permanent fixtures, mobile homes can be moved from place to place.) But according to LendingTree, the median value of a mobile house is $53,300, nearly $190,000 less than that of a site-built house. Better, the median value increased by 39 percent between 2014 and 2019 – 6 percentage points more than that for conventional houses over the same period.
But compare that to yet another sign of the housing apocalypse: An abandoned, 120-year-old rowhouse in San Francisco’s trendy Noe Valley neighborhood recently sold at a conservatorship sale for $600,000 over the starting bid – even though the place has boarded-up windows, peeling paint, mismatched floors and not one bedroom.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at email@example.com.