Bitcoin has been a popular subject in the news lately and it’s been causing quite a stir in the real estate and mortgage industries, as well.

What is Bitcoin?

In case you weren’t aware, bitcoin is a type of cryptocurrency. It is a decentralized type of digital currency that allows for peer-to-peer purchases and its value changes daily like a speculative stock. The subject of cryptocurrency has been very controversial. As its value has increased, there have been more and more questions about it. One of the biggest questions was if bitcoin or another similar speculative cryptocurrency could be used to purchase something as major as a house?

Fannie Mae Ruling

I recently learned that Fannie Mae has cleared up its stance on cryptocurrency and bitcoin in particular. A mortgage broker by the name of Guild Mortgage reached out to Fannie Mae to make sure it could accept bitcoin in order to secure a mortgage loan. The federal agency responded with confirmation. However, it was only acceptable if there was a full paper trail. As long as there was ample documentation of the buyer originally paying for the cryptocurrency and then selling it back into U.S. dollars, it could be used for a down payment.

First Confirmed Cryptocurrency Mortgage

Then, I came across this recent story in the Seattle Times. Cary Kuo, a young investor up there actually used a bitcoin-like cryptocurrency to purchase a $415,000 home in the town of Tukwila. He utilized a combination of bitcoin cash and a few other cryptocurrencies to secure a conventional mortgage.

It’s important to note that the currencies needed to be converted into U.S. dollars before the sale closed. The source of the purchase may have been cryptocurrency, but the final transaction still had to be in standard U.S. currency in order to meet the lender’s requirements, pay off the seller and take careof closing costs and taxes.

Kuo had to provide the paper trail of his cryptocurrency assets and it actually took a little while extra for him to get final approval on his mortgage loan. Being that this is the first confirmed major transaction of its kind, there were challenges and some confusion on all sides. However, the loan was ultimately secured using bitcoin and other speculative cryptocurrency owned by the buyer.

Mortgage Industry Impact

Needless to say, I am fascinated by this subject and it may ultimately change the way some mortgage loans are funded. I will definitely be keeping a close eye on this story and others that will affect the mortgage industry.

What do you think about using bitcoin and cryptocurrency to acquire a mortgage loan? I’d love to hear your thoughts. Send me an email at beau@tspmortgage.com and share your feedback.

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.