Better Home & Finance Pioneers Crypto-Backed Mortgage Loans

For years, CEO of Better Home & Finance Vishal Garg struggled to buy a house due to difficulties in liquidating assets for cash. To address this issue, Better partnered with Coinbase to launch a solution that allows borrowers to pledge Bitcoin or USDC to obtain two loans: one first-lien mortgage loan compliant with Fannie Mae standards; another independent private financing loan used to pay the down payment, secured by crypto assets, and attached with a second lien on the house.

In March, Better revealed that before the product officially launched in the summer, the waitlist corresponded to a potential loan volume of about $250 million, of which 41% of applicants did not have enough cash to pay the down payment. The collateral ratio for Bitcoin is 250%, meaning borrowers need to pledge assets worth up to two and a half times the down payment amount.

Garg stated that the assets meet bank investment standards, and multiple banks are already lining up to acquire and take over these loans, including top large banks in the United States. However, seven senators wrote to Federal Housing Finance Agency (FHFA) Director William Pulte requesting regulators to 'revoke relevant approvals and prohibit government-sponsored enterprises from taking on crypto asset-related risks.'

The senators argued that the 250% collateral clause represents risk control robustness, but also admitted that crypto assets are high-risk. They estimated that combined financing costs could be up to 1.5 percentage points higher than standard Fannie Mae mortgage rates.