Why a $778 Billion Mortgage Lender Is Taking Bitcoin and Ethereum Seriously Now

Younger Americans may find it increasingly difficult to afford a home, but Newrez, a national wholesale mortgage lender, thinks Bitcoin and Ethereum could change that.

The firm—which serviced a $778.3 billion portfolio of 3.7 million loans, as of last year—recently signaled that it would begin assessing both cryptocurrencies for mortgage qualification. Last week, it billed itself as the first major provider of mortgages in the U.S. to do so.

That means the company intends to view Bitcoin and Ethereum as reserves that a homeowner could theoretically dip into to meet their mortgage obligations. Typically, applications ask prospective borrowers to report liquid assets like cash, as well as ones like stocks.

In an interview with Decrypt, Newrez President Baron Silverstein said the move was aimed at Gen Z, noting that “future home buyers have a higher and higher percentage of crypto assets as part of their investments,” relative to generations that came before them.

“We’re looking to help first-time home buyers,” he added.

In recognizing borrowers’ digital assets, Newrez plans to apply a “haircut,” valuing Bitcoin and Ethereum at a discount to their market prices. Silverstein declined to say how steep that haircut would be, but he said it takes the assets’ volatility into consideration.

Newrez’s entry into the digital assets space was recognized on X by Bill Pulte, the director of the U.S. Federal Housing Finance Agency, who directed the regulator in June to begin examining the impact of crypto holdings on mortgage qualifications in the U.S.

“It begins,” he wrote.

Pulte’s directive sparked unease among U.S. lawmakers, including Sen. Elizabeth Warren (D-MA), who warned the move could ultimately “introduce unnecessary risks to consumers and pose serious safety and soundness concerns for the U.S. housing and financial markets.”

“When we were evaluating the program, we pressure-tested a lot of different things,” Silverstein said. “What we launched is much closer to what we consider to be our bread and butter business today.”

Silverstein noted that Newrez isn’t letting borrowers make mortgage payments using digital assets, but he said the lender could evaluate that in the future. The same goes for Bitcoin and Ethereum held in self-custodial wallets, which aren’t eligible under the program.

Newrez said that digital assets need to be held with either a U.S.-regulated crypto exchange, fintech app, brokerage, or a nationally chartered bank to qualify. As a result, digital assets held within wallets like MetaMask, or via keys on a flash drive stashed in a desk, would be treated as worthless.

An FAQ for the program states offering will be available in February for “non-agency products,” which are distinct from those offered by government-sponsored Fannie Mae and Freddie Mac. Newrez’s program also recognizes stablecoins backed by cash.

“We will continue to evaluate an expansion of our guidelines, an expansion of crypto assets, and potentially an expansion of these custodians,” Silverstein said. “This is a great place for us to start, and then we’ll continue to learn from there.”