On December 1, 2021, Freddie Mac published Bulletin 2021-36 for Freddie Mac sellers to provide updated guidance on eligibility criteria for qualifying mortgages. Freddie Mac publishes such bulletins on a regular basis for loan originators who wish to resell mortgages to Freddie Mac, and Bulletin 2021-36 covers a number of routine topics such as 2022 conforming loan limits, certain credit underwriting criteria and document custody. The bulletin is notable, however, because it specifically addresses requirements related to cryptocurrency’s use in the mortgage qualification process.
The bulletin announces that, due to a “high level of uncertainty associated with cryptocurrency,” Freddie Mac has updated its credit underwriting criteria for qualifying mortgages as follows:
- Income paid to a borrower in cryptocurrency may not be used to qualify for a mortgage;
- For income types that require evidence of sufficient remaining assets to establish likely continuance (e.g., retirement account distributions, trust income and dividend and interest income), those assets may not be in the form of cryptocurrency;
- Cryptocurrency may not be included in the calculation of assets as a basis for repayment of obligations;
- Monthly payments on debts secured by cryptocurrency must be included in a borrower’s debt payment-to-income ratio and are not subject to other criteria regarding installment debts secured by financial assets; and
- Cryptocurrency must be exchanged for US dollars if it will be needed for the mortgage transaction (i.e., any funds required to be paid by a borrower and any borrower reserves).
The bulletin also notes that Freddie Mac will continue to monitor cryptocurrency developments and may update its requirements as appropriate in the future. The new cryptocurrency criteria are effective immediately.