Durbin, Warren, Merkley Send Letter To Federal Housing Finance Agency Criticizing Fannie Mae’s Decision To Accept Crypto-Backed Mortgages

Durbin, Warren, Merkley Send Letter To Federal Housing Finance Agency Criticizing Fannie Mae's Decision To Accept Crypto-Backed Mortgages

WASHINGTON - U.S. Senate Democratic Whip Dick Durbin (D-IL), Ranking Member of the Senate Judiciary Committee, along with Elizabeth Warren (D-MA), Ranking Member of the Senate Banking Committee, and Jeff Merkley (D-OR), sent a letter to Federal Housing Finance Agency (FHFA) Director William J. Pulte, urging the agency to provide an explanation for the Federal National Mortgage Association's (Fannie Mae) decision to accept crypto-backed mortgages. Last month, mortgage provider Better Home & Finance (Better) and cryptocurrency exchange Coinbase announced a partnership with Fannie to offer crypto-backed mortgages. Senators Chris Van Hollen (D-MD), Richard Blumenthal (D-CT), Bernie Sanders (I-VT), and Mazie Hirono (D-HI) also joined the letter.

The Senators wrote, "As the regulator and conservator of Fannie Mae and Freddie Mac (collectively, 'the Enterprises'), FHFA directly oversees the Enterprises and is tasked with ensuring that they operate in a financially sound manner. Given the deep volatility of cryptocurrencies, and the risks introduced by this untested product-which has not been subject to public input-we urge you to rescind any approval of this decision and prohibit the Enterprises from taking on crypto-related asset risks, including by purchasing crypto-backed mortgages."

In the letter, the Senators warned Director Pulte about cryptocurrency-a risky, volatile investment asset plagued by noncompliance and fraud. The value of Bitcoin, considered to be the gold standard of crypto, has seen its value plummet by nearly 40 percent since October. High-risk tolerant investors may be able to write off crypto's market swings, but these mortgages and their risks do not belong in the trillion-dollar, taxpayer-backed books of Fannie Mae and Freddie Mac.

The Senators continued, "Fannie Mae's move to reportedly begin purchasing crypto-backed mortgage loans adds complexity to a purchase that often is already one of the most expensive and consequential decisions in a family's life. These crypto-backed mortgages require homebuyers to apply for two mortgages-one that is the standard loan secured by real property, and a second that is secured by crypto but requires a homebuyer to pay up to an additional 2.5 times the dollar amount in crypto to qualify for the loan. This not only inherently concedes that crypto is a risky asset, but in addition, forces a homebuyer to pay interest on two loans-potentially increasing the amount of borrowing that a homebuyer would otherwise be allowed to take on under mortgage lending rules, and significantly increasing the total costs."

The Senators continued, "As a government-sponsored enterprise currently owned by U.S. taxpayers, Fannie Mae purchases mortgages and pools them into mortgage-backed securities that are guaranteed by the U.S. government. This means that American taxpayers would bear any losses resulting from defaults on risky crypto-backed mortgages when borrowers are unable to repay… [Today Fannie Mae] is relaxing borrowing standards and allowing undue risk into a high-interest rate housing market already struggling with low supply, skyrocketing prices, and limited resales-all of which have driven existing home sales to near 30-year lows. Meanwhile, Coinbase is advertising crypto-backed mortgages as a way for investors who have built their wealth based on crypto to finance their home using a risky, volatile asset… If the crypto industry causes a housing crash, all Americans will be forced to pay the price in the form of another bailout."

To better understand FHFA's decision to allow Fannie Mae to purchase crypto-backed mortgages and place them on the government's balance sheet, the Senators requested responses to a number of questions by May 30, 2026.

The Senators concluded, "It is your duty to ensure the safety and soundness of the Enterprises. Crypto-backed mortgages, launched without any pilot, opportunity for public input, or public research into default risk, flaunt this duty. We urge you to protect American homebuyers and taxpayers by banning Fannie Mae and Freddie Mac from accepting crypto-backed mortgages now and in the future, and we look forward to working with you on this matter."

Durbin has continuously raised concerns about the risks of crypto. Following the collapse of FTX, Durbin urged Fidelity Investments to reconsider its decision to allow 401(k) plan sponsors to offer plan participants exposure to Bitcoin, and sent a letter to then-Department of Labor Secretary Lori Chavez-DeRemer urging the Department to reverse a decision to rescind guidance warning of the risks of offering cryptocurrency in employees' 401(k) plans. Last April, Durbin sent a letter urging then-Deputy Attorney General Todd Blanche to reverse the Department of Justice's (DOJ) recent decisions to effectively terminate the Department's cryptocurrency investigations and prosecutions.

Durbin also filed three amendments to the bipartisan 21st Century ROAD to Housing Act that would have cracked down on crypto ATM fraud, prevented crypto companies from receiving a taxpayer-funded bailout, and made it explicitly clear that the Social Security Trust Funds cannot currently, and can never, invest in crypto.

As the President continues to line his pockets from cryptocurrency, Durbin has urged his colleagues to implement guardrails to the crypto market so there is not a repeat of the 2008 financial crisis. Following the 2008 financial crisis, Durbin helped pass the Dodd-Frank Act and create the Consumer Financial Protection Bureau (CFPB).

The full text of the letter is available here and below.

April 30, 2026

Dear Director Pulte,

We write to express our ongoing concern regarding the Federal Housing Finance Agency's (FHFA) efforts to allow Fannie Mae and Freddie Mac to purchase risky crypto-backed mortgage loans. The Wall Street Journal has reported that you recently approved a decision to allow Fannie Mae to purchase crypto-backed second lien mortgages from Better Home & Finance and Coinbase. As the regulator and conservator of Fannie Mae and Freddie Mac (collectively, "the Enterprises"), FHFA directly oversees the Enterprises and is tasked with ensuring that they operate in a financially sound manner. Given the deep volatility of cryptocurrencies, and the risks introduced by this untested product-which has not been subject to public input-we urge you to rescind any approval of this decision and prohibit the Enterprises from taking on crypto-related asset risks, including by purchasing crypto-backed mortgages.

Homeownership is a cornerstone of the American economy and has come to symbolize stability, opportunity for wealth-building, and the American Dream. Cryptocurrency, meanwhile, is a risky, volatile investment asset plagued by noncompliance and fraud. For example, the value of Bitcoin, considered to be the gold standard of crypto, has seen its value plummet by nearly 40 percent since October. High-risk tolerant investors may be able to write off crypto's market swings, and private lenders may experiment with non-Qualified Mortgages (non-QM). However, these mortgages and their risks do not belong in the trillion-dollar, taxpayer-backed books of Fannie Mae and Freddie Mac, and the Federal government should not encourage using risky assets in mortgage underwriting standards.

Fannie Mae's move to reportedly begin purchasing crypto-backed mortgage loans adds complexity to a purchase that often is already one of the most expensive and consequential decisions in a family's life. These crypto-backed mortgages require homebuyers to apply for two mortgages-one that is the standard loan secured by real property, and a second that is secured by crypto but requires a homebuyer to pay up to an additional 2.5 times the dollar amount in crypto to qualify for the loan. This not only inherently concedes that crypto is a risky asset, but in addition, forces a homebuyer to pay interest on two loans-potentially increasing the amount of borrowing that a homebuyer would otherwise be allowed to take on under mortgage lending rules, and significantly increasing the total costs. The rates on the combined financing could run as much as 1.5 percent higher than the standard Fannie Mae mortgage to account for crypto risk, representing tens of thousands of dollars over the lifetime of the loan. For families already struggling to afford a home, this burdens them with yet more expenses.

The dual loan structure also could create perverse incentives for homebuyers. According to Coinbase's own press release describing Fannie Mae's purchase of crypto-backed mortgages, "the terms of the loan remain unaffected by Bitcoin's price volatility; if the market fluctuates, your mortgage terms remain the same." However, if a homebuyer's crypto assets plummet in value, they still are required to pay the higher interest rate on their primary mortgage. At the same time, they cannot sell off their low-value assets to manage risk and invest in other, more promising opportunities. If collateral value on this second loan evaporates, the borrower is also paying an expensive mortgage every month while having only a tiny equity stake, leaving them at risk of going "underwater" on their mortgage-meaning they would have to repay more on the loans than their home might be worth. We are concerned that this incentivizes borrowers to simply walk away from their loan, leaving the American taxpayer to pay the price.

As a government-sponsored enterprise currently owned by U.S. taxpayers, Fannie Mae purchases mortgages and pools them into mortgage-backed securities that are guaranteed by the U.S. government. This means that American taxpayers would bear any losses resulting from defaults on risky crypto-backed mortgages when borrowers are unable to repay. Our country has already seen a version of this play-out in the 2008 financial crisis, when mortgage lending standards were more relaxed and the Enterprises took on more risks that eventually became concentrated on their books. Leading up to the Great Recession, lenders extended subprime and predatory mortgage credit for homes with inflated prices, and buyers ultimately were unable to repay their loans. Indeed, once the housing bubble burst, more than 10 million Americans lost their homes to foreclosure, and families lost more than $5 trillion in home equity. These failing mortgages nearly bankrupted Fannie Mae and Freddie Mac, leading Congress to place them into conservatorship and the federal government to provide them with a $189 billion taxpayer-backed bailout.

Today, Fannie Mae appears to be following the same reckless pattern. It is relaxing borrowing standards and allowing undue risk into a high-interest rate housing market already struggling with low supply, skyrocketing prices, and limited resales-all of which have driven existing home sales to near 30-year lows. Meanwhile, Coinbase is advertising crypto-backed mortgages as a way for investors who have built their wealth based on crypto to finance their home using a risky, volatile asset. As of 2025, only about 14 percent of American adults invested in crypto, and other companies that have provided crypto-backed mortgage loans reportedly have not received much interest in their product, with one company serving just over 100 borrowers-perhaps affirming prior Enterprise skepticism about the adoption of crypto in mortgage lending and underwriting standards. However, if the crypto industry causes a housing crash, all Americans will be forced to pay the price in the form of another bailout.

To better understand FHFA's decision to allow Fannie Mae to purchase crypto-backed mortgages and place them on the government's balance sheet, we request responses to the following questions by May 30, 2026:

1. What research did FHFA and Fannie Mae rely on, and what analysis did FHFA and/or Fannie Mae conduct, to assess and consider the risks of crypto-backed mortgages to both investors and U.S. taxpayers? Please summarize the findings, and provide copies of this research and analysis, including the analyses the Enterprises submitted to FHFA in accordance with your June 2025 directive.
2. What research did FHFA and/or Fannie Mae rely on, and what analysis did FHFA and/or Fannie Mae conduct to determine the expected uptake of crypto-backed mortgages? Please summarize and provide copies of the findings of this research and analysis, including the analyses the Enterprises submitted to FHFA in accordance with your June 2025 directive.
3. How much more, on average, will a homebuyer who obtains a crypto-backed mortgage pay in interest on a standard 30-year mortgage, compared with a borrower with a traditionally financed 30-year mortgage? Please provide the total amount paid over the lifetime of the loan and the monthly mortgage payment.
4. What is FHFA and Fannie Mae's rationale for approving a crypto-backed mortgage without soliciting public input?
5. Did FHFA or Fannie Mae consult with any other mortgage lenders or crypto companies before approving the purchasing of the Better Homes & Finance-Coinbase product? If so, why is Fannie Mae partnering with only Better Home & Finance and Coinbase? If not, why did Fannie Mae fail to consider other companies? Please provide a list of other lenders and companies that were consulted.

It is your duty to ensure the safety and soundness of the Enterprises. Crypto-backed mortgages, launched without any pilot, opportunity for public input, or public research into default risk, flaunt this duty. We urge you to protect American homebuyers and taxpayers by banning Fannie Mae and Freddie Mac from accepting crypto-backed mortgages now and in the future, and we look forward to working with you on this matter.

Sincerely,

-30-