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Adds a new paragraph (8) to Section 302(b) of the Federal National Mortgage Association Charter Act establishing definitions for 'digital asset' and 'qualified custodial arrangement', permitting qualified borrower digital-asset holdings to be included in borrower reserves without conversion to U.S. dollars, requiring risk-based adjustments for volatility and concentration, periodic review of adjustments, and board approval plus FHFA Director review of methodologies.
Inserts a new subsection (e) into Section 305 of the Federal Home Loan Mortgage Corporation Charter Act that defines 'digital asset' and 'qualified custodial arrangement', permits qualified borrower digital-asset holdings to be included in borrower reserves without conversion to U.S. dollars, requires risk-based adjustments for volatility and concentration with periodic review, and requires Board approval and FHFA Director review of methodologies.
Allows Fannie Mae and Freddie Mac to count certain borrower-held digital assets (like crypto held in approved custody arrangements) as cash reserves for mortgage underwriting without converting them to U.S. dollars, subject to risk-based adjustments and oversight. It defines key terms, requires periodic review and risk-based haircuts, and requires board approval plus FHFA review before using new or materially changed assessment methods.
Amend Section 302(b) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)) by adding a new paragraph titled “Digital Assets in Mortgage Risk Assessments.”
Define “digital asset” as any digital representation of value recorded on a cryptographically-secured distributed ledger; the text notes there are exclusions (the clause begins “does not include any asset that—”).
Define “qualified custodial arrangement” to mean either (I) custody by a third-party custodian that is chartered, licensed, or otherwise regulated under Federal or State law and subject to U.S. courts, or (II) a multi-party custodial arrangement where a controlling quorum of private key or control component is held by such custodians and is subject to an enforceable governing agreement under U.S. law.
Require the corporation, when assessing the risk of a single-family mortgage loan, to permit a borrower’s holdings in a digital asset that are evidenced and maintained under a qualified custodial arrangement to be included in the borrower’s reserves without converting the digital asset to U.S. dollars.
Require the corporation to apply risk-based adjustments when including digital assets in reserves: (i) adjustments for market volatility and liquidity of the digital asset; (ii) adjustments for concentration of digital assets as a portion of reserves; and (iii) periodic review and updating of those adjustments.
Who is affected and how:
Borrowers with digital asset holdings: Can potentially use qualifying crypto or other digital assets as part of their reserves when applying for mortgages backed by Fannie Mae or Freddie Mac, improving their ability to qualify if assets meet custody and eligibility rules. However, the usable value will be reduced by risk‑based adjustments.
Mortgage lenders and servicers: Must adapt underwriting workflows and documentation to accept and verify qualified digital asset reserves, coordinate with custodians, and apply enterprise-specified valuation adjustments.
Custodial service providers and crypto custody industry: Likely see increased demand if custodial arrangements meet the statute’s qualifications, since custody standards are required.
The enterprises (Fannie Mae and Freddie Mac) and FHFA: Face new responsibilities to develop, approve, and periodically review valuation methods, custody standards, and risk adjustments; FHFA must review board‑approved methods before use.
Investors and the mortgage market: May see modest changes to credit risk profiles if digital assets are counted toward reserves; effectiveness depends on how conservatively enterprises set haircuts and verification standards.
Potential risks and tradeoffs:
Digital asset price volatility and liquidity concerns create higher risk that will be addressed via haircuts; imperfect valuation or custody failures could raise credit risk.
Operational burdens on lenders and enterprises to verify custody, value assets, and monitor changes.
Overall effect: The change opens a regulated path for some borrowers to use digital assets in mortgage underwriting while building guardrails (custody rules, haircuts, oversight) to limit added credit risk; the practical impact depends on the enterprises’ implementing policies and FHFA review.
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Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced July 28, 2025 by Cynthia M. Lummis · Last progress July 28, 2025
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced in Senate