FHFA Makes Moves to Expand Borrower Access to Mortgage Loans
By Robert Wilkins
August 8, 2025
Under direction of the FHFA, Fannie Mae and Freddie Mac will soon be adopting policies to incorporate underwriting criteria that are intended to make mortgage loans available to a broader group of potential borrowers.
The first change announced by FHFA Director William Pulte is the incorporation of cryptocurrency assets into the evaluation of a borrower’s qualifications for obtaining a mortgage loan. Currently, Fannie Mae guidelines permit virtual currency that has been exchanged into US dollars to be acceptable for down payment, closing costs, and financial reserves, provided that 1) there is documented evidence that the virtual currency has been converted to US dollars and is held in a state regulated financial institution and 2) the funds are verified in U.S dollars prior to the closing of the loan. FHFA has now directed Fannie Mae and Freddie Mac to develop policies that will allow the consideration of cryptocurrency assets without requiring a potential borrower to convert the cryptocurrency to U.S. dollars.
The proposed policies, which are required to be established “as soon as reasonably practicable” must address the inclusion of virtual currency reserves without conversion to US dollars, the fact that only virtual currency evidenced and stored on US regulated exchange holdings will qualify, and risk based adjustments that lenders can use to account for the volatile nature of the virtual currency market. As these proposed policies are still in the development phase, the impact on lenders remains to be seen. However, with the recent passage of the GENIUS Act, the first major cryptocurrency legislation passed by the federal government, it is clear that financial institutions should be preparing to adapt to what is a developing financial landscape.
A second announcement from FHFA will allow lenders to deliver mortgage loans to Fannie Mae and Freddie Mac using either a FICO credit score (the current requirement) or a VantageScore 4.0 score. Per FHFA, the VantageScore 4.0 model takes into account additional sources of data, including rent payment history, giving it the potential to accurately score more potential borrowers than the current FICO model. This change can be expected to have numerous impacts.
For example, because the VantageScore 4.0 model takes into account additional data sources, the expectation is that more applicants will be able to qualify for mortgages. VantageScore estimates that five million potential applicants will benefit from consideration of the VantageScore 4.0 model.
Additionally, now that multiple credit score models may be used, the monopoly that FICO has had on credit scoring mortgage borrowers appears to be coming to an end. This should mean that FICO and the three major credit reporting agencies, which developed the VantageScore model, will have to compete for the business of lenders by ensuring that they are providing quality and accurate credit scores at competitive price levels.
While the potential benefits are evident, there is certainly still some concern about the adoption of the new model. One concern is that VantageScore was developed by the 3 major credit reporting agencies, which provide the content for the development of the score. For some, this is seen as anticompetitive, potentially negating any positive competitive effects created by the introduction of a competing credit score.
A separate concern is that lenders will be able to choose what credit score will be used on a specific loan delivered to Fannie Mae or Freddie Mac. This choice can potentially lead FICO and VantageScore, in an effort to be the preferred choice of a lender, to develop ways to ensure more loan approvals. Government officials and lenders should be ready to provide guardrails to ensure that such development does not come at the expense of quality and accuracy of the provided credit score.
Neither the cryptocurrency nor the new credit score policy have taken effect yet. We expect the GSEs to provide updates to their Selling Guides with an implementation date in the near future.
About the Author
Robert Wilkins
Robert Wilkins is a Senior Associate Attorney at SW&M with experience in regulatory compliance, trust and decedent accounts, operational matters and cannabis banking. Robert was instrumental in creating the firm’s Cannabis Banking practice. Additionally, he co-authored SW&M’s California Trust Accounts […]
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