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Better Mortgage adds Bitcoin pledged down payments for conforming loans
Better says day to day BTC price moves will not trigger margin calls, but borrowers face potential Bitcoin liquidation after 60 days of payment delinquency.
Better Mortgage and Coinbase announced Aug. 26 that a token-backed conforming mortgage product is now available to borrowers, allowing a homebuyer to use pledged Bitcoin for a down payment while keeping a standard first mortgage designed to meet Fannie Mae guidelines, according to CryptoSlate.
Under the structure, the homebuyer takes two loans from Better: a standard first mortgage and a separate down-payment loan secured by a pledge of Bitcoin and a second lien on the property. Better’s published terms use a 40% advance rate on Bitcoin, meaning $250,000 of BTC supports a $100,000 down-payment loan, and the company notes advance rates can change without notice.
CryptoSlate reports the Bitcoin is transferred to Better Mortgage’s custodial account on Coinbase Prime, and the borrower is restricted from selling, transferring, re-pledging, or otherwise encumbering the Bitcoin without prior written consent during the pledge period. Better says day-to-day Bitcoin price changes alone do not trigger margin calls or forced selling under the public terms.
The key risk is payment performance, not BTC volatility. Better says delinquency begins the day after a missed payment, gives the borrower 30 days to bring the account current, and if the loan remains delinquent for 60 days it may liquidate the pledged Bitcoin, which could eliminate future upside and may create a taxable event, according to CryptoSlate.
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