Uncategories Figure’s crypto mortgage

Figure’s crypto mortgage

12.04
Figure Technologies is rolling out a crypto-backed 30-year fixed-rate mortgage product in early April.
Figure Technologies is rolling out a crypto-backed 30-year fixed-rate mortgage product in early April. Figure Technologies CEO Mike Cagney said he moved up his timetable due to product demand. 

 

"I've just been blown away by how many people are in a situation where they have significant crypto assets, and their lenders just won't take it into consideration," Cagney told my colleague Flavia Furlan Nunes. "Crypto is some of the best collateral because it's not only liquid, but liquid 24 hours a day." 

 

Figure's crypto-backed mortgage, which uses bitcoin and ether as collateral, will have a 100% loan-to-value ratio and monthly collateral adjustments: if cryptocurrency prices drop, the client needs to deposit more collateral or pay down the loan balance to get the ratio back to 100%. Otherwise, the company will liquidate the collateral.

 

However, if the cryptocurrency price increases to a 125% loan to value ratio, the lender will release the excess back to the borrower. Figure will not rehypothecate the collateral (in other words: use it for their own purposes).

 

Figure will originate crypto-backed mortgages of up to $20 million, at a fixed interest rate of 5.99%. "For us to get paid, we need to be at that 5.99% rate. As the market gets comfortable with the product, the rate will look like the prime jumbo," Cagney said. (The prime jumbo rate is currently at around 5%.) 

 

Cagney, of course, has built this business on the premise that blockchain technology will be transformative for the industry. He may be right, but take note of a recent Fannie Mae survey that found just 25% of lenders reported being familiar with the technology and its possible applications in the mortgage business. A majority of lenders (68%) said they have not yet looked into the technology. Of the 20% of lenders that have looked into blockchain, 41% said they plan to adopt it within four years.

 

LOs – what do you think of all this? Is the public ready for crypto mortgages? Is this product even needed? Will blockchain soon become a force? Email me with your thoughts at jkleimann@housingwire.com.

 

James Kleimann

Managing Editor, HousingWire

 

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    Figure Technologies will be releasing a cryptocurrency-backed 30-year fixed-rate mortgage product in April. The fintech will fund mortgages up to $20 million, with a 100% LTV. We have all the details.

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