As of Wednesday, crypto assets, including stablecoins and tokens, have lost around 60% in market capitalization since the peak on April 4, according to CoinMarketCap.
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The cryptocurrency market has taken a nosedive this year. As of Wednesday, crypto assets, including stablecoins and tokens, have lost around 60% in market capitalization since an April 4 peak, according to CoinMarketCap.
Mortgage industry executives have described conditions as the first test in the growing crypto-backed mortgage space. With these products, if crypto prices drop, the client needs to deposit more collateral (otherwise, the company will liquidate the crypto). However, if the price increases, the lender will release the excess back to the borrower.
"This is the first test for us, but it's not something that's going to adversely affect people's interest in the product," said Jackie Frommer, COO of Lending at Figure Technologies. The company is running pilot testing of a cryptocurrency-backed 30-year fixed-rate mortgage product. "People will have less crypto now, but the likelihood that the crypto will continue to depress at these rates is much lower."
Josip Rupena, CEO and founder of Milo, a digital lender that launched a product in January, said, "in times of volatility like this, when investors have seen a significant portion of their net worth go down, they're looking for options to counterbalance that, and real estate is one of those great asset classes that has created a lot of wealth."
Lenders seem optimistic about crypto-backed mortgages despite the crypto collapse. LOs – what do you think? Please share your thoughts with me at flavia@hwmedia.com.
Lenders who want to thread the needle between the different interests of borrowers, investors and regulators need smart, efficient mortgage software solutions to meet their servicing goals.
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