Prolly nothing... https://www.bloomberg.com/news/arti...with-crypto-new-mortgages-are-backed-by-coins Crypto Mortgages Let Homebuyers Keep Bitcoin, Put Down Nothing New home loans are deepening the role of volatile digital assets in the real estate market. Miami Beach, Florida, Biscayne Bay, Miami downtown city skyline. (Photo by: Jeffrey Greenberg/UCG/Universal Images Group via Getty Images)Photographer: Jeffrey Greenberg/UCG/Getty Images By Heather Perlberg April 27, 2022, 7:01 AM PDT It took Vincent Burniske months to get a seven-figure loan to buy two small apartment buildings in a coveted Miami neighborhood. The sports-media consultant had money — but much of it was tied up in crypto. Digital wealth meant little to banks when it came to a mortgage. And Burniske, 63, wanted to keep his coins rather than trade them for dollars. “If you cash out, you have to pay sizable tax and you’re leaving a lot of upside on the table because you’re getting out early,” he said. Then came an option that wasn’t available when Burniske found the properties late last year: a 30-year fixed-rate mortgage secured by part of his Bitcoin and Ethereum holdings. He nailed down the loan from Milo Credit, a Miami-based startup that’s seeking to tap into the burgeoning pool of crypto loyalists who want to diversify their wealth while hanging on to their tokens. Crypto mortgages are the latest example of the deepening role of digital coins in the U.S. real estate market, with property buyers and lenders alike embracing the volatile currencies to underpin deals for hard assets. Last year, Fannie Mae started allowing borrowers to use crypto for their down payments. New buildings going up in tech hot spots like Miami are accepting digital tokens for deposits on condos. A house in Tampa, Florida, even sold as an NFT earlier this year. The home loans offered by Milo represent a new twist. Instead of simply paying for property with tokens, borrowers pledge their digital holdings as collateral, with no down payments necessary. That enables the holders to keep their coins, avoiding taxes on capital gains and theoretically benefiting from rising values for both the tokens and the real estate. It also heightens risk by using a volatile asset to finance purchases at a time the heated U.S. property market faces a slowdown from the fastest jump in borrowing costs in decades. Josip Rupena Source: Milo Milo wants to make such loans a big business by pooling them and selling them to banks, asset managers and insurance companies, maybe even offering them as bonds in a securitization, according to founder Josip Rupena. Wall Street’s financial engine is already looking at the novel mortgages. “We’ve advised on several matters involving the origination of loans backed by crypto and NFTs for eventual securitization and similar concepts, said Steve Blevit, a partner at law firm Sidley Austin, who specializes in financing esoteric assets. “We see a lot of interest in this area and expect it will develop into a new asset class.” Until now, those with large crypto holdings who didn’t want to sell were turning to companies like BlockFi, which offers collateralized loans that can be used to buy property. There’s also Austin, Texas-based Unchained Capital, which offers three-year loans with up to 14% interest rates. Milo, which started originating home loans in 2019 for non-U.S. citizens, is offering a product that looks more like a traditional mortgage. If its wait list of more than 8,000 people ready to buy property in states such as Texas, California and New York is any indication, the company’s crypto offering may dwarf its $100 million of foreign national loans. The company has issued pre-approval letters on $340 million of mortgages in the last 30 days. Milo recently received $17 million in Series A funding led by venture-capital firm M13 to help fuel growth. “Were going to refine this and get it bigger,” said Rupena, 38. “Milo will be looking to provide other long-term solutions to those with crypto wealth — not just mortgages.” It’s the type of lofty ambition rippling through the crypto economy and Milo’s hometown of Miami, where the culture of decentralized finance is fast taking root. In the city’s Wynwood neighborhood, Bored Ape NFTs, which grew in mainstream popularity with the help of Snoop Dogg and Justin Bieber, hang out on building facades and telephone poles. Cranes dot the skyline in between old warehouses about to be inundated by employees of Blockchain.com and MoonPay. Bored Ape NFT graffiti in the Wynwood neighborhood of Miami. Photographer: Eva Marie Uzcategui/Bloomberg Even as the value of digital assets has exploded over the last decade, standing now at about $2 trillion, it’s a big challenge to cross into the decades-old, highly regulated mortgage industry. Skeptics point to cryptocurrencies’ volatility: Bitcoin infamously soared 305% in 2020 but is down more than 40% from an all-time high. Ether and other altcoins have also suffered steep declines. Crypto has also attracted attention from government officials who have expressed concern about the lack of regulatory oversight and surveillance which can come with fraud and other problems. “There are always early adopters out there trying new things,” said David Lykken, president of Transformational Mortgage Solutions, a consulting and advisory firm. “Cryptocurrency doesn’t have enough stability or the confidence of the broader investor community. Certainly not now — maybe never.” Supporters remain steadfast, arguing the tokens will prove their worth in time. Bitcoin has still gained almost 500% since the end of 2019.
A 63 y.o buying overpriced property in Miami, backed up with crypto. Bundle it all together, give A+++ and sell if for NYC firefighters pension funds.
It sounds like a pretty good deal for the lender. It would be interesting to know the LTV ratio, and if the price of the pledged collateral drops, at what price it would be liquidated to secure the mortgage. That is, how much margin is he allowed on the collateral? For the borrower the benefit is this is not a tax recognition event. But I don’t see this as diversification of risk. What is the correlation between crypto and multi-unit residential real estate in that area? I’m guessing it’s not negative.
BAYC? Yeah, there's a thread that digs into it - gordongoner.com Didn't seem to faze the market for them though. Then again a case could be made that the NFT market is dominated by cis white males and diversity doesn't deserve a premium.
It looks like it can be as much as 100% LTV crypto asset It's adjustable if you want to put down a downpayment, for example There have been many lenders that offer short term loans against cryptos such as BlockFi, Nexo and even Fidelity offers for their HNW clients. They don't offer mortgage loans, yet BlockFi will send the funds in 1 business day with no credit check needed It's a great deal for everyone. You can always add more to your collateral if the price of Bitcoin (for example) goes down in value. I think the trigger is 80% value ------------------------------- https://www.milocredit.com/crypto/
So in the end everybody buys real estate with copies of computer pixels. Like read before, it sounds like the end game, excesses stage. When prices collapse this will have its domino effect to the property market. Enjoy these times, our children will scratch their heads these things really happened. Reality is often stranger than fiction.
At present there is no secondary market for these mortgages. Until there is one, these mortgages are just isolated deals and have no impact on the real estate market. The article mentions securitization but I’m not sure how much appetite firms and institutions have for that idea after 07-08.
"Fannie Mae started allowing borrowers to use crypto for their down payments." This really is false information. Fannie Mae only accepts actual U.S. currency. There are to many crypto articles using this ridiculous info. Fannie Mae will not currently accept your Bitcoin or Dogecoin for down payment on your new home.. lol