The American crypto exchange Coinbase will allow its clients to buy real estate from holders of bitcoins and USDC.
This is a concrete case of using cryptocurrencies in real life. The American crypto exchange Coinbase will allow its clients to buy real estate from holders of cryptocurrencies. Until now, it is possible to buy real estate in cryptocurrencies, or to sell your cryptos to finance your contribution, implying the payment of taxes on capital gains. For the first time in the world, Coinbase is offering to put its cryptos as collateral as part of a real estate loan, allowing you to continue to “grow your position” over time.
The crypto exchange is partnering with Better Mortgage, a mortgage company, and the Federal National Mortgage Association (Fannie MAE), a mortgage lending organization in the United States, to allow crypto holders to benefit from the same borrowing terms as those paying in dollar. The project will be launched in the coming weeks.
Concretely, if a person wants to buy a house for $500,000, they can pledge $250,000 in bitcoins and obtain a loan of $100,000 for their contribution, explains Coinbase. Better Mortgage will hold the cryptos in a Coinbase deposit account for the duration of the loan. They will be returned at the end of the repayment of the credit.
“The volatility of the bitcoin price has absolutely no impact on your mortgage loan or your personal contribution. No additional guarantee is required. Even in the event of a significant drop in bitcoin, you will never be asked to provide more guarantees,” specifies Coinbase.
Subprime crisis
This solution is considered in the context of a mortgage loan in the United States. In the event of a payment delay of more than 60 days, Better Mortgage “may liquidate your pledged cryptocurrencies. A property foreclosure procedure will be initiated separately on the 180th day of delay in accordance with Fannie Mae guidelines”, warns Coinbase.
“This new financial package will perhaps allow young American households to more easily meet the criteria required by banks to take out one of the most important loans of their lives. But be careful, could the use of cryptocurrencies as collateral reproduce the excesses and risks which had fueled the crisis of subprimes of 2008?”, points out the specialized media Cryptoast.
