Crypto bros, maybe it’s time to put down the nautical smoking ape pictures and call your LO?

UMortgage’s Tyler Hodgson just received underwriting approval on a $4M non-QM mortgage w/ cryptocurrency asset-depletion qualifying. It’s for an $8M house purchase(!) in the DFW area.

The borrower, who runs a crypto video game platform (whatever that is), didn’t have to move the assets (XRP) into Coinbase/another regulated exchange. He didn’t have to convert them into U.S. Dollars either. The investor, LendSure, instead used “proof of Satoshi” to prove wallet ownership. It’s not dissimilar to a bank depositing a couple pennies into your account to verify that it’s yours. 

Here’s why this is potentially a big moment: Crypto investors who wish to buy a house typically have to liquidate cash, move it into a bank account, & then still need additional cash for income calculating to get a mortgage. That also comes w/ a capital gains hit. It’s a big roadblock.

But NonQM lenders are increasingly getting comfortable w/ mortgages backed by crypto holdings & the FHFA recently told the GSEs to come up with a crypto policy on assets & reserves.

Using crypto as an asset can strengthen the file, which is big b/c crypto-heavy homebuyers like Hodgson’s client don’t show much income (similar to self-employed borrowers). Though the unknown is always a bit nervy, Hodgson said the origination process was similar to other non-QM products. It wasn’t that scary.

“The interest rate was the same as what it would be for a normal asset depletion or bank statement product. Solid terms, 30 year fixed, nothing crazy. No prepayment penalties, fees & rates were in line with a normal non-QM deal.” Hodgson also got paid by the lender as he normally would on a non-QM deal.

There are fascinating elements on the servicing side as well since the crypto is on a public ledger. “If you know the borrower owns Wallet 12345 and you see a $10M balance in that wallet and lend them $1M, you can track the balance of the wallet, which is public to you as an investor,” Hodgson said. “The benefit it provides to an investor is you can better predict the chance of default or issues. You can literally track the wallet to see what the trends are.”

Though the volatility of crypto assets will probably prevent it from becoming mainstream in mortgage for a few years, Figure Technologies & others are pioneering more liquid marketplaces.

“I think we’ll see more & more adoption,” Hodgson said. “As an originator, it’s an opportunity to help more people who want to buy homes. I hope to become the go-to crypto LO.”

We'll be looking at margin call risk, counterparty risk, consumer protections in a future edition. If you do crypto lending, I want to hear from you. Email me.

A few weeks after she closed on a refi for her Ann Arbor home, Lisa Cook bought a $600,000 1-bedroom condo in the Four Seasons Hotel in Atlanta. You know the story by now: Bill Pulte & President Trump say that Cook, now a Fed Governor, committed mortgage fraud.

This has been quite a saga. Reuters reported on Friday that a “loan estimate” document produced by Bank Fund Staff Federal Credit Union suggests that Cook informed credit union staff that the ATL condo was to be used as a vacation home. The story muddies the waters & gives credence to the idea that no fraud was committed. Fraud requires intent, remember? And it sounds as though she told Bank Fund Staff about the occupancy plan.

Still, the reality is that on July 6, 2021, Cook signed 🔏 closing documents confirming that the occupancy status as a principal residence & not a vacation home or a 2nd home, The Mortgage Scoop has learned. 

Isolated HMDA LAR data from the 1003 shows that Cook and Bank Fund Staff originator Adje Wilson Bahun closed on a $540,000 loan that went through Fannie Mae’s Desktop Underwriter (Note: The loan had not been sold by the HMDA reporting deadline; it’s unclear if Fannie even bought it). Cook, who declared $278,000 in income on the paperwork, received a 3.25% interest rate (above the prevailing rate of between 2.93% and 3.03%), paid nothing in origination fees, and received a $5,400 lender credit.

That $5,400 lender credit was the second-highest lender credit Bank Fund Staff issued in 2021, according to an analysis of HMDA data. The credit union marked down the rate spread as 0.382 & said the total loan cost was $4,136. The file shows Cook had a 45% DTI & a 89% CLTV. This is the first time a media outlet has reported on loan-level details from Cook’s Atlanta condo purchase.

It’s unclear why occupancy changed from a vacation home on the LE (which is not a legal document btw) to a principal residence, or when it happened. The credit union & Cook’s lawyer didn't immediately return a request for comment.

It’s important to note that Fulton County tax records show Cook has never claimed a homestead exemption on the condo. In other heavily-redacted documents related to her Fed Gov. confirmation, she described the Atlanta condo as a "2nd home." Cook also bought the Atlanta condo before the LLPA hits on second homes, so it’s hard to see how she would financially benefit from declaring it a principal residence.

Maybe the bank LO (who also did the mortgage on the Massachusetts property) said, ‘Don’t worry, nobody will find out or care that you have multiple primary mortgages,’ and I have my own reasons for doing it?" Or perhaps Cook did intend to use it as a primary residence, her situation changed & she told bank staff? Or she rushed through the paperwork at the closing? Maybe there was a clerical error & nobody noticed/cared because it didn’t affect the rate?

I don’t know. I do find it hard to believe that a future Fed Gov would sign closing docs & be unaware that she can’t get 2 mortgages in as many weeks w/ them both being principal residences, but the point is we just won’t definitively know until a full file audit emerges.

This one looks like it will hit the Supreme Court fairly soon, so stay tuned…

Guild brass are executing on their retention strategy as the Bayview acquisition gets worked out: Corporate is going to managers and LOs directly w/ bonuses, sources told The Scoop. It’s basically, “take it or leave it,” two sources said. The CA-based lender, which is expected to return to private after being bought by asset manager Bayview, is offering 25 bps to 30 bps to managers, one source said.

Another source said they’re looking to lock up LOs ahead of the Bayview deal closing in Q4. FWIW, 2 LOs and a rival manager said Guild’s pricing has been on the high side lately. One source theorized that the secondary desk is “adjusting/increasing margins as rate slips to try to move back to a more normal environment. While others are being more aggressive, keeping the same thin margins." Other large IMBs also have pretty high rates as well right now, that source said.

Guild did not return a request for comment.

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