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The nations second-largest mortgage lender aims to give borrowers the option to pay their mortgages in Bitcoin by the end of the year. United Wholesale Mortgage said itll be the first mortgage company in the U.S. to accept cryptocurrency in exchange for monthly payments.

UWM is planning to accept Bitcoin because we have nearly 1 million consumers who pay us a monthly mortgage payment, and were always trying to find a way to make things easier for our clients, said Mat Ishbia, the companys chairman and CEO.

The move raises familiar questions about cryptocurrency, and whether this virtual money can function as a means of exchange in addition to its well-known role as a vehicle for speculation. Financial experts dont expect a rush of people paying their mortgage this way.

It is nice to know that individuals can pay off their mortgage with cryptocurrency, but because of operational issues for the individual investor, I think very few will, said Clark Kendall, a financial advisor who runs Kendall Capital Management in Rockville, Maryland.

United Wholesale Mortgage is the nations No. 2 mortgage lender. It originated more than 560,000 loans in 2020, a tally that trailed only Rocket Mortgage, according to a Bankrate analysis of federal Home Mortgage Disclosure Act data.

Ishbia said United Wholesale Mortgage will open by accepting Bitcoin, the most prominent cryptocurrency. Its total market value is approaching $1 trillion.

Ishbia said his company is looking into accepting other virtual coins as well. He didnt name names, but Ethereum, Cardano, XRP and Litecoin are among the most widely held cryptocurrencies.

United Wholesale Mortgage has released no details about how the payments might work. Will consumers pay from accounts with Coinbase or other cryptocurrency brokerages? Its unclear. The company is still ironing out those issues with federal authorities. The great part of working in such a carefully regulated industry is that we are able to work directly with regulators to ensure were doing right by everyone before a change like accepting cryptocurrency comes to pass, Ishbia said.

Bitcoin has been a subject of intense interest in the past year, and its price has moved accordingly. In September 2020, a single bitcoin traded for a bit more than $10,000. By April , the price was flirting with $65,000.

Within months of reaching that high point, Bitcoin plunged below $30,000. Its on the rise again, nearing $50,000. That roller-coaster ride is the opposite of the stability that is the hallmark of such major currencies as the dollar and the euro.

Bitcoins volatility raises a number of challenges. For one, theres a mismatch between a debt payment denominated in a stable currency and a means of exchange whose price fluctuates wildly.

If your monthly mortgage payment is $1,000, do you send in $800 or $1,200 worth of Bitcoin for this months payment? Kendall said.

Greg McBride, Bankrates chief financial analyst, is similarly wary. I wouldnt recommend basing the certainty of next months mortgage payment on the price of a stock youre holding now, and I certainly wouldnt recommend doing so based on a speculative asset, he said.

Bitcoins value can move so sharply that borrowers might even fret about a jump in value in the moments between the time the payment is made and the account is credited.

For true believers in Bitcoin, the concept of using cryptocurrency to pay the bills is counterintuitive. If you think the value of Bitcoin will rocket past $100,000, why would you use it to pay the mortgage when boring old dollars will accomplish the same task?

Taxes are another stumbling block. While tax policies around cryptocurrency are a work in progress, the IRS considers using cryptocurrency to buy something or to pay an expense a potentially taxable event.

So the seemingly simple act of trading bitcoins for a mortgage payment could trigger the capital gains tax, the American Institute of Certified Public Accountants said.

I could only see recommending using cryptocurrencies to pay off debt if the investor was looking to unload their cryptocurrency and pay off their mortgage in full, Kendall said.

Using cryptocurrencies to make monthly mortgage payments does not make operational sense in my book.

Read more from the original source:
Youll soon be able to pay the mortgage in Bitcoin but should you? - The Spokesman-Review