In late August of this year, United Wholesale Mortgage (UWM) announced it will begin accepting bitcoin payments on mortgages by the end of 2021. The company’s CEO said, “That is something we have been working on, and we are excited that hopefully, in Q3, we can actually execute on that before anyone in the country because we are a leader in technology and innovation.” UWM also said it would begin evaluating other cryptocurrencies and hopes to accept at least one other by the end of the year.
Interestingly, the mortgage company has not announced whether it will convert the cryptocurrency payments to U.S. dollars at the point of transaction or hold the digital currency as cryptocurrency. Some industry experts warn that the move could backfire if the federal government “cracks down” on cryptocurrency use and regulates it more closely. Plans for increased cryptocurrency tax regulation are part of the current $1 trillion infrastructure bill working its way through Congress.
So, why might UWM opt to start accepting cryptocurrency, and will anyone actually make mortgage payments in crypto? To answer the first question, we need to look at the company’s business operations. UWM is the second-biggest mortgage lender in the United States (only Quicken Loans is bigger) and it is strictly a wholesale lender. This means that brokers connect clients directly to home loans. The company went public in January of this year and, so far, the company has reported that its purchase loan business is up 288 percent since that time. However, total gain on loans was down during that time, thanks to falling volumes of refinances.
Mat Ishiba, UWM’s CEO, emphasized that this is to be expected as refinancing continues to decline and mortgage rates eventually rise. He said, “UWM is built to succeed not only when there is a refi boom and margins are at record highs, but also when margins are compressed and purchase business drives volume.” Then, he gave a hint regarding why it might be important to accept bitcoin even if most consumers do not use it to make mortgage payments: “Consumers are increasingly coming to realize that working with a broker is the cheapest, fastest, and easiest way to get a mortgage.”
Ultimately, the decision to accept bitcoin and other cryptocurrencies may have more to do with maintaining the appearance of being cutting-edge and consumer-friendly than actually accepting the digital currency. As the American Apartment Owners Association put it, “[Accepting bitcoin] can be one way to stand out from competitors.” However, if you decide to accept cryptocurrency payments, remember that the value of these currencies fluctuates wildly. If you need to “cash out” cryptocurrency monthly to pay your bills, then this may not make sense for you.