The 21st Century Mortgage Act of 2025 would require the government-sponsored enterprises (GSEs) to consider digital assets in the risk assessments used for single-family mortgage loans. It defines what counts as a digital asset and what qualifies as a custodial arrangement, and it authorizes counting holdings of digital assets toward borrower reserves without converting them to dollars.
The bill also requires appropriate risk adjustments for volatility and concentration, and places governance guardrails on adopting or revising any methodology. The changes are implemented in two charter amendments: one for Fannie Mae (Section 302(b)) and one for Freddie Mac (Section 305).
At a Glance
What It Does
Adds a formal framework for digital assets to be considered in mortgage risk assessments, including definitions, reserve treatment, risk adjustments, and governance requirements.
Who It Affects
GSEs, regulated custodians, lenders, and borrowers who hold or seek to obtain single-family loans backed by the GSEs.
Why It Matters
Provides a clear path for digital asset holdings in mortgage risk models, potentially expanding collateral considerations while introducing governance and risk controls.
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What This Bill Actually Does
The act amends the two main government-sponsored housing finance entities to require them to look at digital assets when they assess mortgage loan risk for single-family homes. It creates precise definitions so the GSEs know what counts as a digital asset and what counts as an eligible custodial arrangement.
A key feature is that borrowers’ digital asset holdings held under a qualified custodial arrangement can be counted in the borrower’s reserves without needing to cash out into U.S. dollars. The bill also requires that risk adjustments be made for market volatility, liquidity, and how concentrated digital assets are within reserves, and that any new or revised methodologies be approved by the respective GSE board and then reviewed by the FHFA.
The same structure is applied to Freddie Mac through its charter amendment. The result is a formal framework that brings digital assets into mortgage risk management with governance guardrails and explicit risk controls.
The Five Things You Need to Know
Digital assets defined as fungible values on a cryptographically secured ledger; non-fungible digital collectibles are excluded.
Qualified custodial arrangements include regulated third-party custody or a multi-party arrangement with a controlling quorum.
Borrower digital asset holdings can be counted in reserves without USD conversion.
Banks of risk adjustments must account for volatility, liquidity, and concentration, with periodic reviews.
Methodologies for digital asset risk must receive board approval and FHFA review before use or revision.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Digital assets in mortgage risk assessments — Fannie Mae
This section adds definitions for digital assets and qualified custodial arrangements and requires Fannie Mae, when assessing a single-family mortgage loan, to treat holdings of digital assets held under a qualified custodial arrangement as part of the borrower's reserves without requiring conversion to dollars. It also mandates risk-mitigating adjustments for volatility and concentration, and requires advance board approval and FHFA review for any new or revised methodology.
Digital assets in mortgage risk assessments — Freddie Mac
This section mirrors the Fannie Mae provisions for Freddie Mac, defining digital assets and qualified custodial arrangements and allowing a borrower's digital asset holdings to count toward reserves without USD conversion. It requires similar risk adjustments for market volatility and concentration, plus board-approved methodologies and FHFA oversight prior to adoption or modification.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Borrowers who hold digital assets and arrange them through regulated custodians may gain access to more loan opportunities as their assets can support reserves.
- Lenders originating or securitizing single-family loans may benefit from a broader set of acceptable collateral and clearer risk frameworks for digital assets.
- Qualified custodians and digital-asset service providers will see greater demand for custodial infrastructure and compliance services.
- The FHFA and the GSEs gain a formal, governance-backed approach to digital-asset risk within the mortgage pipeline, improving consistency and oversight.
Who Bears the Cost
- GSEs will incur costs to implement new risk models, governance processes, data systems, and oversight procedures.
- Lenders will bear transactional and compliance costs related to verifying custodial arrangements and integrating digital-asset risk into underwriting workflows.
- Borrowers with volatile digital assets may face additional risk considerations and potential impacts on loan pricing or eligibility.
- Custodians face regulatory compliance costs to meet the new standards for custody and reporting.
- Regulators will shoulder ongoing oversight responsibilities to ensure adherence to the new framework.
Key Issues
The Core Tension
Balancing the potential benefits of including digital assets in mortgage risk assessments (expanded collateral, broader borrower participation) against the risk management challenges posed by price volatility, liquidity concerns, and the need for robust custody and governance—creating a trade-off between innovation and prudence.
The bill creates a formal policy framework to bring digital assets into mortgage risk assessment through clearly defined terms and governance steps. It relies on active governance—board approvals and FHFA review—to prevent arbitrary or ad hoc changes to risk methodology.
While the approach can expand access for asset holders and modernize risk management, it also hinges on accurate valuation, custody reliability, and the ability of the GSEs to implement new models without destabilizing existing underwriting practices. Key questions include how to standardize valuation, how to handle rapid price swings, and what reporting the GSEs will require from custodians and borrowers.
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