A report published on May 2 by the rating agency Weiss Ratings warns that crypto-backed mortgages “spell risk.” Weiss editor Jon D. Markman said backing a mortgage with crypto is an “interesting strategy,” but stressed that during these market conditions “investors should be skeptical.”
Weiss Ratings Editor Doesn’t Believe Crypto and Mortgages Mix
According to the editor at Weiss Ratings, Jon D. Markman, lenders who allow people to use crypto to back a mortgage might be adding more risk to current market conditions. Markman uses the firm Milo as an example, as the Florida-based digital bank is allowing mortgage investors to use digital currencies as collateral. In Markman’s opinion, the trend is similar to the risk-associated home loans that were sold in 2007-2008. “Pooling risky home loans, then selling them to unsuspecting asset managers, was the recipe for the Great Recession of 2009,” the Weiss editor insists. As long as housing prices continued to climb, homebuyers were able to refinance and everyone got paid, including bondholders.” Markman continued:However, when housing prices imploded, millions of low credit score borrowers defaulted. The rest is history.
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