Encrypted currencies such as Bitcoin have appreciated very quickly in the past year, and some have cashed in their digital assets in order to buy a car or house.
However, those who cash in digital assets, even if they already have the funds to purchase real estate, it is difficult to obtain a home loan.
This week, on the Bitcoin Reddit Forum r/btc, a person trying to get a mortgage from the US financial company PNC Bank was rejected by the bank because it sold the cryptocurrency for funding. The Bitcoin investor sold a portion of its digital assets in December. Therefore, PNC Bank rejected his loan application most likely because of his wave of operations.
In December last year, bitcoin prices were close to $20,000, and many investors made “cash out”. During that time, Bitcoin.com reported on the purchase of Lamborghini and luxury homes with a large amount of bitcoin, and detailed the difficulty of converting more than $10,000 in cryptocurrency into French currency.
The Reddit user u/fojawi also said:
Last December, I sold some digital currencies, crossed countless barriers unrelated to Bitcoin, and got PNC's traditional mortgage. Throughout the process, PNC did not indicate that bitcoin was a worrying issue. But in the end, after I made all the concessions they wanted, they answered all their questions. They said that they had put aside some of the problems involved in these concessions because some of the funding for the down payment was Bitcoin.
Finally, they said that the down payment or other mortgage factor funds should not be related to Bitcoin sales, all of which must be in the bank's savings account. Banks holding these funds have never been exposed to any bitcoin trading platform. The banks said that the length of time it takes to sell cryptocurrencies is irrelevant.
Mortgage providers are not ready to deal with this issue, and this is not the first time people have questioned the sale of Bitcoin. Because of this problem, they are unable to obtain a loan.
After the cryptocurrency reached an unprecedented price high, there were reports that the UK mortgage lender refused to accept deposits related to digital assets for fear of “money laundering”.
According to Mark Stallard, a broker at House and Holiday Home Mortgages, one of his colleagues has accumulated £40,000 from Bitcoin investment. However, the loan is still problematic.
I called the first mortgage bank and the bank asked me what was the cryptocurrency. I called the other two banks and the bank also refused. When I talk about where the money comes from, people are very reluctant to understand this. I don't think mortgage providers are generally prepared for this problem.
UK lenders believe that funds derived from cryptocurrencies may pose risks because of the potential for money laundering.
In addition, some UK mortgage lenders may approve such loans, but this will require a broader and deeper audit. For example, the Yorkshire and Coventry Building Associations in the UK said they would accept funds from cryptocurrencies, but would also require a more thorough audit and experience identification process. A statement from the Regional Building Society (BSA) details that lenders have doubts about these funds because of the “money laundering risk”. BSA has a cooperative relationship with a large number of mutual banks and depository institutions in the UK.
The BSA said in January this year:
These electronic currencies are currently not regulated, which makes their risk categories high. In addition, criminals may use them to wash money.