PLEDGE YOUR COINS, GET A HOUSE — BETTER ADMITS IT CAN LEND YOUR BITCOIN OUT WHILE YOU PAY THE MORTGAGE — YOU GET AN IOU BACK IN 2056
You do not get your coins back. You get coins like them, later.
Read what Better told CoinDesk, not the brochure.
The deal sounds simple. You want a house. You have bitcoin. You pledge $2.50 in coins for every $1 of down payment. The coins move from your Coinbase account into Better’s custody account, and you get two loans: a normal Fannie Mae mortgage on the house, and a second loan against the coins. No margin calls. If the price drops, nothing gets sold unless you miss payments. $360 million in applications have come in since the public launch on August 26.
Then comes the sentence that changes the deal. Better “may rehypothecate the pledged bitcoin.” In plain words: while you make your payments, Better can lend your coins out and use them somewhere else, as long as it keeps an equal amount ready to hand back. You do not get your coins back. You get coins like them, later. Much later. The coins stay locked until the whole mortgage is paid off or refinanced, and a mortgage runs 30 years. You cannot even pay off the bitcoin loan early to free them.
CoinDesk asked the two questions that matter: who holds legal title to the coins once they are lent out, and what happens to you if Better fails. Better did not answer either one.
There is more, and this part sits on Better’s own page. Ask the page when you get your coins back and it gives two different answers. One answer says once the down-payment loan is repaid. Another says after the whole mortgage is fully repaid or refinanced. Those are different promises, up to 30 years apart. Pressed by CoinDesk, Better picked the longer one.
More than a third of the applicants hold over $500,000 in coins. Each one is trading the hardest money for a promise written in someone else’s terms. This industry spent three years after FTX learning what that promise is worth.
At the time of this writing, bitcoin was $79,552 (Crypto.com, 11:07 AM ET, Sep 6).
The deal sounds simple. You want a house. You have bitcoin. You pledge $2.50 in coins for every $1 of down payment. The coins move from your Coinbase account into Better’s custody account, and you get two loans: a normal Fannie Mae mortgage on the house, and a second loan against the coins. No margin calls. If the price drops, nothing gets sold unless you miss payments. $360 million in applications have come in since the public launch on August 26.
Then comes the sentence that changes the deal. Better “may rehypothecate the pledged bitcoin.” In plain words: while you make your payments, Better can lend your coins out and use them somewhere else, as long as it keeps an equal amount ready to hand back. You do not get your coins back. You get coins like them, later. Much later. The coins stay locked until the whole mortgage is paid off or refinanced, and a mortgage runs 30 years. You cannot even pay off the bitcoin loan early to free them.
CoinDesk asked the two questions that matter: who holds legal title to the coins once they are lent out, and what happens to you if Better fails. Better did not answer either one.
There is more, and this part sits on Better’s own page. Ask the page when you get your coins back and it gives two different answers. One answer says once the down-payment loan is repaid. Another says after the whole mortgage is fully repaid or refinanced. Those are different promises, up to 30 years apart. Pressed by CoinDesk, Better picked the longer one.
More than a third of the applicants hold over $500,000 in coins. Each one is trading the hardest money for a promise written in someone else’s terms. This industry spent three years after FTX learning what that promise is worth.
At the time of this writing, bitcoin was $79,552 (Crypto.com, 11:07 AM ET, Sep 6).
KEY RECEIPTS
The product went generally available Aug 26 (BusinessWire release). Pre-applications since: $360 million in requested loans, up from $260 million projected off the waitlist (Better to CoinDesk).
The structure: two loans at closing. A Fannie Mae-conforming mortgage on the home, plus a down-payment loan backed by the coins and a second lien on the house. 250% collateral ratio: $250,000 in bitcoin funds a $100,000 down payment on a $500,000 home (Better’s product page).
At closing the coins move from the borrower’s Coinbase account to Better’s custody account on Coinbase Prime. Coinbase is custodian and technology provider only — no role in credit or liquidation decisions (the companies, to CoinDesk).
The quote, from Better’s written responses to CoinDesk, Sep 6: “Better may rehypothecate the pledged bitcoin, provided it keeps equivalent Bitcoin on hand to return the collateral at loan payoff.”
The lock: collateral stays pledged until the conforming mortgage is fully repaid or refinanced — repaying the bitcoin loan alone does not free it. A home sale requires the down-payment loan repaid before the coins release (Better public page).
Better’s page contradicts itself on the release date. One FAQ: crypto “is returned to you once the down payment loan is repaid.” Another FAQ on the same page: “returned in full after your mortgage is fully repaid or refinanced.” (Better’s product page, read Sep 6.) Better’s pressed answer to CoinDesk matches the second.
No margin calls. A price drop triggers nothing. Missed combined payments start delinquency; Better may sell coins after 60 days with notice, only enough to bring the account current. Foreclosure can start at 180 days under Fannie Mae rules; Better says it must pursue the bitcoin first.
What Better did not explain, asked directly: whether each borrower’s coins stay separately identifiable, who holds legal title after reuse, and whether a borrower is an owner or just a creditor if Better or a financing partner fails (CoinDesk).
The applicants: 35.9% hold more than $500,000 in crypto; 38% plan to buy within three months (the companies).
Bitcoin only at launch. The March announcement also named USDC; the partners deferred it.
The structure: two loans at closing. A Fannie Mae-conforming mortgage on the home, plus a down-payment loan backed by the coins and a second lien on the house. 250% collateral ratio: $250,000 in bitcoin funds a $100,000 down payment on a $500,000 home (Better’s product page).
At closing the coins move from the borrower’s Coinbase account to Better’s custody account on Coinbase Prime. Coinbase is custodian and technology provider only — no role in credit or liquidation decisions (the companies, to CoinDesk).
The quote, from Better’s written responses to CoinDesk, Sep 6: “Better may rehypothecate the pledged bitcoin, provided it keeps equivalent Bitcoin on hand to return the collateral at loan payoff.”
The lock: collateral stays pledged until the conforming mortgage is fully repaid or refinanced — repaying the bitcoin loan alone does not free it. A home sale requires the down-payment loan repaid before the coins release (Better public page).
Better’s page contradicts itself on the release date. One FAQ: crypto “is returned to you once the down payment loan is repaid.” Another FAQ on the same page: “returned in full after your mortgage is fully repaid or refinanced.” (Better’s product page, read Sep 6.) Better’s pressed answer to CoinDesk matches the second.
No margin calls. A price drop triggers nothing. Missed combined payments start delinquency; Better may sell coins after 60 days with notice, only enough to bring the account current. Foreclosure can start at 180 days under Fannie Mae rules; Better says it must pursue the bitcoin first.
What Better did not explain, asked directly: whether each borrower’s coins stay separately identifiable, who holds legal title after reuse, and whether a borrower is an owner or just a creditor if Better or a financing partner fails (CoinDesk).
The applicants: 35.9% hold more than $500,000 in crypto; 38% plan to buy within three months (the companies).
Bitcoin only at launch. The March announcement also named USDC; the partners deferred it.
THE HOUSE IS REAL. FOR THE NEXT 30 YEARS, THE COINS ARE A PROMISE.
CoinDesk original reporting · Sun Sep 6, 10:00 AM ET · + Better product page + Aug 26 BusinessWire release