Over the summer, United Wholesale Mortgage (UWM) created a “bang” in the marketplace with the news it would begin accepting cryptocurrency for mortgage payments. But now it appears the initiative may be reduced to a whimper.
“We’ve evaluated the feasibility, and we’re looking forward to being the first mortgage company in America to accept cryptocurrency to satisfy mortgage payments,” CEO Mat Ishbia told investors in August. Among the currencies on the list: Bitcoin, Dogecoin and Ethereum.
But just two months later, Ishbia announced that UWM has processed just six such mortgage payments thus far, and it will not be widely accepting the experimental currencies after all.
“Due to the current combination of incremental costs and regulatory uncertainty in the Crypto space, we’ve concluded we aren’t going to extend beyond a pilot at this time,” Ishbia said in a statement.
Experts began questioning the wisdom of UWM’s decision as soon as Ishbia announced it. Cryptocurrencies are a class of financial product developed and traded using a variety of computational and security networks, of which Bitcoin is the most well known. Their status as actual currencies has been contested, but their profits are staggering: the crypto market now comprises more than $2 trillion worldwide.
But analysts say it’s impossible to predict how cryptocurrencies will impact traditional markets, and how that plays out may depend on how many people decide to use cryptocurrencies.
“UWM and other enterprises agreeing to accept bitcoin will only make material additional income if there is a significant number of potential clients that will only do business with them if they can pay with bitcoin. I consider that unlikely,” Willem Buiter, a visiting professor of public affairs at Columbia University and former Global Chief Economist at Citigroup, told The Mortgage Note.
“If a potential mortgage borrower is technologically sophisticated enough to be able to pay with bitcoin,” he continued, “he or she is highly likely to be able to pay using conventional electronic payment methods.”
Industry insiders say this sudden reversal is classic Ishbia. “Crypto was just his latest’ shiny object,’ one mortgage professional told The Mortgage Note. “It took him less than two months to drop it. He got his headline, and now he’s moving on. It looks like a stunt.”
Ishbia has acknowledged this aspect of his management style, telling Carlos Watson on the now-disgraced Ozy Media platform, “Decide fast, change often. If I get a good idea, I just do it. And if it’s wrong, I’ll change it. I’m not afraid of making a bad decision. Too many people try to get it right the first time.”
The UWM announcement comes on the heels of a September “flash crash” that wiped out much of Bitcoin’s value, though it has since recovered.
Bank of England Deputy Governor Jon Cunliffe urged for regulation of cryptocurrencies as a “matter of urgency” on Wednesday, saying a crash is “certainly a plausible scenario, given the lack of intrinsic value and consequent price volatility, the probability of contagion between crypto assets, the cyber and operational vulnerabilities, and of course, the power of herd behavior.”