Product Launch Details
According to CoinDesk, Better Mortgage and Coinbase have fully launched their Bitcoin-collateralized mortgage product last week. Borrowers can pledge Bitcoin at a 250% collateralization ratio to cover their down payment. For example, a $500,000 property requires $250,000 in Bitcoin collateral to support a $100,000 down payment.
Loan Volume and Structure
Since the full launch, pre-application loan volume has reached $360 million, surpassing the previous $260 million estimate from waitlist users. At closing, borrowers receive two loans: a conventional mortgage secured by the property and conforming to Fannie Mae standards, and a down payment loan secured by the pledged Bitcoin and a junior lien on the property.
Rehypothecation and Lock-up Period
Better disclosed that it may rehypothecate borrowers' pledged Bitcoin as long as it retains an equivalent amount of assets for return. Borrowers cannot withdraw their crypto assets early; they must wait until the conventional mortgage is fully repaid or refinanced, which could lock up the Bitcoin for 15 to 30 years.
Risk Management and Custodian Role
Unlike typical crypto loans, Bitcoin price declines do not trigger margin calls or automatic liquidations. Only after a borrower defaults for 60 days may the pledged assets be liquidated. Coinbase serves solely as custodian and technology provider and does not participate in credit decisions. The product currently supports only Bitcoin; both parties mentioned USDC in March but ultimately launched with BTC first.