The world’s first crypto mortgage? Homeowners insurers don’t hate it

If homeowners insurance companies didn’t face enough problems this year, here’s another one to ponder: A Miami company is now offering cryptocurrency-based mortgages.

Some insurance representatives are cautiously optimistic about the idea, but a few wonder what a Bitcoin mortgage could mean for policies and escrow accounts, especially if the currency loses value.

David Howard

“As long as it’s a legitimate mortgage and follows the mortgagor vs. mortgagor process, I don’t foresee us having an issue with insuring homes with crypto mortgages,” said David Howard, president. of Vyrd Insurance, a recently launched real estate insurance company in Florida.

He added, however, that because this is a new type of mortgage, more research is needed.

Milo, a fintech company with offices in Miami and directors based overseas, announced last week that it is now offering what appears to be the world’s first crypto mortgage. Customers will be able to pledge their Bitcoin assets and benefit from low-interest loans over 30 years – with no down payment, Milo said in a press release.

“The world is changing rapidly, with how consumers create and invest their $2 trillion in crypto wealth,” said Josip Rupena, CEO and Founder of Milo.

The company said it was an approved, audited and insured direct lender and was “capable of delivering on its commitment”. The press release did not address what could happen if the digital currency were to lose value, as Bitcoin and other cryptocurrencies do.

Company officials could not be reached for comment, but the statement said conventional mortgages have been tricky for crypto investors, due to tax obligations and fluctuations in value.

“There are countless stories of people buying property with the proceeds of bitcoin only to see it increase in value and be worth millions more,” Rupena said in the statement.

A property insurance group in Florida initially wondered how it would all work. But after checking with board members, the president of the Personal Insurance Federation of Florida said most insurers can live with crypto mortgages.

Michael Carlson

“We probably don’t care how a mortgage is paid – we only care about the insured value of the property, which won’t change due to crypto valuation changes,” said Michael Carlson.

Others accepted. Paul Handerhan, president of the Florida-based Federal Association for Insurance Reform, noted that the source of the home loan may not matter much to insurers.

“If it goes south, it probably won’t affect the insurance policy,” he said, adding that most policies are paid on an annual basis.

Additionally, Handerhan noted, crypto mortgages can open up ownership to more younger people who are more likely to invest in Bitcoin and other digital currencies, which could mean more policies put in place. .

It’s unclear how Milo would pay homeowners insurance companies from an escrow account — in bitcoin or conventional currency. But some insurers are warming up to the idea of ​​accepting premium payments via crypto. AXA Switzerland announced last year that it would allow non-life policyholders to pay with bitcoin, and Universal Fire and Casualty said it would accept crypto for certain types of commercial insurance, according to reports. the Metromile, an auto insurer, also said it would accept digital currency for premiums and pay claims with it.

Cryptocurrency, a decentralized currency designed to be used on the internet, has grown in popularity since bitcoin first hit the scene in 2008. Since then, a number of digital currencies have emerged, and most have seen fluctuations in important and frequent values.

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