Milo Credit has introduced a cash-out refinance mortgage product that allows borrowers to access 100% of their home's equity by pledging their crypto assets and the property to secure the loan.
This follows Milo's purchase mortgage offering released earlier this year, in which the borrowers
Milo is bringing this product to market during what some experts deem as a "crypto winter," an extended period where currency values are at low levels. Back in May,
But many people that have
"We [cannot] foretell what's going to happen over the next three months," Rupena said. "But I guarantee you over the next three, five, seven years, people that have this wealth will definitively need a solution like this, so we're playing the long game here."
Many of the people that Milo works with have been long-term investors in cryptocurrencies, as far back as 10 years ago, he added.
"They've been holding it through some of these periods of more volatility and have seen the benefit of holding, which is why for them a product like ours is very compelling, because they want to continue to own it," Rupena said. "The question is, what do they want to do in addition to holding it?"
The new crypto mortgage product is secured by both the cryptocurrency and a first lien on the property. Repayment can be in either dollars or crypto. If the value of the pledged crypto declines significantly, the borrower might have to add more crypto or reduce the loan balance.
In addition, Milo introduced an "undercollateralized" option backed by USD Coin, a cryptocurrency pegged to the U.S. dollar. Consumers can borrow 100% of the property's value by pledging 40% of the loan amount in USDC.
This was not something that Milo originally designed but it was requested by its borrowers, Rupena said.
Borrowers can choose to use this option for either a purchase or refinance mortgage. This compares with using a cryptocurrency such as bitcoin or ethereum, where the amount pledged has to be one-to-one with the loan amount.
"There's more demand for this product because there are more and more consumers that are living in the digital world and earning in the digital world, earning in stablecoin and USDC and paying their bills and doing everything else with it," Rupena said.
These programs allow consumers to receive larger loans than what they would if using traditional underwriting, he added.
"They're leveraging those crypto assets so that they can go out and get a mortgage and for us, this allows us to underwrite them differently, to consider that we do have something to mitigate some of the risks of working with a consumer that may be less conventional than most people that are getting normal mortgages," Rupena said.
Milo originated more than $10 million in crypto-backed mortgages since coming to market in April through July, Rupena said. In March it raised $17 million in a Series A round led by M13. Other participants were OED Investors and MetaProp, who were part of Milo's $6 million January 2021 seed round.
