HousingWire Article: CEO Armando Falcon on the FHFA’s move toward crypto mortgages

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HousingWire Article: CEO Armando Falcon on the FHFA’s move toward crypto mortgages

It’s been just over a week since Federal Housing Finance Agency (FHFA) Director Bill Pulte directed Fannie Mae and Freddie Mac to start preparing for the use of cryptocurrency in single-family mortgages.

With limited guidance beyond the FHFA’s directive, mortgage originators and industry experts are working to assess how cryptocurrency could be applied to mortgages. They’re evaluating potential use cases, volatility risks, collateral pricing and implications for the underwriting process.

Among these experts is Armando Falcon, chairman and CEO of Falcon Capital Advisors and the former director of the Office of Federal Housing Enterprise Oversight (OFHEO), now known as the FHFA.

Falcon sat down with HousingWire to offer his perspective as a predecessor of Pulte’s and to showcase Falcon Capital Advisors’ new digital asset practice that advises mortgage lenders on how to safely incorporate crypto and other digital currencies into their businesses.

This interview has been edited for length and clarity.

Sarah Wolak: Can you tell me about your background as a regulator for the government-sponsored enterprises (GSEs) and what you do today?

Armando Falcon: I left the government about 20 years ago. I went into the consulting business with another group of people and eventually set up my own firm. And so for the past 17 years or so, I’ve been building a management consulting firm focused on not just the mortgage market, but also credit markets and capital markets.

I think we built up a nice niche business of providing basic management consulting services, and we try to be on the leading edge of developments in the mortgage market. Several years ago, I saw that there was a growing movement in the eNote initiative. So I formed an E-note digital mortgage practice group within the firm, and I’ve now got a team of people there who focus on that.

Whenever we see the markets moving in a certain direction, we try to align with where the market’s going and help clients take advantage of new opportunities, as the mortgage market is always evolving. And that sort of leads into the whole cryptocurrency world.

Wolak: Can you tell me about your latest division, Digital Assets Advisors?

Falcon: We’ve been watching what’s going on with the digital currencies world. We view digital assets, as a lot of people say, as crypto — and that refers to digital currencies generally — but the whole digital space is more than crypto.

It’s also various types of assets, like NFTs, and so this practice group, once the Trump administration decided they wanted to bring some regulatory structure around the digital currency world — and, more broadly, digital assets — we thought that if this market’s going to start to develop within a well-established regulatory framework, then our clients and new clients may need some help.

Our first webinar is in a few weeks, and that will focus primarily on the emerging role of crypto in housing finance.

Wolak: Can you share some of the developments you’ll be discussing, specifically about Fannie’s and Freddie’s directive to prepare for crypto?

Falcon: Director Pulte instructed the GSEs to reconsider how crypto is utilized or not utilized in the underwriting process. And so we’ll talk about some of the implications of that as it moves forward, and what potential originators and servicers and investors have to be thinking about as that begins to get implemented.

Wolak: What are some of the things that they have to be mindful of?

Falcon: We have to think about what the risk appetite is. Do they do they have the risk appetite and the proper risk management practices internally to originate mortgages in the way that the agency is going to permit crypto to be utilized in the underwriting process?

They will, like anything else, be able to decide if they want to engage in that type of mortgage origination or not. They’ll have to consider what the competitive advantages and disadvantages are if they don’t get involved.

So the next step is to make sure that they have a full compliance regime, the right risk management practices, the right amount of policies and procedures, training for all of their personnel, and make sure their whole investor network is aligned with the origination of these types of mortgages.

Wolak: What about the hurdles for the GSEs when developing the framework to accept crypto?

Falcon: They have to make sure that it’s done in a very safe and sound manner. The last thing they want to do is to authorize something that creates unintended consequences.

It’s one thing to say crypto will be allowed in the underwriting process for getting a mortgage. It’s another thing to ask, well, what kind of crypto? There are many types of cryptocurrencies out there, besides just Bitcoin. Does the crypto have to have a certain amount of market volume so it is very liquid?

Does it have to be traded on an exchange so that it’s freely bought and sold and converted into cash, if need be? All these things have to get figured out to make sure it’s not the wild west, right?

Wolak: Based on your experience, what do you think it will take for Fannie and Freddie to safely and accurately integrate crypto into risk models as they move forward in this process?

Falcon: I think one good step would maybe to do this as a pilot program, rather than wide-scale permission to transact. It would make sense to start with just the pilot program, so the originators, some participants in the pilot program on the origination side, can do some transactions. They can figure out if there are any hidden risks that they didn’t anticipate or problems with the transaction itself.

Same thing for the regulator — they can assess the transaction and see how it went, and decide if risk management and internal controls were adequate.

Wolak: How are you perceiving the FHFA’s directive?

Falcon: I look at this as just part of the continual evolution of the mortgage market. You know, before, I mentioned eNotes. Who would have ever guessed we would have paperless mortgages? There were a lot of hurdles to get to this point where eNotes are now accepted by investors and by originators.

ITIN mortgages are now also very well accepted in the industry, and investors put money into them. Maybe crypto will end up being treated just like a form of currency.

So that’s certainly something that the underwriting process can handle and that investors can figure out. Are there any differences in those mortgages from any other kind of traditional mortgage? I think the industry’s very capable of figuring this out.

Published on Housing Wire July 3, 2025 by 

Falcon Capital Advisors Expands Leadership Team to Accelerate Growth

Alexandria, VA., August 4, 2022– Falcon Capital Advisors, a leading business advisory firm that provides strategic advice, technical expertise and engagement execution to financial institutions and government agencies, today announced that it has hired industry veteran Walter Allen as its Managing Director; Natisha Dawson as its new Director of Finance and promoted Ken Yoo to Chief Operating Officer.

“We are pleased to welcome Natisha and Walter to the team and to elevate Ken in an expanded role,” said Armando Falcon, Chairman and Chief Executive Officer of Falcon Capital Advisors. “This latest infusion of talent, as well as our recent announcement that Phil Bracken has joined us as Vice Chairman, reinforces our position as the premier, full-service consulting firm dedicated to serving the needs of the mortgage and capital markets. The timing couldn’t be more advantageous, given turmoil in the mortgage market and the digital transformation that is taking place. Clients are looking for strategic counsel as they readjust their business models and for direction and implementation assistance as they digitize their lending and secondary marketing operations.”

Allen will be responsible for business development across Falcon’s major practice areas: financial institutions and government advisory services and its eMortgage consulting practice. Allen is a recognized industry veteran and digital business strategy leader with more than 20 years of experience utilizing technology solutions to drive transformational business initiatives in both the government and private sector. Prior to joining Falcon, Allen was the President of HouseAmp, a fintech company where he managed and oversaw all aspects of the operation. Prior to HouseAmp, Allen spent nearly 13 years with data and technology leader CoreLogic, most recently as Vice President of Government Solutions working directly with federal government clients and agencies. Earlier, he was the Vice President of Global Capital Markets where he oversaw a team of product specialists and subject matter experts focused on key financial services customers and the Rating Agencies.

Dawson brings more than 20 years of finance and leadership expertise to Falcon. As Director of Finance, Dawson will be responsible for leading all finance and accounting matters in the firm. Prior to joining Falcon, she was the Founder & Chief Financial Officer of The Griffin Way, a firm designed to provide outsourced finance and accounting services to small- and mid-sized businesses. Previously, she held executive financial roles at large, global marketing, public relations and communications firms.

As Chief Operating Officer, Yoo oversees Falcon’s daily operational and administrative functions. Yoo’s areas of oversight at Falcon include daily operational supervision, strategic planning, M&A planning and integration, IT and physical infrastructure management, and governance/risk/compliance activities. Yoo has more than 25 years of senior leadership experience in banking, housing finance, consulting risk management and regulatory oversight. During his tenure at Falcon Yoo has been responsible for managing teams, relationships and projects for both commercial and government agency clients. Yoo’s involvement in those engagements have included initiatives related to program management, asset management, risk management and quality control, data analytics, grant and loan administration and financial analysis for the housing, financial services and healthcare industries.

About Falcon Capital Advisors

Falcon Capital Advisors (FCA) is a Washington, D.C.-based business and technology advisory firm that provides strategic advice, technical expertise and engagement execution to financial institutions and government agencies. The FCA team is comprised of industry experts who have developed deep financial services expertise by serving as regulators at federal financial regulatory agencies and as top business and technology executives at leading financial institutions. FCA’s capabilities span the entire mortgage landscape, from origination and servicing to government agency consulting. The firm’s technology consulting practice is known for its expertise in digital transformation, its ability to implement as well as design solutions, and its vendor agnostic approach. For more information, go to falconcapitaladvisors.com.

Jim Voth: Digital Transformation Will Continue Despite Slowdown

PERSON OF THE WEEK: Will a slowdown in the mortgage market result in lenders cutting back on technology investments?

Not necessarily, says Jim Voth, managing director at mortgage advisory firm Falcon Capital Advisors, in a recent interview with MortgageOrb.

Q: Historically, when the mortgage industry goes into a down cycle, investments in technology often get placed “on hold.” Do you think this will be the case this time around? Or will the drive toward digital transformation keep going at the same pace this year?

Voth: That’s certainly the conventional wisdom, but this cycle might be different. For one thing, there is a lot of momentum behind digital lending, and the value proposition is compelling. Digital lending and e-closings, for example, can drive operational efficiency and help offset some of the margin pressure that mortgage companies are facing.

The creation of e-notes accelerates delivery to the secondary market, which is why there are more and more investors accepting eNotes, including aggregators like Wells and PennyMac. Fannie Mae and Freddie Mac also have auto-certification that reduces document certification time to almost nothing and speeds up funding.

There is also the issue of competitive parity: The nation’s largest lenders are all-in on digital lending and enhancing the borrower’s experience at closings. The next tier of lenders has to go digital to stay in the game.

Going digital isn’t the heavy lift it was a few years ago. The closing technology has been proven and is integrated into the major lending platforms and in industry utilities, like the MERS e-registry. The settlement service community, for the most part, is also up to speed on hybrid and even full e-closings. So, a lot of the friction has been removed.

To flip the script, you could argue that the slowdown in refinancing might accelerate the digital transformation. That’s because lenders will have the bandwidth to undertake and finish these projects. One bottleneck that slowed progress last year, for example, was the switchover to the new URLA form, which pushed lots of projects further down the queue in IT departments. And that’s behind us now.

Q: What are some of the operational benefits that lenders (and other players) could quickly realize by taking on either discrete or end-to-end digital engagements?

Voth: Obviously the more digital you are, the more value that you’ll realize. But not every lender needs to be fully digital from day one. There is incremental value in each step in the transformation process. Hybrid closings, for example, are more efficient in most cases than traditional closings and enhance the customer experience. They are often a good interim step prior to full e-closings.

E-notes, as we’ve mentioned, are now being accepted by the GSEs and Ginnie Mae, as well as private investors. The numbers are still relatively small as a percentage of all mortgages, but they are growing rapidly. The industry is coming to realize how much faster you can move and sell these e-assets. For example, if you can move an e-note off a warehouse line in days, rather than weeks, that significantly reduces short-term borrowing costs.

So, to recap, end-to-end solutions are absolutely achievable and can produce real bottom-line results, but they can often be accomplished in stages.

Q: Everyone has always agreed that in principle digital lending is the future. But hard numbers on ROI have always been hard to find. Is this changing?

Voth: Getting solid return on investment (ROI) numbers has been a challenge. Recently, however, two new ROI studies have been released. The first study, commissioned by Notarize, found that a full e-closing saves lenders approximately $444 per loan, and settlement agents up to nearly $100 per loan. This was based on an analysis of time savings, fewer defects, and the direct printing and mailing costs.

The average time savings on a hybrid closing was 99 minutes; 157 minutes for an e-closing. Almost 90% of the respondents said that they could close more loans with the same or fewer staff members.

Similarly, ICE Technology released an ROI survey that showed its hybrid e-closing solution is saving 70 minutes per loan and reducing overall cycle time by 2-3 days. Together these two savings add up to a savings of $134 per loan. A fully digital closing, the study suggests, could save up to $500 per loan.

We’d argue that the ROIs might even be higher, since the surveys didn’t really go into some of the downstream secondary marketing advantages like fewer days on warehouse lines using eNotes.

Q: Are there bottom-line advantages in using a consultant in a transformation versus doing it all in-house or using turnkey vendors?

Voth: This is our business, so it is a little hard not to be biased. What we’ve seen in the market though is that successful implementation of a complete e-mortgage program is determined by much more than just buying the right technology. There are impacts across your people, processes, technology and policies and procedures that are critical to get right, both from an internal operations and external adoption perspective. A firm like ours, for example, can help clients assess their digital readiness and then develop a roadmap for their journey, including the identification of the operational changes that will be required.

The advantages to working with an advisor are even more pronounced for complex engagements: for example, multi-channel digital lending or end-to-end integrations to achieve straight through processing.

A good consultant will have e-mortgage business transformation expertise, experience working with the leading eMortgage technology companies and be an agnostic party in the vendor selection process.

Our team has worked on the client side of the mortgage industry at large banks, vendors investors and industry standard-setting organizations so, in addition to knowing the strengths and limitations of vendors and solutions, we have a deep understanding of the business and compliance requirements necessary for implementation.