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To give you an update of what a farce the real estate mortgage underwriting process is:

I have dollars in my bank account that are proceeds from selling bitcoin in April. These funds are magically aged to the satisfaction of the underwriting department. These funds are blessed.

I have dollars in my bank account that are proceeds from selling bitcoin in June. These funds are too new to consider magically aged, so they will need additional provenance. I will have to painstakingly show how long they were in a self-custodial wallet before they moved to an exchange. I will have to use diagrams, paragraphs of text and finger puppets to show how the transactions are related to the Kraken deposits. Because the funds did not magically age by 60 total days in the bank.

I am dumber for having learned this.

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Discussion

Darin 1y ago

I feel your pain. I went through something similar with one of my house purchases.

The bank even wanted copies of all of my retirement account statements! (IRAs, 401Ks, etc).

Rich Nost 1y ago

Oh yeah, I had to provide all that too. What I just fond absolutely wacky is how there is some sixty day time window that "ages" funds to the point that you don't have to explain anything about their provenance. I would definitely tell those looking to buy a house with bitcoin funds to:

1) Don't think you can just go swing your bitcoiner schlong around the real estate market, before "aging" those funds as dollars in a bank account for two months

2) Get an institution that does in-house portfolio loans, meaning they approve, process, underwrite, and service the loan IN-HOUSE (as opposed to those that turn around and sell your loan to another bank or farm underwriting out). Their approval amdunderwriting process are a lot more flexible.

3) Do not refer to your proceeds of bitcoin as "bitcoin" trades or sales. Just say you sold assets and let them ask for more information if they need it. It's been 15 years and these people still bristle at the mention of crypto. This will cause them to ask a lot of nonsense questions (even before processing) and they won't even understand your answers anyways. Talking about bitcoin until you absolutely need to just unnecessarily confuses the process.

Rich Nost 1y ago

*before you absolutely need to

Tracy 1y ago

Damn the KYC/AML crap. And it likely won't change. (Perhaps with Chevron Deference falling it'll be challeneged?)

But the solution is a Bitcoin circular economy ending-around this garbage.

Rich Nost 1y ago

Honestly, between having to dox my wallet rather hard and going to closing with just the April proceeds, I prefer the latter. Then I can just re-cast the loan once the June proceeds are magically aged. First month mortgage payment is rather steep, but my privacy is preserved.

paulo 1y ago

That’s some fine bullshit right there 🤦🏻‍♂️

Luke Warmwater 1y ago

Presumably, bitcoin is not the issue but that they want proof that you have owned it for a minimum amount of time? Ie, would be the same problem if a family member gifted you the same in dollars from their bank account, and you had not held it in your account for the minimum 60 days?

Rich Nost 1y ago

Yes, however, self-custody makes it extremely difficult before the 60 days. It led to a whole bunch of questions, the answers to which made them nervous. Examples:

"Can you have bitcoin generate an annual 1040 for our records?"

"Can you take a screenshot of bitcoin to show us that you are the registered owner of the account?"

If these were stock sales, these requests for info are easily answered.

My advice? Wait the 60 days, and regardless of that, don't mention "bitcoin" until they start asking for details. If you don't wait the 60 days, get ready to dox the most straight-forward view of your wallet, which will be the balance and transaction history. Because they will go cross-eyed when you start talking about blockchain explorers.

Rich Nost 1y ago

The documents from the exchange will not be enough either, if you didn't hold funds in the exchange for over 60 days.

Luke Warmwater 1y ago

That's really useful info. Thx.

A real pain going in and out of the fiat world. Just want to go into bitcoin and stay in. Looking forward to bitcoin only exchanges for property, bitcoin banks and lending/mortgages. No fractional reserve. No global banking connections.

Kind of like old fashioned community banks. But would have to be completely in the Second Realm. Maybe they already exist...