In this comment, CRL applauds the Department of Housing and Urban Development for taking a critical first step in better understanding buy-now, pay-later financing effects by soliciting information from the general public and all concerned stakeholders. For the reasons discussed in this response, CRL believes that this important step should be followed, however, by focused research into the relationship between mortgage defaults and buy-now, pay-later (BNPL) financing before any changes are made to underwriting policies at the Federal Housing Administration (FHA). As further discussed in the comment, given their short-term nature and small sizes, most BNPL financing agreements appropriately fall outside underwriting consideration for large, long-term loans such as FHA-insured mortgages. Decisions made to mitigate risk to borrowers and, derivatively, to the Mutual Mortgage Insurance Fund should be based on concrete research and data absent any evidence of an emergency threat to borrowers or the Fund’s wellbeing. This need to exercise caution before engaging in making underwriting changes that would limit access to housing credit is especially true in the present environment where stagnant wages, steep home prices, high interest rates, inflation, and rental affordability challenges are already imposing significant constraints on mortgage access.
