MBA Responds to FHA Regarding ‘Buy Now Pay Later’ Debt

MBA responded to the Federal Housing Administration’s Request for Information concerning Buy Now Pay Later debt.

The letter from MBA Associate Vice President of Government Housing Finance Brendan Kelleher to HUD Deputy Assistant Secretary for Single-Family Housing Matthew Jones highlighted some of the underwriting and documentation challenges in respect to BNPL obligations and offered recommendations that would encourage greater transparency and standardized reporting guidelines.

Specifically, MBA’s recommendations include:

• A foundational first step of FHA establishing a clear, standardized definition of BNPL debt to help lenders determine which obligations should be evaluated under BNPL guidance

• Testing the operation of any proposed guidance before finalizing it

• FHA adopting interim underwriting guidance that provides lenders with clear direction and guidance

Click here to read the full letter.