Federal housing officials are studying the risks of buy now, pay later (BNPL) loans on housing payments and market stability. The Department of Housing and Urban Development issued a request for public comment on BNPL loans, seeking industry feedback on how these loans impact borrowers’ financial situations and housing-related expenses. HUD aims to understand how BNPL loans intersect with housing payments to determine if new policies are needed for FHA support. Current FHA policies largely exclude BNPL loans from underwriting determinations if the debt will be paid off within 10 months and is 5% or less of a borrower’s monthly income.

The Consumer Financial Protection Bureau has retreated from a rule interpretation that would have provided BNPL users with consumer protections similar to credit cards. The Financial Technology Association sued to block the bureau’s BNPL rule interpretation under the Truth in Lending Act. BNPL companies are working to have their lending data included in consumer credit scores. Affirm began reporting data to credit bureaus, and FICO plans to include BNPL data in some credit scores later this year.

Four large BNPL providers had no comment on HUD’s information request. The Financial Technology Association plans to submit comments on HUD’s BNPL request. The American Fintech Council is encouraged by HUD’s decision to understand how BNPL products may impact borrowers in FHA programs. Comments on HUD’s request are due by Aug. 25, with nearly two dozen comments collected so far. A commenter suggested requiring BNPL companies to report to credit bureaus for loans with more than four payments to assess borrowers’ financial management capabilities.

Read more at Yahoo Finance: HUD studies BNPL housing risks