Federal: AFC Comment Letter to HUD on BNPL RFI

Regulations Division
Office of General Counsel
U.S. Department of Housing and Urban Development
451 7th Street SW, Room 10276
Washington, DC 20410-0500

Re: Request for Information Regarding Buy Now Pay Later Unsecured Debt—Docket No. FR–6547–N–01

Dear Director Bernier,

On behalf of The American Fintech Council (AFC),  I am submitting this comment letter in response to the U.S. Department of Housing and Urban Development’s (HUD) Request for Information Regarding Buy Now Pay Later Unsecured Debt (RFI).

AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by fostering responsible innovation in financial services and encouraging sound public policy. AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies. Our members are also improving access to financial services and increasing overall competition in the financial services industry by supporting the responsible growth of lending and lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable financial products.

BNPL is an emerging credit product that has been successful in offering consumers a low-cost alternative to traditional high-cost credit products. Many of these high-cost credit products have been used by borrowers traditionally served by Federal Housing Administration (FHA) programs. AFC members offer responsible BNPL loans that provide clear disclosures of terms in accordance with the principles of the Truth-in-Lending Act and have tirelessly worked with credit reporting agencies to ensure that BNPL loans are properly counted on a consumer’s credit report. As evidenced by the recent decision to include BNPL products in credit reporting and scoring, the industry recognizes the importance of ensuring that consumers’ usage of these products is properly captured and understood from a credit perspective.

Further, AFC members offering BNPL loans work diligently to understand the risk profiles of each consumer they serve by underwriting each BNPL loan. By underwriting these loans, BNPL lenders are able to ensure that their consumers are not overleveraged and have the best ability to repay the debt. As evidenced by a recent Consumer Financial Protection Bureau report, BNPL default rates from 2019 to 2022 remained below 3 percent.  Whether BNPL loans are offered to borrowers traditionally served by FHA programs or those served in the traditional mortgage market, the practices pursued by BNPL lenders ensure a safe and sound loan that offers consumers a low-cost alternative to higher-cost credit.

While the underwriting processes put in place by AFC members offering BNPL loans are important to ensure borrowers who are served by FHA programs are engaging in responsible practices, as with any lending product, ultimately consumers must also engage in prudent practices. Concerns regarding “loan stacking” have been levied as it relates to consumers’ use of BNPL loans.  However, taking out multiple BNPL loans simultaneously does not necessarily mean that the consumer is acting irresponsibly and therefore should not be held independently as a risk when considering the use of BNPL data in FHA programs. BNPL loans offer flexibility to consumers, allowing them to make the financial choices that are best suited to their needs. This is further exemplified by the aforementioned CFPB report, which notes that “even with the increase in defaults during the holiday season,” which is historically a higher usage time for BNPL loans, “default rates on BNPL loans are lower than default rates on credit cards”.  Consumers who use BNPL loans simultaneously in a responsible manner should not be penalized or understood to have an increased risk profile due to their usage choices.

AFC is encouraged by HUD’s decision to understand how Buy Now Pay Later (BNPL) loans may impact borrowers in FHA programs. Given the robust disclosure and underwriting practices, as well as the low BNPL default rates discussed above, AFC believes that BNPL obligations do not negatively impact the ability for FHA lenders to accurately assess risk. Further, as evidenced by the previously mentioned decision to include BNPL loans in consumers credit reports and credit scores, BNPL’s continued growth could present an opportunity to more accurately assess borrowers served by FHA programs. We welcome the opportunity to continue to be a resource for HUD as it progresses in its study of BNPL and thank you for your consideration of our comments.

Sincerely,

Ian P. Moloney
SVP, Head of Policy and Regulatory Affairs
American Fintech Council

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[1] American Fintech Council’s (AFC) membership spans EWA providers, BNPL and other lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.
[2] See, Patrick Cooley, “Affirm, other BNPL players ratchet up credit bureau reporting,” Payments Dive, (Mar. 24, 2025) and Laurel Wamsley, “'Buy now, pay later' purchases can now affect your credit score. Here's what that means,” NPR, (Jul. 5, 2025).
[3[ Consumer Financial Protection Bureau, Consumer Use of Buy Now, Pay Later and Other Unsecured Debt, (Jan. 2025), Page 20, available at https://files.consumerfinance.gov/f/documents/cfpb_BNPL_Report_2025_01.pdf.
[4]The CFPB defines loan stacking as the practice of taking out multiple BNPL loans simultaneously or taking out BNPL loans with multiple lenders simultaneously. Ibid., Page 10.
[5} Ibid., Page 15.

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