CUNA Requests MLA Credit Card Guidance, Clarifications

CUNA continued its efforts for additional clarifications, including asking for credit card guidance, on the changes to the Military Lending Act with a letter sent Thursday. Many changes became effective last October, and credit card provisions are scheduled to take effect Oct. 3.

The Department of Defense finalized changes to the MLA in July 2015, greatly expanding the types of loans covered by the rule to include most loans that are subject to the Truth in Lending act/Regulation Z and establishing limitations on terms of consumer credit extended to servicemembers and their dependents. Since the rule became effective in October 2016, financial institutions continue to struggle with a number of issues.

CUNA has had a number of meetings about compliance concerns, most recently at the beginning of this month.

CUNA seeks clarifications to several specific issues, including:

  • Purchase money loans;
  • Ancillary products;
  • Statutory liens;
  • Share-secured loans;
  • Definition of “vehicle;” and
  • Reasonable and bona fide credit card fees.
  • In addition, CUNA asked for credit card guidance to be released a minimum of 4 months prior to the Oct. 3 effective date.

“If the DOD is unable to issue guidance in this timeframe, it should delay the effective date of the credit card provisions to provide a period of at least 4 months between the date of issuance of the guidance and the effective date,” the letter reads. “Financial institutions and their vendors need more than the 5 weeks afforded them following issuance of the August 2016 guidance to make the numerous changes necessary to comply with the regulation.”

CUNA is in the process of collecting data it expects will demonstrate the adverse impact the regulation is having on some servicemembers. Specifically, the extent to which credit unions have had to discontinue certain products directly covered under the MLA regulation.

CUNA is also in the process of surveying its credit union membership on whether and how the MLA regulation has affected products offered to members, and hopes to complete its data collection by the end of the first quarter.


in Compliance & Regulatory News