Back to the Future – DoD reverts MLA guidance to 2016 edition

On February 28, 2020 the Department of Defense (DoD) issued a third interpretive rule for its Military Lending Act (MLA) regulations. This adds one more finite question & answer to DoD’s list and reverts to guidance originally issued in 2016. For those not in the weeds on this issue, first we will take a walk down memory lane to help explain what this means for credit union operations.

The original MLA regulations only applied to three kinds of products: payday loans; tax refund anticipation loans; and vehicle title loans, when made to certain servicemembers and their dependents (covered borrowers). Effective October 3, 2016, the DoD expanded the scope of these rules to include most consumer credit products, with certain statutory exceptions including vehicle purchase loans and residential loans. Credit cards became subject to the MLA on October 3, 2017. The MLA includes disclosure requirements and limitations such as a 36% Military Annual Percentage Rate (MAPR) cap. NAFCU members can find comprehensive guidance in our MLA Compliance Guide and our many Compliance Blogposts on this topic can be found here.

Implementing the MLA posed many challenges for credit unions from 2015 to 2017. This was in part because of ambiguities in the rules. As a result, the DoD issued interpretative rules in August 2016 and December 2017, attempting to provide some clarity. Both times, the interpretative rules were helpful in some aspects, yet also created new questions as well.


continue reading »