by: Henry Meier
Consumer lending is about to get even more complicated for all credit unions, especially for those of you who provide loans to members of the military, their spouses and dependents.
Yesterday, President Obama announced a final rule expanding the protections afforded to military personnel getting consumer loans. The rule means that most military consumer loans, including credit cards, will eventually be subject to a Military Annual Percentage Rate cap of 36%. All of you should review this regulation. Credit unions are not exempt. It’s time to call your vendor and get ready to groan as you are taught about these mandates at an upcoming compliance conference.
First some context. In 2007, responding to reports of predatory lending and payday loan practices around military bases, Congress passed the Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,” Act (10 USC 987). The Act gave the DOD discretion in deciding which loans would be subject to greater protections. It ultimately made payday loans, vehicle title loans, and refund anticipation loans subject to a special Military Annual Percentage Rate (MAPR) of 36%.continue reading »