NAFCU statement on DoD proposal to apply Military Lending Act rate cap to more products
WASHINGTON, DC (September 26, 2014) — National Association of Federal Credit Unions (NAFCU) Senior Vice President of Government Affairs and General Counsel Carrie Hunt today issued the following statement on the Department of Defense proposal that would expand the credit products which are covered by the Military Lending Act’s 36 percent rate cap:
“NAFCU strongly supports consumer protections and notes that credit unions are already subject to a cap on finance charges,” said NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt. “We want to ensure that there are no unintended consequences from this rulemaking that would prevent credit unions, particularly those operating on military installations, from providing the safe consumer friendly products the men and women of the Armed Services have come to depend on.”
As of now, MLA protections extend to closed-end payday loans for no more than $2,000 and with a term of 91 days or fewer, closed-end auto title loans with a term of 181 days or fewer, and closed-end tax refund anticipation loans. The proposal would amend the definition of “consumer credit” to more closely match the definition under the Truth in Lending Act, covering more credit products.
However, the protections would still not cover residential mortgages and credit extended for secured personal property purchases and vehicle purchase loans secured by an interest in the vehicle.
NAFCU has worked extensively with the DoD and CFPB on financial issues affecting servicemembers, whom credit unions have a long history of serving. NAFCU has continued a dialogue with the DoD and CFPB on addressing certain practices through regulations, such as the violations of the MLA protections that were shown in a DoD report in June. However, the association commented during a previous comment period that the current regulations – as revised in 2007 – are working well, and do not need to be revised.
NAFCU will continue to work with stakeholders and to monitor this issue for its potential effect on servicemembers and on the credit unions serving them.
The National Association of Federal Credit Unions is the only national trade association that exclusively represents the interests of federally chartered credit unions before the federal government and the public.