Bank and CU Trade Groups Seek Clarifications to Military Lending Rule

Bank and credit union trade groups are urging the Department of Defense to issue clarifications and changes to the new Military Lending Act regulations taking effect in October.

The regulations tighten restrictions on lending to service members and their families and incorporate a “military APR,” an all-in APR capped at 36 percent that differs from the definition of APR under Regulation Z.

The problems identified include the apparent prohibition on borrowers making payments by checks or ACH debits and on security interests in deposited funds; the possibility of requiring multiple credit agreements; the timing of written disclosures; the need for individualized oral disclosures; the timing of military status database inquiries; safe harbors for assignees; the lack of an exemption for credit secured by real estate with no dwelling on it; and elements of the MAPR calculation.

The trade groups wrote that "providing guidance on the issues ... will help ensure that military personnel and their spouses and dependents continue to have access to a wide range of credit products.”

The American Bankers Association, the American Financial Service Association, the Association of Military Banks of America, the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, the National Association of Federal Credit Unions, and the Financial Services Roundtable submitted the recommendations for clarifications and modifications.

Read the letter.