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Comment Letters Needed on Proposed DoD Rule Affecting CU Military Members
Thursday, December 18, 2014 7:00 AM

As you may have heard, the Department of Defense (DoD) has proposed regulatory changes that will affect how credit unions serve their military members, and, in fact, their members in general. The rule will affect all credit unions, but will have a particular impact on military credit unions. This is true even if your credit union does not offer products over the 36 percent lending cap established by the Military Lending Act (MLA).

Cornerstone is asking its credit unions to send their very important comment letters to the DoD before the Dec. 26 deadline.

If you're unsure how the DoD's proposal would affect your military members, here's the rundown. It would:

  • Amend the DoD rule that implements the MLA. The MLA limits the amount of interest that a creditor may charge on payday loans, vehicle title loans, and refund anticipation loans to service members to a maximum annual percentage rate of 36 percent.
  • Prohibit your credit union from offering payday loan alternatives that are presently permitted under current NCUA and state regulator rules. As you know, this service is valued by many members.
  • Expand the scope of products to which the rule applies to make it applicable to most closed end and open end credit products.  Again, even if you don’t offer loans above the 36 percent interest cap, you would be affected by operational requirements including mandatory disclosures tied to a myriad of additional loan types.
  • Have unintended consequences for some credit unions and could jeopardize extension of some consumer credit to service members and their families.

The holidays are quickly approaching, but before you head off on vacation, please remember to send your comment letter to the Department of Defense (DoD) before the Dec. 26th deadline.

For more information about the proposal, including talking points and how to file your comments, please click here. Please also copy Suzanne Yashewski, SVP Regulatory Compliance Counsel, at the email below with your comments.

If you have any questions, please do not hesitate to contact Suzanne at (512) 853-8516 or syashewski@cornerstoneleague.coop.