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CUNA Still Seeks Comments on Military Lending Act Proposal
Wednesday, November 5, 2014 6:35 AM

Credit Union National Association continues to seek input from credit unions regarding the Department of Defense (DOD) proposal that would implement various provisions of the Military Lending Act. The proposed changes to the DOD’s regulations would:

  • Cap at 36 percent the APR charged for credit products covered by the regulation, including credit cards;
  • Require creditors to provide military borrowers with additional disclosures;
  • Prohibit creditors from requiring service members to submit to arbitration or waive their rights under the Service Members’ Civil Relief Act; and
  • Expand the definition of consumer credit.

The proposed expansion of the term “consumer credit” is a major component of the DOD’s proposal.

Consumer credit is currently narrowly defined to include only payday loans, vehicle title loans, and tax refund anticipation loans that meet criteria established by the rule. The proposal would extend the definition to a broader range of closed-end and open-end credit products; the proposed definition is consistent with that of the Truth-in-Lending-Act (TILA), as implemented by the CFPB’s Regulation Z.

  • Do you support the proposed expansion of “consumer credit”?
  • What impact, if any, will the proposed expansion have directly or indirectly on your credit union’s operations?

The DOD has specifically requested input regarding a possible exemption from the proposed definition of consumer credit for insured depository institutions and/or insured credit unions. While CUNA is included to fully support such an exemption, they seek your input on the DOD’s following questions:

  • If such an exemption is contemplated, what legitimate basis could there be for any exemption for an insured depository institution and/or insured credit union from the requirements of the Military Lending Act, particularly if under this approach other financial institutions would be subject to DOD’s regulation?
  • What other insured depository institution and insured credit union protections relating to credit products already are afforded to—or could be improved for—service members and their dependents?

To provide input on these and other important questions regarding the DOD proposal, please visit CUNA’s Regulatory Call to Action by Nov. 7.

The DOD is accepting comments until Nov. 28.