WASHINGTON (1/27/16)--The Credit Union National Association (CUNA) and its trade association partners are asking for relief from a fast-approaching deadline involving financial institutions' responsibilities to identify borrowers covered under the Military Lending Act (MLA).
Beginning Oct. 3, lenders must determine the military status of all applicants for many forms of consumer credit. The MLA places certain protections over covered borrowers, including a cap on annual percentage rates, so credit unions and other lenders need to know which borrowers are covered.
On Jan. 12, credit unions and other lenders were notified that they have until Feb. 1 to notify the Defense Manpower Data Center (DMDC) of intentions to use that center for identifying covered borrowers. Lenders were also told at that time that that there will be limited availability for using the DMDC as a resource.
"For the thousands of (financial institutions) that provide access to credit to America’s servicemembers and their dependents, the February 1 deadline leaves little time to analyze their options and respond to DMDC in a timely manner," CUNA warned in the joint letter to the U.S. Department of Defense.
"In addition, limiting the availability of the best, most efficient option to determine military status of loan applicants will negatively impact smaller and mid-size institutions. For these reasons, we request an extension on the deadline for indicating interest in the direct connectivity option until March 1, 2016," CUNA said.
The letter was also signed by American Bankers Association, American Financial Services Association, Association of Military Banks of America, Consumer Bankers Association, Financial Services Roundtable, Independent Community Bankers of America, and the National Association of Federal Credit Unions.