CUNA continued its push for Military Lending Act (MLA) clarity for credit unions Thursday with a letter to the Department of Defense (DOD). CUNA’s letter continues its call for the withdrawal of Question and Answer 2 (QA2) from DOD’s guidance on the MLA.
Since the MLA Regulation was adopted in 2015, the DoD has issued guidance twice. In 2016 it issued an interpretive rule, and it added amendments in 2017. However, some areas of the 2017 revisions are problematic, including QA2, which addresses certain credit extended for the purchase of a motor vehicle or personal property.
“Specifically, the revised answer to Question 2 indicates that a credit transaction that also finances a credit-related product or service—such as GAP or credit insurance—rather than a product or service expressly related to the motor vehicle or personal property would not qualify for exemption from the requirements of the MLA Regulation.”
CUNA also notes that the withdrawal is “more important than ever,” particularly with hurricane season upon us.
“GAP insurance is an important tool for protecting a critical asset when unforeseen circumstances—such as a major storm—arise,” CUNA wrote. “We are fearful that the current treatment of GAP insurance as described in the 2017 Interpretive Rule may result in a lack of coverage, which could lead to major financial challenges for servicemembers and their families that sustain physical damage from a storm.