While the initial Military Lending Act (MLA) applied only to payday loans, vehicle title loans, and tax refund anticipation loans, the amended MLA Final Rule, issued in 2015, applies to all consumer credit that’s subject to a finance charge or is payable by a written agreement in more than four installments.
Examples of closed-end loans that may be covered by the rule include:
Examples of open-end loans the rule may cover include overdraft lines of credit, unsecured open-end lines of credit, and credit cards.
Compliance with MLA was required by Oct. 3, 2016, for all open- and closed-end loans not exempt from the final rule, except for credit card accounts which had a compliance date of Oct. 3, 2017.
The MLA Final Rule doesn't apply to residential mortgages. This includes loans to finance the purchase or initial construction of the dwelling, any refinance transaction, home equity loans or lines of credit, or reverse mortgages.
It also does not apply to any loan:
The MLA Final Rule defines a “covered borrower” as a member of the armed forces who is serving on active duty, those under a call or order of more than 30 days, or a dependent of a covered borrower.
It also includes active Guard and Reserve duty, which means active duty performed by a member of a reserve component of the Army, Navy, Air Force, or Marine Corps, or full-time National Guard duty performed by a member of the National Guard pursuant to an order requiring full-time National Guard duty for a period of 180 consecutive days or more for the purpose of organizing, administering, recruiting, instructing, or training the reserve components.
However, a servicemember who is no longer on active duty wouldn't be considered a covered borrower. This distinction is important because if the servicemember is no longer a covered borrower, the loan is no longer covered by the MLA Final Rule.
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The MLA Final Rule defines dependents as:
Learn more at the CUNA Compliance Community.
MIKE McLAIN is CUNA’s senior federal compliance counsel.