WASHINGTON (11/26/14)--The U.S. Department of Defense (DoD) announced a 30-day extension of the comment period for its proposed changes to the Military Lending Act. Comments will now be accepted until Dec. 26.
According to the posting in Tuesday's Federal Register, the DOD is "extending the comment period after receiving requests from several organizations. These organizations expressed that they would not have sufficient time to adequately cover their concerns."
The proposal would overhaul the Military Lending Act and could affect credit unions that serve military members and families. Most notably, it would place a 36% cap on the annual percentage rate of interest charged for credit products covered by the regulation, which includes credit cards and payday loans.
Current National Credit Union Administration regulations allow federal credit unions to offer payday alternative loans with an interest rate of up to 28% and an application fee of up to $20.
NCUA Chair Debbie Matz previously expressed concern that the rule could prevent credit unions from making payday loans permitted by NCUA rules. The NCUA finalized a payday lending alternative rule in 2010, and considered existing DOD regulations when constructing it.
"The Defense Department's new proposed rule would broaden the definition of 'consumer credit' under Military Lending Act regulations in a way that would prevent federal credit unions from making payday alternative loans permitted by our rule," Matz said.
The Credit Union National Association and the Defense Credit Union Council are working with state associations and credit unions to develop a comment letter. CUNA is still accepting comments on the proposal.