CUNA publishes analysis of MLA final rule

August 11, 2015

WASHINGTON (8/11/15)--CUNA advocacy staff have completed an analysis of the U.S. Department of Defense’s (DOD) final rule regarding military lending, and have published the results on CUNA’s Removing Barriers blog.

The changes to the Military Lending Act (MLA) were finalized July 22, will become effective Oct. 1 and compliance will become mandatory on Oct. 3, 2016.

“Under the final rule, DOD expands the scope of the MLA regulation by aligning its scope with that of the Truth in Lending Act and Regulation Z; as amended, ‘consumer credit’ covered under the MLA is now generally consistent with credit covered by Regulation Z,” the blog reads. “Thus, a wide range of credit transactions that are subject to Regulation Z--including open-end credit and installment loans--are now also subject to the MLA regulation for the first time. However, the final rule does not apply to residential mortgage loans, secured motor vehicle and personal property loans, and transactions not covered by Regulation Z.”

The rule also includes a new method of calculating military annual percentage rate (APR), which has changed from the APR calculation in Regulation Z. MAPR must include any credit insurance premiums and fees for debt cancellation or suspension agreements, as well as fees for credit-related ancillary products.

In its comment letter on the proposed rule, CUNA urged the DOD to provide flexibility from the rule for short-term, small-dollar loans, such as those made through the NCUA’s Payday Alternative Loans program.

The final rule provides a limited exclusion from the MAPR for application fees.

CUNA also requested the DOD exclude bona fide fees for credit card accounts, which was incorporated into the final rule.

The Removing Barriers blog is updated regularly by CUNA advocacy staff, highlighting the policy decisions, regulation, legislation and other issues of interest to the credit union system.