Compliance: Request MLA ‘covered borrower’ database access by Feb. 1
WASHINGTON (1/19/16)--Credit unions wishing to use the Defense Manpower Data Center (DMDC) for identifying borrowers covered under the Military Lending Act (MLA) must make their intentions known to the DMDC by Feb. 1.
The MLA places certain protections over covered borrowers, including a cap on annual percentage rates, so credit unions need to know which borrowers are covered.
Credit unions wishing to use the MLA database/DMDC direct connection capability being developed should email the MLA help desk at email@example.com no later than Feb. 1. This is necessary because the number of connections DMDC can facilitate is limited and will likely be capped.
The DMDC recently indicated that it is working to establish availability for two methods for identifying borrowers covered under the MLA rule.
Credit unions can use the existing method--using a covered borrower identification statement on the loan application--as a safe harbor for compliance until Oct. 3.
After Oct. 3, credit unions can determine whether a borrower is covered by the MLA by using one of two new safe harbor methods provided in the final rule.
One method will be to certify a borrower’s status on the DMDC database, while the other allows a credit union to use a consumer report obtained from a nationwide consumer reporting agency.
A Credit Union National Association’s September 2015 edition of CompNotes offers more details on the changes implemented to the MLA by the Department of Defense last year.