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Monday, April 18, 2016

ABA, AMBA Seek Interim Rule Clarifying Military Lending Act Changes

ABA and the Association of Military Banks of America urged the Defense Department to issue an interim final rule clarifying several matters of concern and compliance questions about the changes to the Military Lending Act rules taking effect in October.

The two associations noted that guidance is often insufficient to assure lenders that they can comply confidently, whereas an interim final rule – commonly used by bank regulators – provides legal certainty.
The groups said:
Absent the legal support of a formal regulation, in order to avoid the risk of violation and the significant potential liability, lenders will be forced to choose between eliminating valued credit products, such as overdraft lines of credit, loans secured by bank accounts such as secured credit cards, personal loans, and car refinances, or denying those loans to covered borrowers.
ABA and several other bank and credit union trade groups wrote to the Pentagon in April seeking several tweaks to the regulations, which tighten restrictions on lending to service members and their families.

Read the letter.

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