ABA and several other bank and credit union trade groups are urging the Department of Defense to issue clarifications of and changes to the new Military Lending Act regulations taking effect in October. The regulations tighten restrictions on lending to service members and their families and incorporate a “military APR,” an all-in APR capped at 36% that differs from the definition of APR under Regulation Z.
The problems ABA and the other groups identified include the apparent prohibition on borrowers making payments by checks or ACH debits and on security interests in deposited funds; the possibility of requiring multiple credit agreements; the timing of written disclosures; the need for individualized oral disclosures; the timing of military status database inquiries; safe harbors for assignees; the lack of an exemption for credit secured by real estate with no dwelling on it; and elements of the MAPR calculation.
“Providing guidance on the issues discussed below will help ensure that military personnel and their spouses and dependents continue to have access to a wide range of credit products,” the groups said.
Read the recommended changes.
Read ABA's memo on the topic.