MLA Update: CUNA shares proposed guidance language, signs joint letter to DoD
Tuesday, April 12, 2016
Since last month’s edition of the Regulatory Report, there are a couple of new developments related to implementation concerns of the Department of Defense’s (DoD) expanded Military Lending Act (MLA).
1. CUNA Meets with DoD
On March 15, the Credit Union National Association and other trade associations met with officials from the DoD, CFPB, NCUA, FRB, and the FTC to share credit unions concerns with rule implementation and to request detailed guidance. During this meeting, CUNA provided a document with a list of credit union compliance concerns to each agencies representative.
2. CUNA Submits Suggested Guidance Language
After the March 15th meeting, CUNA was contacted by the DoD to submit proposed guidance language for the MLA regulations. So last week, CUNA responded by providing the guidance language on changes to the MLA regulation. CUNA also signed onto a joint letter with other trade associations recommending clarifications and changes.
CUNA’s guidance suggestions include:
- Defining ancillary products more specifically, as any product other than credit insurance, a debt cancellation contract, or a debt suspension agreement, that could have a direct impact on the covered loan balance;
- Allowing lenders to, prior to establishing an open-end account, describe only the interest rate, payment amount and payment frequency, instead of the current language that requires the entire document to be disclosed aloud; and
- Exempting credit unions from the requirement that creditors can only take a security interest in an account opened in conjunction with the loan and only in deposits made after the loan is established. If the DOD cannot exempt credit unions, CUNA presented five paragraphs that define when and how an account can be established to meet the rule requirements.
In the signed joint letter, additional suggestions and solutions for various issues in the final rule's language include:
- Adding language that would allow a covered borrower to make a payment or a creditor to accept a payment from a check or other method of access to an account maintained by the covered borrower;
- Allowing creditors to provide information to borrowers though mail, phone or fax; and
- Allowing creditors to impose a one-time application fee.
“CUNA’s proposed guidance language to the DoD specifically addresses the concerns of our credit unions,” noted Jeanne Couchois, VP compliance and regulatory counsel for the Carolinas Credit Union League. “By working in cooperation with CUNA, the League has a greater platform to express those concerns to the DoD.”
Credit unions in the Carolinas encountering roadblocks in the implementation of MLA requirements should contact Jeanne Couchois at email@example.com or 800-822-8859, ext 565.
News Now: Per DOD request, CUNA submits MLA guidance suggestions (4/11/16)
Regulatory Report: CUNA and League secure MLA guidance, seek CU specifics (3/9/16)