About five years ago, a new rule that impacted financial institution lending to members of the military went into effect. But this one could have been overlooked by financial institutions because it did not come from the traditional bank and thrift regulators. The Department of Defense issued the new rule to implement 2015 changes to the Military Lending Act (MLA), originally known in 2006 as the Talent Amendment. Some bankers thought they did not make loans impacted by MLA rules because they were not extending payday, vehicle title, or refund anticipation loans — the targets of the original Talent Amendment. But, the revised MLA covers many more consumer loans to service members. MLA vs. SCRA One area of confusion is in thinking that the MLA is somehow part of the Servicemembers Civil Relief Act (SCRA). While both laws affect lending to members of the military, there are basic differences in when and to what types of credit their protections apply and what those protections are. The SCRA applies to loans extended to servicemembers in their civilian life, and its protections kick in when they enlist or are called up to active duty. SCRA provisions apply to all types of credit, including business loans to service members. On the other hand, the MLA applies only to consumer credit (with certain exceptions) entered into by active-duty service members. MLA-covered loans The limited coverage of the Talent Amendment, noted above, meant that it did not concern most bankers because they did not generally make those types of credits. But this is not so with the new MLA. It applies to “consumer credit” to a covered borrower (for personal, family, or household purposes) subject to a finance charge or payable by written agreement in more than four installments — which is like the familiar Regulation Z we have dealt with for over 45 years. There are exceptions. The MLA rule does not apply to: • Mortgage loans, that is, loans secured by a dwelling. These include home purchase loans, home equity loans, and home equity lines of credit. • Loans expressly to purchase a motor vehicle and secured by the vehicle • Loans expressly to purchase personal property and secured by that property TALENT AMENDMENT EXPANDED — THE MLA RULE BY WILLIAM J. SHOWALTER, CRCM, CRP SENIOR CONSULTANT; YOUNG & ASSOCIATES, INC. Associate Member cbak.com 8 In Touch
RkJQdWJsaXNoZXIy MTIyNDg2OA==