On Compliance: Military Lending Act implementation

first_imgIf your credit union is like most financial institutions, you have been spending a lot of time and money over the past year preparing for the Military Lending Act revisions that took effect earlier this month. These amendments significantly expand the scope of the regulations governing credit unions’ extension of certain consumer credit transactions to active duty members of the U.S. Armed Forces and their dependents. Most notably, the revised rules widen the definition of “consumer credit,” offer two new safe harbor tests to determine whether a borrower is a “covered borrower,” and add new oral and written disclosure requirements.With the majority of these changes going into effect Oct. 3, have you done everything you need to do to ensure compliance? Here are some suggested steps to take to make sure you are ready for these new regulations.1.    Establish procedures to determine “covered borrower” status.In addition to broadening the definition of a “covered borrower,” the MLA amendments replace previous language with two new methods to conclusively determine whether a borrower is covered under the the act: (a) searching the Department of Defense’s database directly or indirectly and (b) verifying a borrower’s status using a consumer report obtained from a nationwide consumer reporting agency or reseller of consumer reports.To take advantage of either safe harbor, a credit union must make a covered borrower determination no more than 30 days prior to the initiation of the covered credit transaction or application for the covered credit account. A 60-day look-back period applies to firm offers of credit. 4SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr continue reading »last_img read more