Removing Barriers Blog

CUNA Presses DoD for Guidance on its Military Lending Act Regulation
Posted February 25, 2016 by CUNA Advocacy

Yesterday during a joint trade meeting with the Department of Defense (DoD) and CFPB, CUNA staff requested, and DOD agreed to develop explanatory material regarding DoD's Defense Manpower Data Center (DMDC) database, which lenders must access to qualify for a safe harbor under DoD's Military Lending Act (MLA) regulation that goes into effect this October. Specifically, the regulation greatly expands the scope of products covered by the MLA's protections, which includes a 36% interest rate cap. While the protections apply only to servicemembers and their families, lenders will need to utilize the DMDC database to determine which potential borrowers are in fact covered. See CUNA Compliance's detailed Final Rule Analysis for more information about the regulation.

There continues to be some confusion regarding credit unions' options for accessing the database, which will be: (1) via the DMDC MLA Web Site, (2) via the DMDC MLA Web Service (which is a direct connection to the database), and (3) through one of the national credit reporting agencies. The DMDC MLA Web Service is still being developed and will be available only to a handful of large lenders with a high volume of covered borrower status requests. While most credit unions will not have access to the Web Service, it is worth noting that responses to requests made through the Web Service will take the same amount of time as those made through the Web Site; responses to individual borrower requests will be real-time while responses to batch requests may take up to 24 hours. The third option will allow lenders to request the status of a borrower through the credit reporting agencies.

We asked DoD to provide explanatory material since there are pros and cons to each option. We will alert you to that material via this Removing Barriers Blog. In addition, we are actively working with NCUA on compliance guidance for the MLA regulation and will let you know once it has been released.