Removing Barriers Blog

Our Letter Urges DoD to Delay MLA Effective Date
Posted August 30, 2016 by CUNA Advocacy

In a new letter to the Department of Defense, we are urging a minimum six-month delay to the October 3 effective date of the Military Lending Act (MLA) regulation. 

While we appreciate the DoD’s compliance guidance published on August 26, in light of the fact that we are roughly one month from the October 3 effective date, we are concerned the guidance may be too little, too late. Based on our review of the guidance, it appears to provide some helpful information regarding certain provisions of the regulation. However, there are a number of areas and issues on which credit unions need clarification that were not addressed in the guidance, such as the definition of the term “ancillary product,” which is critical to accurately determining the Military APR. Therefore, we urge the DoD to delay the MLA rule’s effective date for a minimum of six months to ensure credit unions and other lenders are fully capable of compliance. 

Absent a delayed effective date, we ask the DoD to establish a safe harbor of at least six months for lenders that are working to comply with the rule but are unable to do so by October 3. The safe harbor should permit such lenders to continue operating—entirely or partially—under the regulation’s requirements prior to the July 2015 amendments. Since the DoD does not examine financial institutions, it is critical that the DoD pledge to work with the federal financial regulators to ensure the safe harbor will be observed by lenders’ prudential regulators.