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NAFCU has issued a Regulatory Alert seeking members' input on the Defense Department proposal to apply the Military Lending Act's 36-percent rate cap to more consumer credit products.

Comments are due to NAFCU by Oct. 28 and to the Defense Department by Nov. 28.

The proposal would amend the definition of "consumer credit" to more closely match the definition under the Truth in Lending Act, covering more credit products. However, the protections would still not cover residential mortgages and credit extended for secured personal property purchases or vehicle purchase loans secured by an interest in the vehicle.

As of now, MLA protections extend to closed-end payday loans for no more than $2,000 and with a term of 91 days or fewer, closed-end auto title loans with a term of 181 days or fewer, and closed-end tax refund anticipation loans.

DoD also proposes to require credit unions and other financial institutions to check the Defense Manpower Data Center Database to see if a borrower is covered by MLA when he or she opens an account.

NAFCU has worked extensively with DoD and CFPB on financial issues and rules affecting servicemembers, whom credit unions have a long history of serving. It has also urged NCUA to review its own rules on short-term, small-amount loans so federal credit unions are not blocked in the future from offering them because of MLA rule changes.

NAFCU will continue to work with stakeholders and to monitor this issue for its potential effect on servicemembers and on the credit unions serving them.