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The Department of Defense has issued a proposal that would expand the credit products which are covered by the Military Lending Act's 36-percent rate cap.

"NAFCU strongly supports consumer protections and notes that credit unions are already subject to a cap on interest rates," said NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt. "We will work to ensure that there are no unintended consequences with the changes proposed to the definition of consumer credit."

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. 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 and vehicle purchase loans secured by an interest in the vehicle.

NAFCU has worked extensively with the DoD and CFPB on financial issues affecting servicemembers, whom credit unions have a long history of serving. NAFCU has continued a dialogue with the DoD and CFPB on addressing certain practices through regulations, such as the violations of the MLA protections that were shown in a DoD report in June. However, the association commented during a previous comment period that the current regulations – as revised in 2007 – are working well, and do not need to be revised.

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.