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The Defense Department, in the text of an interpretive rule slated for publication on changes to the Military Lending Act, includes NAFCU-sought clarification that the MLA will not prohibit the use of statutory lien authority by federal credit unions.

The DoD guidance will be published tomorrow in the Federal Register. The MLA rules will take effect on Oct. 3.

The DoD guidance also clarifies how financial institutions should provide oral disclosures.

"NAFCU and our members have a solid history of serving our troops' financial services needs," said NAFCU President and CEO Dan Berger. "We appreciate the Defense Department heeding some of our concerns regarding this rule, particularly relating to the lien authority, but many of our concerns remain unresolved. We will continue to advocate for our members and to carefully review the guidance to assess its full impact."

NAFCU's Regulatory Compliance team is studying the guidance and will update the association's MLA Compliance Guide in advance of the effective date.

A credit union can use its own method to determine whether a member is a covered borrower under the rule, or it can use one of two safe-harbor methods: check the member's status in the Defense Manpower Data Center database, or check it against data obtained from a consumer reporting agency.

The new MLA rule expands the number of products covered by MLA, meaning credit unions will have to revamp how they identify covered borrowers and services.

NAFCU's extensive collection of MLA compliance resources is available online.