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The Department of Defense's interpretative guidance released last week on its Military Lending Act changes clarifies that oral disclosures can be made in a variety of ways, including generically, writes Senior Regulatory Compliance Counsel Elizabeth LaBerge in today's NAFCU Compliance Blog post.

Under the MLA requirements, credit unions are required to provide oral disclosures in addition to written ones. LaBerge notes the confusion regarding the requirements that oral disclosures provide a clear description of the payment obligation of the covered borrower.

DoD's recently released interpretative rule clarifies that "reading all of the member's account-opening disclosures does satisfy the rule, but it is not the only way to comply," LaBerge notes.

She adds that creditors can also "orally provide a clear description of the payment of the covered borrower by providing a general description of how the payment obligation is calculated or a description of what the borrower's payment obligation would be based on an estimate of the amount the borrower may borrow."

Regarding whether credit unions can provide MLA oral disclosures via a 1-800 number and with completely pre-recorded message, LaBerge writes, "Now that the DoD has clarified that generic messages that do not address a covered borrower's specific loan terms are permissible, this could open the door to prerecorded disclosures, which may relieve some of the burden of MLA compliance."

NAFCU's Compliance Blog on Monday also discussed DoD's guidance and how the MLA does not prohibit a credit union from exercising its statutory lien.