The NAFCU Journal: Compliance Central - NCUA's Military Lending Act Examination Approach

In 2016, no regulation has caused more compliance-related anxiety or aggravation than the Military Lending Act (MLA) rule. The Department of Defense (DoD), after promising to release guidance for months, finally released its interpretive guidance on the MLA rule less than six weeks before the implementation deadline of Oct. 3, 2016. While that interpretive guidance did answer some important questions, such as clarifying that oral disclosures can be generic and therefore can be made by a recording, it still left many key questions unanswered. It also muddied the waters on other issues, creating confusion about loans in which the amounts financed exceed purchase price. Credit unions continue to struggle to determine whether certain items are a "credit- related ancillary product" to be included in the military annual percentage rate (MAPR), and with the ongoing calculation of the MAPR on closed-end loans where add-on products are purchased after consummation.

Multiple regulators, including the Consumer Financial Protection Bureau (CFPB), have issued interagency examination procedures for the MLA rule. These procedures contain no new answers or further guidance on how compliance with the MLA rule can be achieved. They merely broadly state the MLA rule's requirements, incorporating the DoD's interpretive rule.

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From the January-February 2017 edition of The NAFCU Journal magazine.