Compliance Blog

Mar 30, 2009
Categories: Consumer Lending

DoD Regulation Examination Guidance

Posted by Steve Van Beek

Last Tuesday, I had the opportunity to give a presentation on Lending to Servicemembers at NAFCU's Regulatory Compliance School.  The Lending to Servicemembers topic covers protections under the Servicemember Civil Relief Act of 2003 (SCRA) and the Department of Defense's (DoD) regulation: Limitations on Terms of Consumer Credit Extended to Service Members and Dependents.

The Federal Financial Institutions Examination Council (FFIEC) issued examination procedures for the DoD rule.  Sometimes when regulations affecting credit unions are not issued directly by NCUA, the information can be difficult to find and track.  This is the case with the DoD rule - so you might want to bookmark this guidance for later reference.  The Federal Reserve circulated the examination procedures at the end of July 2008. 

One of the key things to remember about the DoD rule is that it only applies to three specific products:  payday loans, vehicle title loans, and tax refund anticipation loans.  As a first step, check to see if your credit union offers either of those products as defined in the rule.  That is going to be examiner's first step as well:

"Examination Procedures

Determine Applicability of DoD Regulations and Evaluate Policies and Procedures

1. Determine if the creditor offers or purchases any consumer credit products covered by 32 C.F.R. Part 232 (payday loans, motor vehicle title loans, and tax refund anticipation loans as defined in § 232.3(b)(1)).

• If the creditor does not offer or purchase consumer credit products as described above, the regulation does not apply and no further review is necessary.
"  (page 4 - emphasis added).

That last sentence is music to any compliance officer's ears.