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The Department of Defense (DoD) last week issued a third interpretative rule for its Military Lending Act (MLA) regulations that reverts language for Question No. 2 to guidance originally issued in 2016. NAFCU Vice President of Regulatory Compliance Brandy Bruyere breaks down what this means for credit union operations and how it adds to clarification in a new post on the Compliance Blog.

“The original MLA regulations only applied to three kinds of products: payday loans; tax refund anticipation loans; and vehicle title loans, when made to certain servicemembers and their dependents,” explains Bruyere. “Effective October 3, 2016, the DoD expanded the scope of these rules to include most consumer credit products, with certain statutory exceptions including vehicle purchase loans and residential loans.”

Bruyere goes on to provide background about the difficulties credit unions faced from 2015 to 2017 with regards to the implementation of MLA regulations.

Bruyere highlights that in 2016 and 2017, the DoD attempted to provide some clarity with interpretive rulings that proved helpful in some respects but created new questions as well.

“This [third interpretive rule] is good news for credit unions in terms of the difficulties presented by the language pulling vehicle purchase loans that finance credit related products into the scope of the MLA,” Bruyere adds. “However, it does restore the previous ambiguities about the scope of question 2.”

In regards to the publication of the latest MLA interpretive rule,  Bruyere points out that the DoD indicated they will further consider this issue.

“NAFCU will continue to advocate for clarity for credit unions and keep members posted on this issue,” Bruyere concludes.

Bruyere points to NAFCU’s many previous Compliance Blog posts on this topic and the member-only MLA Compliance Guide as resources for further comprehensive guidance. For more on the interpretive rule, read Bruyere's blog post.