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In a letter with six additional members of the House Financial Services Committee, Rep. Warren Davidson, R-Ohio, encouraged the Department of Defense (DOD) to withdraw question No. 2 from its Military Lending Act (MLA) revised interpretive rule. NAFCU and the Defense Credit Union Council (DCUC) are also working to have question removed due to the confusion it has created for credit unions and their third-party vendors.

The seven members of the House Financial Services Committee, in a letter to the department Thursday, said it seems to restrict access to products such as guaranteed auto protection (GAP) insurance "that many service members and their families rely on to help them manage the financial risks associated with owning an automobile."

GAP insurance protects against situations when a purchased vehicle is destroyed or stolen and the value of that vehicle is less than the remaining loan balance. NAFCU and the DCUC have argued the same as the Representatives – that question No. 2 seems to prohibit access to GAP insurance for the MLA-covered borrower when they want to finance the insurance with the loan used to purchase the vehicle. 

Signers of the letter, in addition to  Davidson, included: Rep. Scott Tipton, R-Colo., Rep. Roger Williams, R-Tex., Rep. Bill Posey, R-Fla., Rep. Ted Budd, R-N.C., Rep. Lee Zeldin, R-N.Y., and Rep. Alex Mooney, R- W.Va.

NAFCU will continue to push for more clarity in the form of guidance or revisions to the MLA rule. NAFCU has a host of MLA resources available here and also has its Military Lending Act Guide that explains these interpretations.