Department of Defenses Interpretive Guidance on Military Lending Act Limitations on Terms of Consumer Credit Extended to Service Members and Dependents

Dear Board of Directors and Chief Executive Officer:

On August 26, 2016, the Department of Defense (DOD) issued Interpretive Guidance on issues related to the 2015 amendments to the regulation implementing the Military Lending Act (MLA). The regulation affects most non-mortgage related consumer credit a lender extends to active duty service members and their dependents. Credit unions must comply with most of the regulatory changes starting October 3, 2016. Compliance with changes related to credit card accounts begins October 3, 2017.

The Interpretive Guidance clarifies a number of issues the regulation addresses, including:

• Determining a person’s covered borrower status;
• Exercising a statutory right to take a security interest in a member’s account;
• Timing and delivering required disclosures; and
• Identifying fees which can be excluded when calculating the military annual percentage rate for credit card accounts.

For More Information

NCUA provided guidance explaining the MLA regulation in Regulatory Alert 16-RA-04, issued in March 2016 and Regulatory Alert 15-RA-04, issued in October 2015. NCUA staff is developing examination procedures in connection with the Final Rule.

If you have any questions, contact NCUA’s Office of Consumer Protection at 703.518.1140 or compliancemail@ncua.gov, your regional NCUA office, or your state supervisory authority.