Military Lending Act Implementation: Determining Covered Borrower Status


Last summer the Department of Defense (“DOD”) finalized sweeping changes to the Military Lending Act (“MLA”) that take effect this coming October. As a refresher, the MLA prohibits a credit union from charging a covered borrower an MAPR in excess of 36%. This MAPR cap applies to “covered borrowers” on most extensions of consumer credit.

A frequent question we receive from credit unions regarding MLA implementation is how to determine whether an applicant is a “covered borrower.” The MLA gives your institution some discretion as to how you go about making this determination; however, it provides you with two safe harbors.

Click here to read the full CUInsight article.