May 17, 2016
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.
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