The new Military Lending Act regulations — which require that banks determine military status for applicants applying for consumer credit that is not a mortgage or purchase money loan — provide a compliance safe harbor for lenders who verify military status through the Department of Defense database or a nationwide credit bureau.
Methods covered in the safe harbor include checking with the Pentagon’s Defense Manpower Data Center database through its website, which will allow single or batched MLA verification requests with a 24-hour turnaround or — for a quicker response — directly accessing the DMDC database. However, because of limited resources, the DoD will initially determine which creditors have direct access based on creditors’ volume.
As a result, by Monday, Feb. 1, bankers must email email@example.com and advise DoD that the bank is interested in direct access to the DMDC database to determine military status for purposes of MLA compliance.
Lenders may also receive safe harbor protection through obtaining credit reports. The credit bureaus have reported that the information will be an “add-on” to credit reports, and it is expected there will be a charge for the information. For more information, contact ABA’s Nessa Feddis.