With the Oct. 3 compliance deadline for the Department of Defense’s Military Lending Act rule bearing down, the American Bankers Association today requested examination procedures from the prudential regulators that would clarify how banks will be examined on particular points within the rule.
Specifically, ABA urged the agencies to distinguish between “phony” purchase money loans designed to evade the requirements and legitimate purchase loans with related services and products financed by the loan. ABA asked the agencies to allow lenders to rely on the borrower’s statement that a loan is being used to purchase a vehicle or personal property, which makes the loan exempt from the rule.
ABA also urged the agencies to allow creditors to benefit from the “safe harbor” for determining military status under clarifications made in the Pentagon’s recent interpretive rule and to allow covered borrowers to obtain loans secured by a bank account.
ABA continues to work with the DoD and regulators to ensure that the changes to the rule are implemented with minimal imposition on customer service. To help bankers comply with the changes, ABA has updated its staff analysis on the MLA to reflect the interpretive rule.