The Military Lending Act May Apply To That Car Loan After All

February 2, 2018 at 8:55 am Leave a comment

Image result for north korean president

We have the greatest military in the world but judging by the way the DOD has gone about implementing the Military Lending Act it is safe to say that if the military was as bad at defending us as they are at promulgating consumer protection regulations, the United States would be a protectorate of a united Korea under the leadership of great leader Kim Jong-un.

If you think I’m being too tough then perhaps you haven’t been paying attention to the latest developments. The Military Lending Act was passed by Congress in 2007 in response to wide-spread reports of abusive loan practices towards our military personnel such as pay-day loans. The basic idea is that when consumer credit is extended to a member of the military or their relatives, they are to be given additional protections. Most importantly, the Military Lending Act mandates that covered products are subject to a Military APR (MAPR) which caps the amount of interest that can be charged at 36%. Since the original regulations applied to a narrow group of products, they didn’t get all that much attention.

But then in 2015 the Department of Defense extended the coverage of regulation to most consumer loan products and placed an affirmative obligation on institutions to identify covered individuals. This was bad but at least the final regulations did not apply to car loans. Unfortunately on December 14th, the DOD gave compliance people everywhere an early Christmas present when it issued an updated Q&A in which it explained that automobile purchases generally are not considered consumer credit for purposes of the Act, but “The answer will depend on what the credit beyond the purchase price of the motor vehicle or personal property is used to finance. Generally, financing costs related to the object securing the credit will not disqualify the transaction from the exceptions, but financing credit-related costs will disqualify the transaction from the exceptions.”

In other words, if you have the audacity to offer GAP insurance to your military members you must comply with the Military Lending Act when making car loans. Try explaining that one to your software vendor.

Yesterday CUNA joined other associations in calling for the DOD to withdraw this ridiculous interpretation which contradicts the DOD’s earlier decision that car loans are not consumer credit products for purposes of the Military Lending Act. I wish I could give you more helpful advice than this but just remember that everyone is in the same boat.

DeFrancisco Runs For Governor

Quick witted, long serving Republican Senator John DeFrancisco announced on Tuesday that he would run for Governor against incumbent Andrew Cuomo. DeFrancisco joins Brian Kolb, the Republican minority leader in the Democrat-dominated Assembly, and Joel Giambra, the former Erie County executive. Here’s a good bit of trivia for you: When’s the last time a Republican won state-wide office in New York? 2002.

My Good As Gold Super Bowl Prediction

Well it’s that moment you’ve all been waiting for when I give you my Super Bowl prediction. My predictions are so good that you can actually use them as collateral under NCUA regulations. New England 27, the Eagles 14. Brady cements his legacy as the greatest quarterback of all time and after some early success, the Eagles are unable to move the ball against the Patriots. At least we can all watch bits and pieces of that ridiculous Tom Brady video.

 

Entry filed under: Compliance, Regulatory. Tags: , , , , .

The CFPB Is Constitutional…For Now What Makes A Catch A Catch In Football Plus Some Compliance Stuff

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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