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#2055719 - 12/24/15 04:24 PM Impact of MLA final rule
Jade'sFire Offline
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I am attempting to look at all the possible impacts to address with regard to the MLA revisions. Here are the items of focus I have identified. Kind of a task plan to implementation.

1) Determine what loan products the Bank offers that are now covered by the rule.
2) Determine how to identify covered borrowers prior to origination.
Could a question be added to the application process for the applicant to self identify?
Or do you check all applicants on the DOD database?
Or do we rely on CRAs and use the credit report? (this seems like the easiest, but are the CRAs going to be accurate?)
3) Determine how to provide the written and oral disclosure to covered borrowers prior to origination.
Provide notice to all applicants, eliminate the risk of missing a covered borrower?
Do we set up a 1-800#?
3) Determine how to calculate the MAPR on closed-end loans.
Set up loan limits and fee schedules that would eliminate the possibility of reaching the 36% limit?
4) Determine how to monitor the MAPR for open-end loans for each billing cycle.
Concerned about overdraft lines of credit that have transaction fees and possible low balances.
5) Determine when to drop the MLA protections on an open-end loan when the borrower is no longer active duty.

Just throwing this out there...any opinions and ideas are welcome. Thanks!!
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#2058081 - 01/12/16 05:10 PM Re: Impact of MLA final rule Jade'sFire
Jade'sFire Offline
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Can there not be a 1-800 # for this verbal disclosure that is industry wide? Why make each Bank set up a # when the model disclosure is a general statement?
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#2059124 - 01/15/16 10:25 PM Re: Impact of MLA final rule Jade'sFire
bcompliance Offline
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Could a question be added to the application process for the applicant to self identify

I haven't read the final rule in quite some time, but I thought I remembered something that said you would not fall under the safe harbor if you allowed them to self-identify. It had to come from their database or a credit reporting agency (I don't think they have either of these figured out yet either). Please correct me if I am wrong.
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#2059296 - 01/19/16 05:45 PM Re: Impact of MLA final rule Jade'sFire
CULady Offline
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That is correct. We can no longer rely on the self identifying statement. Safe harbor will only exist if you use either the database or a credit reporting agency and retain the documentation of that search.
My question is will the dependents also have their information on the database and credit reports? I would assume they would or how would we identify them and have safe harbor?
I keep trying to get ahead of this, but I feel like every time I look at it, I end up with more questions than answers!

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#2059325 - 01/19/16 07:39 PM Re: Impact of MLA final rule Jade'sFire
bcompliance Offline
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From what I understood they would be included. However, I don't think they have the databases set up yet, so it is very hard to tell how that is going to work.
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#2059461 - 01/20/16 03:51 PM Re: Impact of MLA final rule Jade'sFire
Jade'sFire Offline
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Did anyone else see this? I am mot sure what they mean by "direct access".

MILITARY BANKING
Feb. 1 Is Deadline for Military Lending Database Access
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 dodhr.dodc-mb.dmdc.mbx.mla@mail.mil 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. Read ABA’s staff analysis on the rule changes. For more information, contact ABA’s Nessa Feddis.
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#2059463 - 01/20/16 03:55 PM Re: Impact of MLA final rule Jade'sFire
bcompliance Offline
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From what I understand from that "direct access" means signing into the database and running the scrub yourself via a single lookup or a batch file depending on how many people you are searching. If you did not sign up for this, your only other option under the safe harbor would be to get this added to the credit report.
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#2059509 - 01/20/16 05:07 PM Re: Impact of MLA final rule Jade'sFire
Jade'sFire Offline
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Thanks for responding bcompliance. I just cant grasp how this site will no longer be available for anyone to use? I know a lot of Bank's use this for SCRA monitoring as well. I can't believe they would limit the access to this resource.

https://www.dmdc.osd.mil/appj/scra/single_record.xhtml
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#2059515 - 01/20/16 05:14 PM Re: Impact of MLA final rule Jade'sFire
bcompliance Offline
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I'm not sure how to grasp that either because as you said, a lot of people use that for SCRA.

My question is: are they setting up a new database for the MLA stuff or restricting access to the link you provided because of the increase in activity they will see on the site?
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#2059525 - 01/20/16 05:27 PM Re: Impact of MLA final rule Jade'sFire
JPJ Offline
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I'm exploring implementation alternatives and wondering if we could simplify our process by treating all borrowers the same, similar to the way we send the SCRA late payment notice to all mortgage borrowers. It appears we are not required to conduct a covered-borrower check (except to obtain the optional safe harbor) and we are ultimately trying to provide the MLA disclosure and MAPR cap to covered borrowers. What if we adjusted rates/fees and provided the MLA disclosure on all covered loan products, whether individual borrowers were covered or not? Are we prohibited from doing so? Would there be a downside?

The model disclosure language looks general enough to use for all borrowers:

Federal law provides important protections to members of the Armed Forces and their dependents relating to extensions of consumer credit. In general, the cost of consumer credit to a member of the Armed Forces and his or her dependent may not exceed an annual percentage rate of 36 percent. This rate must include, as applicable to the credit transaction or account: The costs associated with credit insurance premiums; fees for ancillary products sold in connection with the credit transaction; any application fee charged (other than certain application fees for specified credit transactions or accounts); and any participation fee charged (other than certain participation fees for a credit card account).

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#2059539 - 01/20/16 06:02 PM Re: Impact of MLA final rule Jade'sFire
waterdog Offline
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We just called our third party that we order credit reports through and also Equifax. Neither company is offering an "add-on" feature to the credit reports. Neither of the customer services reps acted like this was going to be any sort of option. One told us that it would be up to the military person to add it and it would be in the comments section just like a fraud alert. Has anyone gotten a different answer?

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#2059542 - 01/20/16 06:11 PM Re: Impact of MLA final rule JPJ
Jade'sFire Offline
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Originally Posted By JPJ
What if we adjusted rates/fees and provided the MLA disclosure on all covered loan products, whether individual borrowers were covered or not? Are we prohibited from doing so? Would there be a downside?[/i]


That is what we have been discussing as well. I think adding the disclosure on all our covered loan products and structuring our products to never trip the MAPR limit is the way to go. It would be an operational nightmare to monitor all of this. I just want to make sure I am not missing something by trying to simplify the process. smile
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#2059550 - 01/20/16 06:23 PM Re: Impact of MLA final rule Jade'sFire
CULady Offline
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I know that Transunion is in the process of adding something to their reports.

Page 3: https://www.transunion.com/resources/tra...tive-Update.pdf

I am also hoping that we can just add disclosures to all covered products. But I also want to have procedures in place in the event that the MAPR max is reached. We are working with our LOS to have the MAPR calculated so it can be watched.

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#2059783 - 01/21/16 05:51 PM Re: Impact of MLA final rule Jade'sFire
CULady Offline
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Can someone help me out on the oral disclosure part? It is my understanding, after about 12 readings, that we can provide the information orally to covered members OR include a 1-800# in the written disclosures.

So are most of you just going to add the 1-800# to the written model disclosure? I think I would feel better having them call the number rather than relying on staff to give the oral disclosures. If so, what are you putting on it? Just a recording that reads the model statement? I am hoping that would be sufficient... That wouldn't be too hard to set up an extension that went to that recording and then give them the option to press 0 to get to an operator after listening to the full recording.

I am probably getting ahead of myself, but I am having trouble wrapping my head around this 1-800# part!

And I agree Jade, why can't they just establish ONE number with the disclosures for us all?!

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#2060972 - 01/28/16 04:43 PM Re: Impact of MLA final rule Jade'sFire
Jade'sFire Offline
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I think the 1-800# is the way to go. Does anyone see any reasons not to disclose the model language and 1800# on all our covered loan products? If this was provided in the closing packet, that would meet the delivery requirements to provide before or at the time the covered borrower becomes obligated.
Is anyone else planning on doing this?
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#2071386 - 03/29/16 05:23 PM Re: Impact of MLA final rule Jade'sFire
Red Raiders Offline
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I'd like to bring this thread back to life...

Am I reading the MLA right that we don't actually have to disclose to the borrower the numerical MAPR as long as we are providing the model statement wording?

Since this doesn't apply to commercial loans, residential RE loans, HELOC's, car purchase loans, there are only a few loan types we do that this "could" apply at my bank.
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#2071441 - 03/29/16 06:34 PM Re: Impact of MLA final rule Jade'sFire
Dan Persfull Offline
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Am I reading the MLA right that we don't actually have to disclose to the borrower the numerical MAPR as long as we are providing the model statement wording?

That was my thought also but I can't say I've 100% convinced myself that is true.
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#2071459 - 03/29/16 07:17 PM Re: Impact of MLA final rule Jade'sFire
Red Raiders Offline
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I've read it multiple times today and that's what I'm coming up with but maybe I need to let it sit for a couple days and come back to it.
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#2073202 - 04/08/16 08:55 PM Re: Impact of MLA final rule Jade'sFire
Always In Training Offline
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Just FYI, I got this today from the MLA helpdesk. With the CRA not able to do what the law requires and now the DOD saying they won't grant my institution access -- for the 1 maybe 2 loans I have on this -- I won't have a safe harbor. So frustrating.

______________________________________________________________
Thank you for reaching out to DMDC regarding your interest in the direct connection capability of our MLA database. Unfortunately, DMDC's limited direct connection capacity does not allow us to move forward with a direct connection with your organization at this time. We will retain record of your organization's interest should our capacities change so that you may be reconsidered in the future if this capability is expanded.

In the meantime, you may continue to use the MLA Website at https://mla.dmdc.osd.mil to verify the covered borrower status of individuals. The website is capable of providing an instantaneous response for an inquiry on a single individual and allows you to run batches of up to 250,000 individuals with results usually within 24 hours.

Should you experience any problems with the website, or have any further inquiries about MLA, please reach out to us at dodhra.dodc-mb.dmdc.mbx.mla@mail.mil and our help desk will be happy to assist you. Thank you for your interest.

Regards,

MLA Helpdesk

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#2073281 - 04/11/16 01:29 PM Re: Impact of MLA final rule Jade'sFire
Jade'sFire Offline
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I think you can still access the website and pull checks to have safe harbor. It would be just like SCRA checks except you are using the MLA site. I believe the "direct access" is for a direct connection to the DOD database....maybe the really large FIs will get this, or maybe vendors that would serve multiple FIs.

Please correct me if I am wrong, but this was my understanding.
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#2073282 - 04/11/16 01:29 PM Re: Impact of MLA final rule Jade'sFire
Jade'sFire Offline
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Also, I go the "no access" email as well.
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#2073292 - 04/11/16 01:54 PM Re: Impact of MLA final rule Jade'sFire
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I received the same email. I was expecting it.
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#2073314 - 04/11/16 02:30 PM Re: Impact of MLA final rule Jade'sFire
HMS Pippii Offline
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We're a military bank and got the same email. Our President followed up with his DOD contact - over 3,400 banks requested direct access. They plan to add more banks but it will take time
Last edited by HMS Pippii; 04/11/16 02:31 PM.
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#2076116 - 04/28/16 02:03 PM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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Extremely basic question that i cannot seem to locate (i want to say it's October from memory): what date does the new MLA go in effect?

ETA: Found it...October 3.
Last edited by raitchjay; 04/28/16 02:14 PM.
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#2076204 - 04/28/16 06:23 PM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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Moving on..........so let's say after October 3rd, 2016, you have a covered loan to a covered borrower, and the 36% MAPR ceiling is in play. Credit life would be a huge factor in possibly exceeding that 36% ceiling. Is it a problem then to simply not offer credit life to the covered borrower for that type of loan (while still offering it to others who aren't covered borrowers for the same loan type)?
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#2076224 - 04/28/16 07:28 PM Re: Impact of MLA final rule Jade'sFire
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My opinion would be yes. I don't think the rule is to limit the products you offer them, it is to limit their MAPR to 36%. I would not want to be the first one to find out the hard way either.
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#2076227 - 04/28/16 07:33 PM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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Well.......obviously the authors of this regulation though do not like credit life insurance though, right? That's why they make you include the premium in the MAPR. So my thinking was, if that's the case, not offering (or, in the real world for some banks...pressuring) them credit life would be in the spirit of what the MLA wanted. No?
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#2076230 - 04/28/16 07:49 PM Re: Impact of MLA final rule Jade'sFire
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I honestly don't know the correct answer.

I could just see it as a potential discrimination from an examiners standpoint.... "You're going to offer the product to all non-military, but not offer it to them?"

Just seems like a problem waiting to happen. I agree on the pressuring people into it though.
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#2076232 - 04/28/16 07:59 PM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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Somehow or another, we have to keep the MAPR under 36%......it could be that on a loan with credit life, there's virtually no other way to stay below 36% it seems to me. Or are we supposed to allow the credit life, then if they purchase it, give them an interest free loan?
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#2076258 - 04/28/16 08:45 PM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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One other point (and i very much welcome any and all comments on this, please): Financing credit life premiums are prohibited on consumer purpose loans secured by a dwelling.....just another thing that makes me want to think that the general point of including credit life premiums in the MAPR is a continuation of the general slant of discouraging lenders from selling credit life. Anyone agree or disagree?
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#2076259 - 04/28/16 08:48 PM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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OK
P.S. I know that loans secured by residential real estate aren't covered transactions under the MLA.
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#2076291 - 04/28/16 11:06 PM Re: Impact of MLA final rule Jade'sFire
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I remember hearing in a webinar that the reason they included things like credit life in the MAPR was because military members already have life insurance paid for by Uncle Sam, so that type of stuff was not necessary for them. It is an added expense that the covered borrowers did not need and, at times, it was pushed on borrowers where it shouldn't have been.

So I think that it definitely shouldn't be offered if it is going to put them over 36% MAPR.

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#2076292 - 04/28/16 11:23 PM Re: Impact of MLA final rule CULady
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As stated when issuing the existing rule, the Department remains concerned that covered borrowers are sold credit insurance products ‘‘without having these credit insurance products placed in the context of the Service member’s employment status or his or her current level of insurance coverage.’’

Page 24 of the Federal Register FIL-37-2015
https://www.gpo.gov/fdsys/pkg/FR-2015-07-22/pdf/2015-17480.pdf

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#2076293 - 04/28/16 11:26 PM Re: Impact of MLA final rule CULady
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And it continues to say (on page 24):

The Department believes that most, if not all, of the credit insurance products, debt cancellation contracts, or debt suspension agreements customarily offered to consumers are not suitable for a covered borrower because the military services already provide insurance or other benefits to a Service member that would adequately provide financial resources even if an event of coverage (e.g., disability) were to occur to the borrower.

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#2076311 - 04/29/16 02:37 AM Re: Impact of MLA final rule Jade'sFire
raitchjay Offline
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CU Lady, thanks....just what i wanted to hear.
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#2076336 - 04/29/16 02:11 PM Re: Impact of MLA final rule Jade'sFire
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Sorry...late to this ball game, but yes...the Department does not feel credit life/disability is of any benefit to their already covered folks. It was adamantly discouraged from the tone of their writings.
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#2076399 - 04/29/16 04:30 PM Re: Impact of MLA final rule Jade'sFire
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So it will be acceptable to not offer credit life insurance to a covered borrower?
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#2076750 - 05/03/16 04:07 PM Re: Impact of MLA final rule Jade'sFire
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Is a policy required or just procedures?

We currently have these items addressed in our Servicemember Civil Relief Act Policy. I want to remove the itmes pertaining to MLA and just make a procedure out of those instead of policy.

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#2078268 - 05/11/16 10:33 PM Re: Impact of MLA final rule Jade'sFire
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I would not believe not offering credit insurance is considered discriminatory as that person can secure other policies if desired. It is less convenient. COULD it be considered discriminatory, potentially. Are SMs a protected class, not really. Should that provide you peace of mind? Not at all as I think for all practical purposes SMs are a protected class. So the answer is, it could be a risk decision. Can the interest rate be lowered to accommodate requested credit insurance? If the answer is no, the the interest and credit insurance costs need to be evaluated and perhaps the minimum loan amount needs to increase.

There are no regulatory requirements for SCRA or MLA policies or procedures. But because of the complexity and problems others have had in complying, you'd be wise to have them rather than defend why you don't.
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