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#2076224 - 04/28/16 07:28 PM Re: Impact of MLA final rule Jade'sFire
bcompliance Offline
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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
bcompliance Offline
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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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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
CULady Offline
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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
CULady Offline
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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
CULady Offline
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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
RR Joker Offline
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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
Compl101TX Offline
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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
ahkcompliance Offline
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Midwest
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
Andy_Z Offline
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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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