So, if we make Fresh Start loans to repay overdrawn accounts that don't charge any interest, but are usually over 4 payments, those are subject to MLA aren't they?

Yes. We're treating ours as covered because they're payable in more than 4 installments. We added procedures to have the OD team check the DoD website before they have the customer sign the agreement. Also we added the MLA model statement along with the 1-800# for oral disclosures. Luckily we don't do many of these loans so I'll be able to verify status on each customer.

Thank you Okie.

BTW, I used to live in Bartlesville many moons ago.

I'm at the opposite end of the state in Lawton. Not my first choice of cities in Oklahoma to work but it'll do.

glad I could help. Our OD loans just dawned on me last week as I was working on the training doc for our LO's.

I used to drive through Lawton on my way to Altus during my stint with the dark side...aka Farm Credit.

I too just recently realized our OD loans needed to be included.

We have the same product but we don't charge interest or fees. Do we still need to provide MAPR disclosures even though we don't have any interest and fees? There is nothing to calculate.

Thanks!

bump

(f)(1) Consumer credit means credit offered or extended to a covered borrower primarily for personal, family, or household purposes, and that is:
(i) Subject to a finance charge; or
(ii) Payable by a written agreement in more than four installments.

If it is payable by written agreement in more than four installments, then yes, it will be a covered loan and all of MLA will apply. Even if there is no MAPR to calculate, you still need to give the MAPR statement and comply with the rest of the regulation.

That's what we were thinking - Just needed to make sure other peers agreed. Thanks!!

We considered limiting our Fresh Start loans to no more than 4 payments, to avoid adding MLA steps. But I'm questioning if that's our easiest option. Since these loans don't charge interest or fees, the 36% MAPR cap (the whole point of the MLA) is a non-issue. Providing the MAPR statement to covered borrowers is still a technical requirement, but low-level compliance risk. Can we just add the model statement to the agreement/form used for all depositors, without checking the DoD website? There is nothing loan-specific in the statement and no language that would confuse non-military members, so consumer harm seems unlikely. Would examiners criticize over-disclosure?

We decided to check the database on all repayment plans offered, and only supply the disclosure stament on a separate form with the plan if they are a covered borrower.