The Interpretive Guidance issued last year subjected purchase money transactions to the Military Lending Act if financing GAP or credit insurance. But what if these products are added AFTER the loan originates? For example, what if the individual adds a GAP policy six months after receiving the loan thereby extending the term of the loan?

The original loan is not a covered MLA loan because it was a purchase money loan with no ancillary products. Does the subsequent addition of GAP require us to check the MAPR on this loan at the time the product is added? Or since the loan was originally exempt, it continues to be exempt?

We've been instructed by legal that if it's an ancillary product (GAP) requested after consummation of the loan then the MAPR would not need to be recalculated:

The MAPR under 232.4(c) includes:
(i) “Any credit insurance premium or fee, any charge for single premium credit insurance, any fee for a debt cancellation contract, or any fee for a debt suspension agreement;
(ii) Any fee for a credit-related ancillary product sold in connection with the credit transaction for closed-end credit or an account for open-end credit . . .”

I'd like to revisit this topic. Is anyone recalculating the MAPR if an ancillary product is added to an existing loan? Auditors are recommending that we do so.

I was under the assumption that we are only obligated to recalculate products added to open-end loans. The regulation references requiring inclusion of the MAPR for products "sold in connection with the credit transaction for closed-end credit or at any time in connection with accounts for open-end credit". An extension of credit can only occur at consummation for a closed-end loan, but may occur during at time for an open-end. Thoughts?

I have read several good opinions that it matters what is done when the loan is made, not what is done after that.

But if any bank has a habit of closing a loan under the MLA and soon after amends the loans by adding things in an apparent attempt to avoid MLA restrictions, I'd see that as UDAAP for sure and with MLA penalties allowing a contract to be voided, I can see that coming into play as well.