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#714418 - 04/11/07 12:03 PM DoD issues proposed Military Lending Rules
John Burnett Offline
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The Department of Defense published today (4/11/07) its proposed regulations on terms and limitations of consumer credit extended to service members and dependents. These are the rules that are required by the John Warner Act passed last year.

Yesterday, the BankersOnline team delivered a Special Briefing with our analysis of the proposed rules and 18 questions on which DoD specifically has asked for input for the final rule.
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Lending to Servicemembers (SCRA, JWNDAA), War, Terrorism
#757314 - 06/20/07 08:34 PM Re: DoD issues proposed Military Lending Rules John Burnett
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Its now June 20th - have the proposed rules become final?
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#757430 - 06/20/07 09:56 PM Re: DoD issues proposed Military Lending Rules Burgess
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I haven't seen any thing yet. We'll be sure to blow the horns when this happens. Watch here, and very importantly, watch your Daily Compliance Briefing.

You do subscribe to the free briefings, don't you?
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#762748 - 06/27/07 08:18 PM Re: DoD issues proposed Military Lending Rules Andy_Z
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Between the lines
IS it true that these new rules will only apply to
1-pay day loans (91 days or less),
2-title loans, and
3-refund anticipation loans?

As long as it is regular bank loan, we would not have to worry about predisclosures, revised APR and special past due notices?

Thanks,
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#764399 - 06/29/07 02:26 AM Re: DoD issues proposed Military Lending Rules SMQ, CRCM
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From a couple of BOL articles, one states that the new law applies to all consumer loans, except home mortgages and loans for the purchase of "a car or other personal property," if secured by the property purchased or credit secured by a qualified retirement account. It will apply to loans originated at a branch, through the mail or over the internet. There are 2 additional types in addition to the three that you mentioned the DoD is targeting: military installment loans and rent-to-own (not considered credit under the Truth in Lending Act). If you do a search on "JWNDA" on the BOL home page or click on the SCRA link under Lending, you'll be able to read these documents.

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#766359 - 07/02/07 05:27 PM Re: DoD issues proposed Military Lending Rules Jan94
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What Halito said.

Bear in mind the final regs are to be issued and they'll fill in the blanks, dot the i's and cross the t's. Then we'll know exactly what we are dealing with. If they'd omit regulated banks we would be OK. But there'll still be many loans, I believe, that we'll have to be cautious of and questions to be asked to see if they are in fact covered. Remember, protection expands beyond the servicemember. There'll also have to be time before the changes go mandatory to allow for M-APR calculations to be done in software.
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#782339 - 07/25/07 02:32 PM Re: DoD issues proposed Military Lending Rules Andy_Z
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Still no DoD regulations issued?
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#783670 - 07/26/07 05:09 PM Re: DoD issues proposed Military Lending Rules Burgess
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We're looking every day. You'll know within minutes of when we know.
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#812912 - 09/11/07 04:15 PM Re: DoD issues proposed Military Lending Rules John Burnett
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Hello, I am new to Compliance and this blog. I have a question regarding this matter. Our bank is in a small rural non milatary area. How are we going to know who is an active member or not? Are the loan officers going to have to ask new customers about these new disclousers. I am a little lost on how this is going to work.

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#812928 - 09/11/07 04:31 PM Re: DoD issues proposed Military Lending Rules Compliance Girl
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ACtually, the more elusive question is...is your borrower a dependent, by definition, of a covered military person. About the only way to truly comply with this law, if you make loans falling under the restrictions, is to have a disclosure signed at application to acknowledge whether or not the borrower is a covered person.
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#813307 - 09/11/07 08:56 PM Re: DoD issues proposed Military Lending Rules RR Joker
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RR is correct. Basically, you'll have to ask everyone if the loan is subject to these definitions.
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#814612 - 09/13/07 04:56 PM Re: DoD issues proposed Military Lending Rules RR Joker
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Is there still no word? October 1 is approaching quickly. I was under the impression that the regulation would not impact our bank since we do not make tax anticipation, title, payday loans. Is this not correct? Are we still required to get the initial disclosure (whether or not they are a protected member or dependent of one) before the loan is made on all loans?

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#814693 - 09/13/07 06:31 PM Re: DoD issues proposed Military Lending Rules Baker
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Read the larger thread further down this page...this is already in effect...the link to the Federal Register should be in the other thread.
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#815557 - 09/14/07 05:12 PM Re: DoD issues proposed Military Lending Rules RR Joker
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We have an article summarizing the new regulation and a webinar today on it. It will be available on CD ROM in a few weeks if this topic is of interest to your bank.
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#816388 - 09/17/07 03:43 PM Re: DoD issues proposed Military Lending Rules John Burnett
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Thanks for the answers. That is what I had thought all along. My next question is are there any examples of what the disclouser wording and content should be?

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#816417 - 09/17/07 04:13 PM Re: DoD issues proposed Military Lending Rules Compliance Girl
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The Federal Register has some language you'll want. You'll find a link to the FR and more at the bottom of this article.

http://www.bankersonline.com/lending/defenseloanreg_final_amz.html
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#817594 - 09/18/07 09:29 PM Re: DoD issues proposed Military Lending Rules Andy_Z
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Still muddling through this as I'm sure others are. I know we don't make payday loans or tax anticipation loans as defined in the federal register. We have however made consumers loans for short periods of time (under 181 days) secured by the consumers vehicle. Based on the definition given in the FR, it sounds like we are making one type of covered loan which means we would have to follow all of the other requirements (provide notice to all borrowers that they are not a covered borrower plus all of the other disclosures - MAPR, etc. if we do make a covered loan to a covered borrower).

I am considering changing our loan policy for just these types of loans to say they can not be made for less than 7 months. That way they would not meet the definition of a vehicle title loan. Right away I thought about fair lending issues, but we do have other loan programs (open-ended, ready credit, unsecured loans) that could be done in place of these - and for any time frame - should the need arise. So I don't think I would be excluding someone unintentionally. Not offering a consumer loan (non-purchase money) secured by a vehicle at all isn't an option. Yes, I know - "you should have commented"

Any thoughts on this? I understand the intent of the reg and I think these types of protections are important, but they are burdensome to those of us who may make ones of these deals once every great while.

Help - the deadline is fast approaching.

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#817623 - 09/18/07 09:49 PM Re: DoD issues proposed Military Lending Rules travelgirl
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We are in the same boat and have come to the same basic conclusion: Payday & Tax Refund we don't fit the definitions but certianly have on some short term vehic loans & the plan is to change Loan Policy to not make terms under 182 days.
Given info in other threads on this I don't think we have much choice- - Other posters have said that LaserPro and Jack Henry have indicated they will not change their program to comply with calculating a MAPR.
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#817631 - 09/18/07 09:56 PM Re: DoD issues proposed Military Lending Rules ktac MITCH
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Thanks for the feedback. I feel better knowing others are in the same boat. Plus I know our bank would do everything it could to help a service member and their dependents, not try to pull a fast one just to make a few bucks. Our reputation is worth much more than that.

We use Wolters Kluwer ARTA Lending. They did release a "Covered Borrower Identification Statement" to be signed at closing on covered transactions.

I haven't even looked into the system capabilities yet. Mainly because I was hoping to not make the covered types of loans. I highly doubt the software vendors will be able to meet the 10/1 deadline considering we only got one month.

Got to LOVE compliance some days!

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#818119 - 09/19/07 04:37 PM Re: DoD issues proposed Military Lending Rules travelgirl
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We are a small community bank who also occasionally make these types of loans. It was questioned whether it would be acceptable to make the greatest portion of payoff be within 30,60 or 90 days and the balance be paid at the end of the 185 days (a small balloon payment). What are others thoughts on this?

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#818182 - 09/19/07 05:29 PM Re: DoD issues proposed Military Lending Rules dach
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Devious and creative. I like it!
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#818214 - 09/19/07 05:45 PM Re: DoD issues proposed Military Lending Rules Richard Insley
Dan Persfull Online
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And possibly obligates them to refinance the loan under state statutes dealing with consumer balloon loans not secured by real estate.
Last edited by Dan Persfull; 09/19/07 05:47 PM.
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#818259 - 09/19/07 06:15 PM Re: DoD issues proposed Military Lending Rules Dan Persfull
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S/he used the term "balloon", but also "small". Are you aware of any state laws that would consider the following payment schedule to be a "balloon"?
Note date: 10/1/07
TOP: $600.00
1 pmt of $295 due 11/1/07
1 pmt of $295 due 12/1/07
1 pmt of $10 due 4/1/08 (183 days after note date)
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#818301 - 09/19/07 06:37 PM Re: DoD issues proposed Military Lending Rules Richard Insley
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I'm not...state law where I've actually seen this addressed states required language only if the final payment is substantially GREATER than the other scheduled payments.

That was a creative schedule, Richard!
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#818312 - 09/19/07 06:40 PM Re: DoD issues proposed Military Lending Rules Richard Insley
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No, but I did say possibly. To qualify in IN as a balloon the final payment would have to be twice as large as any of the other previously scheduled payments. Just an observation in case someone got the idea to schedule 150, 150 and 300.
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