We have a consumer open-end line of credit product. We review these annually by pulling the customer's credit report. If the customer no longer meets policy requirements, the draw feature is turned off and the line is converted to monthly payments on its original terms.

Do we need to get a status check for these reviews? There are no fees, no late charges on this product....just an interest rate.

You wouldn't have to. It is just at consummation. HOWEVER, if you did check and saw that they were no longer a covered borrower it would no longer be a covered loan. Even if they became a covered borrower again later.

I am trying to get Lending to do a MLA check at least quarterly. That was if the are no longer a covered borrower we can stop monitoring the loan every billing cycle for the 36% MAPR. I think this will be crucial for when we have to start doing MLA for credit cards!

Like I said, there is absolutely NO danger of the MAPR exceeding 36% on our product, as there are no fees, no penalty rate, no late fees. But if we perform the MLA status check (because it is automatically included in the credit report we pull) and discover that the borrower is now a service member, are we prohibited under the SCRA from adverse action on the account by cutting off the draw privileges?

If they do not qualify, the SCRA discrimination prohibition wouldn't apply. I guess my key question is whether this is a modification or a new loan, and when you make this determination are you sending a Reg B AAN?

Hi, Andy.....yes, we send a letter and an Adverse Action Notice. It is not a new note OR a documented modification agreement. The loan becomes payable as per original payback monthly payback terms.....it's just that new advances are no longer permitted. The contract give us this right.

I'm not sure what you mean by "SCRA discrimination prohibition." Will you elaborate.

https://www.bankersonline.com/regulations/scra-3919

Because they've used SCRA rights you can't hold that against them.