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When to and Not to Verify MLA Status

How often does active duty have to be checked to comply with MLA? If we have originally checked the active duty status on an origination and we need to renew the loan, should we check that status again?

by Dan Persfull:

(3) Determination and recordkeeping; one-time determination permitted. A creditor who makes a determination regarding the status of a consumer by using one or both of the methods set forth in paragraph (b)(2) of this section shall be deemed to be conclusive with respect to that transaction or account involving consumer credit between the creditor and that consumer, so long as that creditor timely creates and thereafter maintains a record of the information so obtained. A creditor may make the determination described in this paragraph (b), and keep the record of that information obtained at that time, solely at the time—

(h) Credit means the right granted to a consumer by a creditor to defer payment of debt or to incur debt and defer its payment.

Renewing/refinancing the loan would be a separate credit transaction to the original.


by Andy Zavoina:

A new loan allows a new verification. There really is no sound business reason to go back in time and verify the status of a borrower today. If they were a covered borrower and the bank missed it, you cannot go back and make pre-consummation disclosures. That would be an uncorrectable violation. Dan's cite specifies where this prohibition is stated.

The SCRA is completely different. The bank may check that list regularly and the CFPB actually encourages this activity as it would allow a bank to be proactive in providing SCRA benefits.

Staff need to understand the differences between the two, the MLA and SCRA. These are two different databases and rules.

First published on 02/18/2024

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