Final rule gives Military Lending Act more bite> US Air Force> Post display
The increased level of protection of financial rights and consumer rights against unscrupulous practices, called the final rule of the Military Loans Act, covers all forms of payday loans, vehicle title loans, corporate loans. ‘Prepayment, deposit advance loans, installment loans, unsecured lines of credit and credit card loans, DOD officials said.
“We will continue to fight to give our troops and our veterans a chance to enjoy the American freedom you helped defend,” the president told Veterans.
“There is already a lot to protect our troops and families from unscrupulous predatory lenders, but some of the worst attackers – like payday lenders – are exploiting loopholes to trap our troops in a vicious cycle of crushing debt.” Obama said.
The President commented on the new rule saying that “it is the right thing to do”.
“With this action, the department is taking an important stand against companies that may prey on our men and women in uniform,” Assistant Secretary of Defense Bob Work said in a press release after the president’s announcement.
“This new rule concerns a range of credit products that previously fell outside the scope of the regulation, compromising the financial readiness of our troops. Today, with our regulatory and enforcement partners, we are united in supporting our military personnel and their families, ”he continued.
Final rule results from a three-year study
The review began with a three-year study conducted by the Defense and Treasury Departments, the Federal Trade Commission, and financial regulators such as the Federal Deposit Insurance Corp., the Federal Reserve Board, the Office of the Comptroller of the currency, the Consumer Financial Protection Bureau and the National Credit Union Administration, DOD officials said.
Congress passed the Military Lending Act in 2006 to provide specific protections to active duty members and their families in consumer credit transactions.
Among other protections, the law caps the interest rate on guaranteed loans to active duty members at 36%, requires disclosures to alert members of the service to their rights, and prohibits creditors from requiring a service member. submits to arbitration in a dispute.
New rule adds protection
The latest rule allows industry compliance by Oct. 1, followed by a phased implementation period, DOD officials said.
The rule will help protect all active duty members and their families from engaging in loans with excessive fees and charges.
Service members will still have access to interest-free loans, grants, and scholarships from the four Military Relief Societies, and all credit products will not be affected by the settlement, including residential mortgages and purchase loans to purchase goods. cars, for example. , which are excluded from the MLA definition of consumer credit, officials said.