DoD Expands Military Lending Act Rules

In July 2015, the U.S. Department of Defense issued a final rule expanding the scope of its Military Lending Act (MLA) regulations. The MLA imposes an interest rate limit on extensions of consumer credit made to covered borrowers. The MLA also places conditions and disclosure requirements on lenders who extend consumer credit to covered borrowers. The final rule makes changes to the definition of consumer credit and to lender disclosure requirements and puts in place two new safe harbors available to lenders when making the determination of whether a borrower is a covered borrower for purposes of the MLA.

Coverage. Currently, consumer credit covered by the existing rule is limited to short term, low dollar, closed-end payday type loans; vehicle title loans with terms of 181 days or less; and tax refund anticipation loans. Under the new rules, the definition of "consumer credit" is expanded to include all types of credit covered by Regulation Z/Truth-in-Lending with