In one week, on October 3, 2016, compliance with the revisions to Part 232, which implements the Military Lending Act (MLA), is mandatory. The revised rules were effective on October 1, 2015. but the revised provisions do not apply to credit consummated before October 3, 2016.
For any covered transaction consummated on or after October 3, 2016 the creditor must provide required disclosures, assure the Military Annual Percentage Rate does not exceed 36%, and abide by other limitations. The MLA applies to consumer transactions that involve covered borrowers.
Covered borrowers include servicemembers and their dependants. Part 232 provides two safe harbor methods of indentifying covered borrowers – use of a Department of Defense database or use of a credit report that contains a code indicating covered borrower status.
Each creditor should have policies, procedures and systems in place to assure compliance with the revised rules.
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