On December 14, 2017 the Department of Defense (DoD) published some much needed clarification on the Military Lending Act (MLA). Previous DoD interpretations, in the form of 19 Questions and Answers published during August 2016,  provided less than sufficient answers to certain questions.
The new guidance eliminates much of the confusion on those issues by amending its guidance on three of the questions and by providing one additional question and answer.

  • Question 2 is amended to clarify that loans to purchase motor vehicles or other personal property qualify for an exemption from the MLA when related items such as warranties are added to the loan.
  • Question 17 is revised to provide assurances that a creditor can take a security interests in checking, savings, or other financial accounts by describing a permissible security interest granted by covered borrowers.
  • Questions 18 now clearly allows creditors to exercise the right to take a security interest in funds deposited into a covered borrower’s account in connection with all types of consumer credit covered by the MLA regulation, including credit card accounts, provided this is not otherwise prohibited.
  • New Question 20 addresses safe harbor qualifications for remotely created checks.

The guidance is effective on the date of publication.
A copy of the interpretations is available at:
To read more on the topic: