By ABIA Outside Counsel, Barnett, Sivon & Natter, P.C.
The Department of Defense (“DoD”) is proposing to expand the application of the Military Lending Act (“MLA”) to many other consumer credit products (“Proposal”). The MLA: (1) limits the amount of interest that a creditor may charge; (2) requires creditors to make certain disclosures; (3) prohibits mandatory arbitration; and (4) prohibits a penalty fee if the borrower prepays all or part of the consumer credit.
Currently the MLA only applies to payday loans, vehicle title loans and refund anticipation loans.
Under the Proposal, the MLA would apply to consumer credit that is subject to the Truth in Lending Act, namely, credit offered or extended to a covered borrower primarily for personal, family or household purposes and that is subject to a finance charge or payable by a written agreement in more than four installments. Notably, residential mortgage loans and auto loans would be excluded from MLA coverage.
To learn more about the Dod proposal to expand the MLA, read the full summary.
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ABIA will comment. Comments are due to the DoD on November 28, 2014.