Last week we presented the webinar Military Lending Act: Navigating the Path to Compliance. The presentation was designed to help lenders understand what the Military Lending Act (MLA) Final Rule covers and the implications it will have on financial institutions so you know your options and are prepared when the act takes effect this coming October. Below are highlights from the presentation and answers to 6 FAQs about our Military Lending Act Search.
Here’s a quick recap of what we covered (you can also watch the MLA webinar here):
- This year, the Department of Defense will require lenders to comply with new Military Lending Act regulations by October 3, 2016 - credit cards will be excluded until October 3, 2017.
- The updated regulation will expand service member protections granted under rules implementing the original legislation
- Coverage - MLA coverage now applies to the same products covered under TILA
- Military APR - Maximum percentage rate of 36% now includes many add-ons
- Eligibility - Lenders are required to verify if a consumer is covered under MLA
- The Military Lending Act will now apply to many open- and closed-end credit products
- The calculation of “Military APR” for disclosure now includes additional charges and payment obligations
- The MLA defines “covered borrowers” to include service members, spouses and certain dependents
- Lenders will have several options to determine whether an applicant is a covered borrower under the MLA
- MLA website – Transactional search
- MLA website – Batch search
- Nationwide CRA
- Transactional search – DMDC Direct Connection
Since the webinar we’ve received many questions about the Military Lending Act and our Military Lending Act Search product. Below are answers to those we’ve heard most frequently.
MLA FAQ #1: How are covered borrower dependents identified and which are included in the MLA searches?
A: TransUnion is working with the Defense Manpower Data Center (DMDC), the agency that owns and manages the MLA covered borrower database on behalf of the Department of Defense. We will be hosting a copy of their file, containing information on all active duty military personnel and their dependents age 18 and older. We will not receive information on dependents under the age of 18, but can cascade to the DMDC’s system, on a transactional basis, to perform a covered-borrower check on those consumers as needed.
The databases do not distinguish between military members and dependents. All are considered covered borrowers under the MLA. There is also no linkage between family members on the MLA database, and you will need to input the consumer information for whichever consumer is applying for the loan. You cannot input information about the military member to perform the covered borrower check for a dependent.
If a consumer questions whether or not they are included as a covered borrower, they should be directed to the DMDC.
MLA FAQ #2: How can we receive TransUnion’s add-on MLA product? What is the difference between default and keyword access?
A: TransUnion’s add-on MLA product is available with several products, including Credit Reports, Model Reports, Instant Prescreens and Instant Credit Risk Screens.
There are two options for set-up:
- Default: as with other add-ons to the credit report, the MLA Search response will be returned with every credit report transaction.
- Keyword: the MLA covered borrower check will be performed only on the transactions that you request via a specific keyword. If you program to a TransUnion system directly, you will need to make small changes to both input and output.
Most customers will use the Keyword option primarily if their TransUnion subscriber code is used for multiple lines of business, and some of those are for loans not covered by the MLA. If your company has separate subscriber codes per line of business, or if the loans you offer are all covered by the MLA, we recommend you use the Default option.
MLA FAQ #3: How will the Military Lending Act data be returned on prescreens?
A: TransUnion will append the Military Lending Act Match or No Match flag to the prescreen output after all other prescreen processing has been completed. We will not use the flag as an inclusion or an exclusion criteria to prescreen processing itself.
MLA FAQ #4: Which software vendors will support TransUnion’s Military Lending Act products?
A: Our Vendor Platform Management team is continuously working with software vendors on integrations so the list changes regularly. You can ask your vendor directly if they are working with us and if they are not you can request that they do so. Your TransUnion representative will also know which vendors will support TransUnion’s Military Lending Act Search products.
MLA FAQ #5: What is the timeline for product availability?
A: The table below includes our current timeline.
|July 15, 2016||
|September 1, 2016||
MLA FAQ #6: How much does TransUnion’s Military Lending Act Search cost?
A: TransUnion’s Military Lending Act Search provides a suite of products to help lenders verify consumer eligibility. For more information on this product, including pricing, contact your TransUnion representative or call 844.245.4071 today.
We also received the following list of questions and, while we believe knowing this information is important, they are best answered by your legal team:
- Do we need to do a search on every client that applies for credit?
- If we pull from the MLA website, how often do we have to pull it?
- What do we do if a pull comes up as Active Duty?
- Are mortgages secured by vacant land considered covered products? What about business loans?
- The MLA specifies the rates must be better on renewals; can the rates stay the same and still be considered compliant?
Our goal is to keep you apprised of key Military Lending Act information, so please stay tuned as we draw nearer to October’s compliance deadline. In the meantime please click the yellow contact us button below or reach out to your TransUnion representative if you have any questions.