Welcome to the Compliance Cohort. We are a group of compliance professionals working to make compliance easier. Our goal is to take complex compliance concepts and put them in simple terms that apply to the real world. We are glad you have found us and look forward to collaborating in the future.
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All in MLA
In this Compliance Clip (video), Adam discusses how to identify covered borrowers under the Military Lending Act (MLA). MLA provides special protections for active duty servicemembers like capping interest rates on many loan products. In particular, Adam talks about the two safe harbors that the regulation provided in determining a covered borrower.
On September 29, 2022, the CFPB sued MoneyLion Technologies and 38 of its subsidiaries, for imposing illegal and excessive charges on servicemembers and their dependents. MoneyLion is a financial technology company that offers online installment loans and other products.
On 12/27/21, the Department of Defense issued a notice to the public of a scheduled change to the Military Lending Act (MLA) Database. Effective February 1, 2022, cadets and midshipmen attending Military Service Academies of the Armed Forces, who are covered borrowers under the MLA, will be added to the population of covered borrowers identified in the MLA database. This is actually a correction of an error in the database's original development.
On 12/20/2021, the Department of Justice and Consumer Financial Protection Bureau (CFPB) issued two joint letters to remind Landlords and Mortgage Servicers to Adhere to the CARES Act and Additional Legal Requirements Under the Servicemembers Civil Relief Act. The first letter was sent to landlords and other housing providers regarding protections for military tenants. The second letter was sent to mortgage servicers regarding military borrowers who have already exited or will be exiting COVID-19 mortgage forbearance programs in the coming weeks and months. The Justice Department and CFPB are calling on mortgage servicers and landlords to ensure that military homeowners and tenants are safeguarded during the pandemic and benefit equally from the nation’s economic recovery.
On 10/21/21, the Military Lending Act Website announced a plan to upgrade their systems on January 20, 2022. At this time, all users will be required to log into their accounts at least once every 35 days to maintain active-account status. After 35 days of account inactivity, accounts will be disabled and users will need to create a new account.
In this Compliance Clip (video), Adam discusses the difference between SCRA and MLA - and gets a bit repetitive at times trying to drive his point home. This video is a must watch for those who need to understand compliance rules for lending to servicemembers.
The CFPB recently released two tools to assist servicemembers understand their rights under both the SCRA and MLA. The first is a blog post explaining SCRA rights and the second is a flowchart outlining MLA applicability.
On 6/16/21, the CFPB issued an interpretive rule that explains the basis for its authority to examine supervised financial institutions for risks to active duty servicemembers and their dependents (i.e. military borrowers) from conduct that violates the Military Lending Act (MLA). In 2018, the CFPB’s leadership discontinued MLA-related examination activities, based on its stated belief that Congress did not specifically confer examination authority on the CFPB with respect to the MLA. The current CFPB leadership does not find those prior beliefs persuasive and the CFPB will now resume MLA-related examination activities.
In this Compliance Clip (video), Adam explains the different compliance requirements between MLA & SCRA and gives a general overview of each law. (Note: The ending on this is terrible as Adam never quite knows how to end his videos!)
