VIDEO: Difference Between SCRA & MLA
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.
For those interested in learning more about SCRA & MLA, check out our new class “SCRA/MLA - Servicemember Compliance Requirements” at https://www.compliancecohort.com/scra-mla.
Video Transcript:
The following is a transcript of this video.
This Compliance Clip is going to talk about the differences between the SCRA and MLA. Of course, SCRA stands for the Servicemembers Civil Relief Act and MLA stands for the Military Lending Act. These are both servicemember topics. Now, of course, lending to servicemembers is a growing hot topic. Servicemembers aren't really a protected class under fair lending rules. However, there are restrictions that are currently in place under both the SCRA and MLA and it's very important for your financial institution to get these correct because the regulators take this very seriously.
So, what are the differences between the SCRA and MLA? Well, the main differences are these, SCRA deals with existing debt that the servicemember had prior to going into active duty service and the Military Lending Act deals with new debt while a service member is in active duty status. So the key here is that SCRA applies to existing debt while MLA applies to new debt. What was that? Existing debt applies to SCRA and new debt applies to MLA. I cannot reiterate this enough, these are the main differences.
SCRA applies to existing debt, debt that they took out prior to becoming active duty, before they were on active duty servicemember. It was debt they took out five years ago, now they're active duty. Now, they have protections. So they took it out not realizing they were going to be on active duty at the time. Now they are, they now have protections.
MLA applies to new debt. They know they're active duty, so new debt that they're taking out while they know that they are active duty. So SRA does not apply if they're taking out new debt while they're already active duty, because it only applies to existing debt but the MLA applies to new debt.
It does not apply to old debt. So those are the differences - SCRA applies to existing debt, MLA applies to new debt.
That's not going to be the entire presentation of this Compliance Clip. Let's talk about some of the protections for both, just a brief overview. First of all, SCRA protections include a number of things, they include interest rate caps, typically at 6%. Now, there are protections also under the SCRA for a number of things like default judgements, non-judicial foreclosures, installment contracts and repossessions, lease terminations, enforcement of storage liens, and life insurance assigned as security. So, quite a few things are covered under the Servicemembers Civil Relief Act.
Now, for the Military Lending Act, it's a little bit different because protection is only applied to certain types of loans. Protections generally apply to payday loans, vehicle title loans, refund anticipation loans, deposit advance loans, but also, which would affect banks and credit unions, installment loans, unsecured open-end lines of credit, like in overdraft protection lines of credit and credit cards. So there are some things that apply. Now, the two main exceptions to the Military Lending Act include real estate and purchase money loans, but there are protections to the other types of loans listed here.
Now, as far as protections, what happens is there is a MAPR. So it’s not the APR, it’s the MAPR - Military Annual Percentage Rate. The MAPR is actually slightly different from the APR.
It's not the exact same calculation but there are some different things included in there. So there's that cap of 36% and there's also disclosure requirements under the Military Lending Act. So those are the main two things, the main two differences. Now it seems simple enough, right? It seems like we have an understanding of this.
Well, here's the thing, I just spent about three minutes talking about the differences. What I have done recently is I created an entire program on the Servicemembers Civil Relief Act and the Military Lending Act and it took an hour and fifteen minutes. So what I just talked about was, really, the tip of the iceberg. If this information was new to you, it might be interesting for you to take a look at our SCRA and MLA program that we have available in our store because we go through all the main compliance requirements that you need to know for your financial institution in this program. This class is available in our store, I just gave you a brief overview of what's covered. First of all, what's included is a training video, just like this, where we have an instructor in front of a slide presentation, it's our virtual classroom approach. So it's exactly what you see here and I'm the instructor for that program. We have three videos in that, about an hour and 15 minutes, It’s available on demand. As soon as you purchase it, you can go buy it and watch it today so that is easy for you to do.
It does include a comprehensive manual. I believe it's about 36 pages, where you can follow along, take notes, follow up, and have all the information to read along and read different things and what I talk about. So it's a second way of learning and really helps you to comprehend and understand SCRA and MLA. It does provide “proof of content” to your examiners, as far as what was covered, and can be downloaded at a later time.
We do offer a certificate of completion, it's available upon request. So just ask for that per purchase. So one per purchase. Do contact us if you're interested in having additional attendees because we do offer discounts in this program. We have a 60-day access for everything.
The manual of course is downloaded and my favorite part of the program is there's a hundred percent money back guarantee. So, really, if you're not satisfied with the value that we deliver. If we do not deliver the value that we promised, we'll give your money back. No problem. So this makes it a low-risk way for you to try our training programs if you've not yet tried them. But believe me, we make sure that we deliver on that value.
So take a look at our store, compliancecohort.com/store. Look at the SCRA and MLA program, its service member compliance requirements. That is available to you in our store if you want more information on that. Otherwise, that's it for this Compliance Clip. Thank you so much for checking it out.