Pursuant to 32 CFR § 232.6(a), the Military Lending Act (MLA) requires that “[w]ith respect to any extension of consumer credit…to a covered borrower, a creditor shall provide to the covered borrower…[a] statement of the MAPR applicable to the extension of consumer credit…” It is important to note that the MLA excludes many types of transactions, such as residential mortgages, certain transactions related to the purchase of motor vehicles and personal property, and transactions that are exempt from Reg Z. (see 32 CFR § 232.3(f)(1)). In addition, § 232.6(c)(1) provides a model form for this statement. The model form reads:
Federal law provides important protections to members of the Armed Forces and their dependents relating to extensions of consumer credit. In general, the cost of consumer credit to a member of the Armed Forces and his or her dependent may not exceed an annual percentage rate of 36 percent. This rate must include, as applicable to the credit transaction or account: The costs associated with credit insurance premiums; fees for ancillary products sold in connection with the credit transaction; any application fee charged (other than certain application fees for specified credit transactions or accounts); and any participation fee charged (other than certain participation fees for a credit card account).
In ConformX we use our Military Lending Act (MLA) Disclosure (Cx20840) for loans related to real property, and our CONSUMER Military Lending Act (MLA) Disclosure (Cx20628) for Consumer loans, to comply with this requirement.
Additionally, 32 § CFR 232.4(a)(1) states that “[a] creditor who extends consumer credit to a covered borrower may not require the covered borrower to pay an MAPR for the credit with respect to such extension of credit” unless it has been “agreed to under the terms of the credit agreement or promissory note”.
Consequently, we created our Military Annual Percentage Rate (MAPR) Addendum to Note (Cx21545) as an addendum to the note or promissory agreement for all loans related to real property.
Although we have had these documents as “upon request” for some time, we are now configuring them to be generic. Note that these documents will only be triggered in the appropriate packages when the print trigger “Print Military Lending Act Disclosure” (FI 106114) is set to “Yes.”
These configuration changes will be in effect on March 27, 2020. If you have any question or concerns about these changes, please contact Client Support at 1.800.497.3584.