Defense Department seeks input on rules implementing new military lending law

CUNA
December 13, 2006

The Department of Defense (DOD) has recently requested input as it begins the process of drafting the rules to implement the new military lending law that is intended to protect military servicemembers from abusive lending practices. The new law, passed by Congress and signed by President Bush on October 16, 2006, imposes a number of new restrictions with regard to loans for military personnel. This includes a 36% interest rate cap on most loans extended to members of the military, reserves, the National Guard, as well as their dependents (exceptions include home loans and secured purchase-money loans for cars and other personal property).

The law also prohibits refinancing or consolidation of these loans by the same creditor; prohibits holding checks, automated clearinghouse (ACH) authorizations, or vehicle titles as security for the loan; and imposes a number of other restrictions. DOD is responsible for issuing the rules to implement the law, in consultation with NCUA and the other financial institution regulators.

The new law raises a number of implementation issues, and DOD has recently requested input as it begins the process of developing these new rules. Click below for more information on DOD’s request:

For more information about this new law and for CUNA's Complete Comment Call click on http://www.cuna.org/reg_advocacy/reg_call/rcc_120706.html

Comments should be submitted before January 25, 2007.