Mortgage compliance dating
Under the new DOD rule, lenders will have to check each credit applicant to confirm that they are a service member, spouse, or the dependent of a service member, through a nationwide CRA or the DOD’s own database, known as the DMDC.
The rule also permits the consumer report to be obtained from a reseller that obtains such a report from a nationwide consumer reporting agency.
One of the most significant changes is the addition of fees paid “for a credit-related ancillary product sold in connection with the credit transaction.” Although the MAPR limit is 36 percent, ancillary product fees can add up and — especially for accounts that carry a low balance — can quickly exceed the MAPR limit.
The final rule also includes a “safe harbor” from liability for lenders who verify the MLA status of a consumer.
While the DOD was responsible for implementing the rule, enforcement will be led by the Consumer Financial Protection Bureau (CFPB).The new rule became effective on October 1, 2015, and compliance is required by October 3, 2016.Compliance, however, with the rules for credit cards is delayed until October 3, 2017.The new rule expands the definition of “consumer credit” covered by the regulation to more closely align with the definition of credit in the Truth in Lending Act and Regulation Z.
This means MLA now covers a wide range of credit transactions, but it does not apply to residential mortgages and credit secured by personal property, such as vehicle purchase loans.
MLA status for dependents under the age of 18 must be verified directly with the DMDC.