NCUA Letter to Credit Unions 16-CU-07 Military Lending Act Examination

Starting October 3, 2016, credit unions must comply with the amended regulation the Department of Defense issued implementing the Military Lending Act.

With this amended rule, NCUA intends to take the same examination approach used with the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule in 2015 and its Qualified Mortgage and Ability-to-Repay rules in 2014.

NCUA examiners are instructed to accept a credit union’s reasonable and good faith efforts to comply with the new rule during the first examination following the implementation date. NCUA recognizes that some credit unions may need time to implement changes and work with their technology vendors to resolve problems that may arise from extensive testing and use, once their new MLA systems become fully operational. However, credit unions should understand that NCUA’s acceptance of good faith efforts for supervision purposes does not shield a credit union from the third-party liability that can arise under the MLA. Your principal and most immediate goal should be to ensure servicemembers and other covered borrowers are receiving the consumer protections the MLA provides.

During the first examination that occurs after October 3, 2016, NCUA field staff will focus on:

  • Ensuring that a credit union is aware of amendments to the rule and determining the applicability of the amendments;
  • Ensuring that a credit union is making progress in complying with the rule, if applicable; and
  • Assessing the quality of a credit union’s compliance risk management systems and its policies and procedures for implementing the program.

NCUA has issued three regulatory alerts on the MLA, providing a guidance summary for compliance:

Blog Posts:

Passwords to access the blog posts, and blog posts are only for NWCG owners and retained clients. These should not be shared outside of the credit union. Blog posts generally contain only a summary of any requirements, and do not represent all potential impact on the credit unions. For further details on any blog post, contact NWCG or references cited in the blog post. The information contained on this site is provided for informational purposes only, and should not be construed as legal advice.

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