If you’re a moneylender, recent regulation changes to the Military Lending Act issued by the DoD could greatly affect your business.
Banks and other lending institutions likely know about the SCRA regulations the Department of Defense set up in 2006 as part of the Military Lending Act, regarding lending money to servicemembers. The DoD enacted these regulations as a way to protect servicemembers from moneylenders who might otherwise take advantage of them. But the SCRA regulations only applied to car loans, payday loans and loans taken out against expected tax refunds.
In July of 2015, the DoD expanded this list to include a wider variety of loans, including personal and home equity loans, credit cards and more. The DoD now stringently regulates certain fees and finance charges, and lenders must disclose the terms of loans and lines of credit in writing and orally.
Another major component of the new MLA regulations is that interest rates for affected loans are now capped at 36 percent.
All these changes mean a lot of work for moneylenders.
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Simplification of SCRA Regulations Requested
The original amendment last year was so unclear and confusing that banks and credit companies everywhere panicked and begged for clarification. The DoD complied, providing an explanatory document released in July. Although this cleared up some of the confusion, the DoD refused to push back the compliance date of Oct. 3, though creditors complained this wasn’t enough time to get proper new policies and procedures under way.
As if this undertaking isn’t complex and labor-intensive enough, the DoD is also requiring creditors to have proof as to whether the applicants are servicemembers. Before, creditors only needed to ask.
But that’s not good enough for the DoD anymore. Now, the only two forms of proof accepted are documents from:
- A DoD database, or
- A national consumer reporting agency
Long Waits Possible for SCRA Regulation Documents
Getting these documents will be half the battle in complying with the new DoD SCRA regulations.
Verifying military status by mail with the DoD can take weeks or months. Sometimes they never even reply. Requiring this type of check for each applicant has the potential to shut down a small business.
The solution: Get your affidavit from the SCRA Centralized Verification Service (SCRACVS). We can get you the documents you need to fulfull the DoD’s new SCRA regulations within 24 hours. The government can take 30 times as long to provide the same proof. The SCRACVS is not a consumer reporting agency, but is set up to access the primary DoD database.
Depending on the size of your institution, you may get dozens or even hundreds of applications a day. With our batch processing, you can send as many applications over each day as you get, and not only will you get them all back within 24 hours, you’ll get a volume discount.
Contact the SCRACVS today for all the documentation you need to comply with the DoD SCRA regulations.