MLA compliance and SCRA compliance solutions for lenders servicing military consumers
Get updated on best practices and compliance solutions to manage every aspect of the military credit journey — from acquisition to account management and collections.
Members of the U.S. military make the ultimate sacrifice — service to country — so the government has created several protections to assist with “consumer credit” transactions and their financial lives.
Explore Experian’s military lending insights to learn how to serve this audience, adhering to laws such as the MLA and the SCRA.
We can assess the DOD’s database on your behalf to identify MLA-covered borrowers with an MLA indicator on the credit report at the point of origination.
Our solutions provide a safe harbor for creditors ascertaining whether a consumer is covered by the final rule’s protections.
Do away with 24+ hour turnaround time with Experian’s one-stop solution and reduce risk.
The SCRA protects service members and their dependents (indirectly) on existing debts when the service member becomes active duty. By contrast, the MLA protects service members, their spouses and/or covered dependents at the point of origination if they’re on active duty at that time.
For example, if a service member opens an account with a financial institution and then becomes active military, SCRA protections will apply. On the other hand, if the service member is of active duty status when the service member or dependent is extended credit, then MLA protections will apply.
Both MLA and SCRA protections cease to apply to a credit transaction when the service member ceases to be on active duty status.
MLA protections apply to all forms of payday loans, vehicle title loans, refund anticipation loans, deposit advance loans, installment loans, unsecured open-ended lines of credit and credit cards. However, MLA protections exclude loans secured by real estate and purchase-money loans, including a loan to finance the purchase of a vehicle.
The SCRA caps interest rate charges, including late fees and other transaction fees, at 6 percent.
The MLA limits interest rates and fees to 36 percent MAPR (military annual percentage rate).
The MAPR isn’t just the interest rate on the loan but also includes additional fees and charges, such as:
Although closed-ended credit MAPR is a one-time calculation, open-ended credit transactions need to be calculated for each covered billing cycle to affirm lender compliance with interest rate limitations.
There’s only one set of circumstances that triggers SCRA disclosures. The Department of Housing and Urban Development (HUD) requires that SCRA disclosures be provided by mortgage servicers on mortgages at 45 days of delinquency. This disclosure must be provided in writing only.
For MLA compliance, financial institutions must provide the following disclosures:
For MLA, it’s also important to note that disclosures are required both orally and in writing that the borrower can keep.