Summaries of CLF-related loan rule,
Reg Alert on DoD’s final MLA rule posted
Nov. 23, 2015 -- Summaries of a final rule on Central Liquidity Facility (CLF)-related loans from corporate credit unions, and an NCUA “regulatory alert” on the Military Lending Act (MLA) final rule issued by the Department of Defense, have been prepared by NASCUS and posted on the association’s website.
Under the rule affecting CLF-related bridge loans, which excludes the loans from the corporate credit union limit on aggregate unsecured lending to one borrower, the NASCUS summary points out that the final rule will apply to situations where a natural person credit union has been approved for a loan by the CLF and obtains a bridge loan from a corporate until the CLF funds can be transferred. For purposes of determining minimum capital requirements, the NASCUS summary notes that the final rule also excludes CLF-related bridge loans from the calculation of ‘‘net assets’’ and ‘‘net risk weighted assets.’’
The summary of the NCUA regulatory alert on the DoD’s final MLA final rule (available to members only) notes that the MLA is designed to protect service members by applying two broad requirements to creditors:
- That the creditor may not impose a Military Annual Percentage Rate (“MAPR”) greater than 36% in connection with an extension of consumer credit to a covered borrower, and;
- That, when extending consumer credit, the creditor must satisfy certain other terms and conditions, including specific disclosures, prohibitions on mandatory arbitration, and prohibitions on prepayment penalties.
The regulatory alert notes that, while the final rule was effective as of Oct. 1, creditors have a 12-month transition period with compliance mandated on Oct. 3, 2016. Compliance with the credit card account rules start Oct. 3, 2017.
“Until October 3, 2016, credit unions making payday loans, vehicle title loans, or tax refund anticipation loans must continue to comply with the original regulation,” the NASCUS summary points out.