Military Lending Act Flashcards
An internal audit identified that covered borrowers under the Military Lending Act (MLA) were being charged a military annual percentage rate (MAPR) of more than 36% on applicable loans. Once the issue has been remediated, what should be done as a follow-up?
A. Review the MLA database
B. Complete an MLA risk assessment
C. Ensure the loans were closed and the balance due was collected
D. Validate that the MAPR was reduced or fees waived to get the MAPR to 36% or lower
D. Validate that the MAPR was reduced or fees waived to get the MAPR to 36% or lower
A natural step to ensure that corrective action has been performed is to validate that has indeed occurred. Thus, validating the fact that steps had been taken to reduce the MAPR to appropriate levels is a valid follow-up step. Reviewing a database and completing a risk assessment may also be wise actions, but they are not the best step to assure compliance as a follow-up. Ensuring the loans were closed and balances collected is not a relevant step in follow-up for an MAPR issue in MLA-covered loans.
What does MLA cover?
A. Consumer credit to active duty personnel
B. Consumer and small business credit to active duty military personnel and their dependents
C. Consumer credit made to active duty military personnel and their dependents
D. Consumer credit made to active duty, reserves, and retired military personnel
C. Consumer credit made to active duty military personnel and their dependents.
Does MLA cover non-Reg Z loans?
No, it only covers loans subject to Reg Z.
What types of loans does MLA exclude? Select all that apply.
A. Residential mortgages
B. Personal credit cards
C. Purchase money credit for and secured by personal property (such as vehicle purchase loans)
A and C.
MLA excludes loans for residential mortgages and purchase money credit for (and secured by) personal property such as vehicle purchase loans.
In addition to credit cards, MLA also covers personal lines of credit, personal installment loans, student loans, payday loans, tax refund anticipation loans, and vehicle title loans.
What is the MAPR upper limit for MLA?
36%
What 2 disclosures are required under MLA?
A. Clear description of the payment obligation
B. Right of rescission
C. Payment schedule
D. Bona fide emergency statement
A and C
Can you renew, refi, or consolidate a loan subject to MLA?
Yes, if the new terms are more favorable to the borrower.
Under MLA, are prepayment provisions or penalties allowed?
No
A compliance professional learns that when the bank originated consumer loans covered by the Military Lending Act (MLA), appropriate disclosures were provided in writing along with disclosures required by Regulation Z. What is the BEST way to respond to this issue?
A. Nothing; MLA disclosures are being provided as required by the Act
B. Implement procedures to also provide MLA disclosures orally as well as in writing
C. Implement procedures to ensure the MLA written disclosures are provided separately from the Regulation Z disclosures, as they cannot be provided together
D. Implement procedures to eliminate the provision of Regulation Z disclosures, as MLA disclosures are the only disclosures required in transactions covered by the MLA
B. Implement procedures to also provide MLA disclosures orally as well as in writing
Disclosures under the MLA are required both in writing and orally. Providing them in writing only does not meet the MLA’s requirements. MLA disclosures must be provided as well as Reg Z disclosures; they are not provided in place of Reg Z disclosures.
Which is true regarding what loans are applicable under MLA and SCRA?
A. MLA only applies to loans that are originated during the borrower’s active duty; the SCRA applies only to loans that were originated prior to active duty
B. MLA only applies to loans that are originated prior to the borrower’s active duty; the SCRA applies only to loans that were originated during active duty
C. Both the MLA and SCRA apply to loans originated during the borrower’s active duty; neither the MLA nor the SCRA apply to loans that were originated prior to active duty
D. Both the MLA and SCRA apply to loans originated prior to the borrower’s active duty; neither the MLA nor the SCRA apply to loans that were originated during active duty
A. MLA only applies to loans that are originated during the borrower’s active duty; the SCRA applies only to loans that were originated prior to active duty
What is a covered borrower under MLA?
A. The active duty military member
B. The active duty military member’s spouse
C. The active duty military member’s children (and other dependents)
D. All of the above
D. All of the above
The covered borrower incorporates the active duty military member, spouses, children, and other adults that rely upon the military member for a majority of their support.
How can a bank provide oral disclosures to military members who may be deployed?
A. They can waive the requirement by documenting the military member’s location
B. They can waive the requirement by obtaining a copy of the military member’s deployment orders
C. They can provide a 1-800 number for the military member to call if the member would like to
D. All of the above
C. They can provide a 1-800 number for the military member to call if the member would like to
