Military credit unions cast watchful eye on DoD Lending Rule

by: Marc Rapport

Credit unions and the military have a long shared history, and financial institutions based on bases are paying particular attention to proposed new rules some worry could limit how they extend credit to credit-challenged service members.

Now in the comment phase, here’s how the changes are described in the September announcement from the Department of Defense “The new proposed actions are designed to apply the protections of the Military Lending Act to all forms of payday loans, vehicle title loans, refund anticipation loans, deposit advance loans, installment loans, unsecured open-end lines of credit, and credit cards.”

The NCUA says the changes go beyond that agency’s own rules and could shut down some alternative lending programs that credit unions currently offer service members. Military-focused credit unions generally say they’re in a wait-and-see mode on the new rules, and several told creditunions.com their products wouldn’t run afoul of the new rules anyway.

However, many are working with the trades and the DoD to offer input and limit the potential fallout from the rules, which could take effect sometime next year. A leader in that effort says credit unions on and around military installations already do the right thing, especially in protecting members against predatory lenders. “We feel the rules in place today have been effective,” says Arty Arteaga, president/CEO of the Defense Credit Union Council.

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