Here’s Why the Government Restarted Military Lending Act Exams

Here’s Why the Government Restarted Military Lending Act Exams
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The Consumer Financial Protection Bureau (CFPB) codified its stance on weeding out predatory lenders with the release last month of an interpretive rule on its enforcement of the Military Lending Act (MLA) via lender examinations.


The rule “affirms the CFPB’s ongoing commitment to the financial protection of our servicemembers and their families,” Jim Rice, assistant director for the CFPB’s Office of Servicemember Affairs said in a June 16 press release. CFBP Acting Director Dave Uejio announced in January a policy change by the CFPB to “supervise lenders with regard to the Military Lending Act.”


MOAA was one of two dozen military and veterans service organizations to write to President Joe Biden in January seeking a return to these supervisory examinations as a way to strengthen the MLA, which saves millions of dollars a year and improves readiness, per DoD estimates, by preventing currently serving members from leaving service because of financial distress.




The MLA prevents lenders from charging an annual percentage rate of more than 36% on loans to military borrowers, prohibits lenders from requiring arbitration, and prevents them from charging penalties to military borrowers who pay a loan back ahead of schedule, among other protections. The supervisory exams not only protect the borrowers, but may also sound alarms for loan providers before those businesses rack up steep fines.


MOAA and other groups began advocating for a return to tighter MLA supervision shortly after the CFPB decided in 2018 to stop supervising lenders related to these loans, relying instead on after-the-fact complaints from servicemembers and their dependents.


Per the interpretive rule, “the Bureau is no longer persuaded by counterarguments that it does not have the relevant authority” to examine these lenders.


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About the Author

Kevin Lilley
Kevin Lilley

Lilley serves as MOAA's digital content manager. His duties include producing, editing, and managing content for a variety of platforms, with a concentration on The MOAA Newsletter and Follow him on X: @KRLilley