22 State AGs Urge Tougher Military Lending Rules
A group of 22 state attorneys general urged the Department of Defense to change its proposed military lending rule, arguing that the plan doesn’t go far enough and could actually result in higher fees.
“Preying on those who serve in our armed forces is despicable. Unfortunately, service members make tempting targets for predatory lenders because they have steady paychecks, many are young, and it can be difficult for them to challenge abusive lenders from overseas,” New York Attorney General Eric T. Schneiderman said Monday. “My fellow Attorneys General and I urge the Department of Defense to provide the strongest possible protections from financial abuse for the brave men and women who protect our nation.”
Attorneys general from Arkansas, Delaware, Florida, Connecticut, Hawaii, Iowa, Illinois, Indiana, Maine, Minnesota, North Carolina, New Mexico, New York, Pennsylvania, Massachusetts, Rhode Island, Tennessee, Vermont and Washington wrote a letter to DoD calling for changes to the proposal.
The attorneys general oppose the plan’s exemption for any “bona fide fees” from the MAPR calculation if they are reasonable and customary.
“We fear this proposed amendment will open a wide door through which abusive fees of creative lenders may pass,” the letter said.
The attorneys general also said the proposal fails to address predatory consumer credit agreements that are created to avoid the protections of the MLA.
“The MLA exempts such loans from the scope of protected consumer credit,” the letter said.
The group further argued that the proposal should clearly state the exemption only applies when there is a “valid and enforceable security interest” at the time of purchase and throughout the life of the loan.
The NCUA also recommended changes to the DoD’s proposal.