WASHINGTON — Credit union trade association attorneys have said they are pleased so far with what they have seen in the Department of Defense's proposed regulation regarding limitations on loans to military service members, but time–and members–will tell some in the industry have said.

The John Warner National Defense Authorization Act sets limitations on the terms of extensions of credit to service members and their families. Payday and other fringe lenders have been spotlighted in the media as preying upon young, regularly but low-paid members of the military. In particular, credit unions and banks were concerned about what would fall under the 36% interest rate cap to be applied to service members and their families; NCUA and the federal banking regulators served in consultation roles on the proposal.

The DoD proposal establishes a separate military annual percentage rate (MAPR) for service members and their families that includes interest, fees, credit service charges, credit renewal charges, credit insurance premiums, fees for debt cancellation or debt suspension agreements, and fees for credit related products sold in connection with the credit. Some of lenders' concerns were allayed by the fact that the MAPR does not include unanticipated late payment fees, defaults or delinquencies because that occurs after the loan is already made. Additionally, loans made prior to the new rule are not covered.