Skip to main content

CFPB New Rule Prevents Predatory Lending To Military Service Members

Katie Jensen
Jun 16, 2021

The CFPB stipulates its authority to examine supervised financial institutions for risk to active duty servicemembers and their dependents.

A new interpretive rule issued by the Consumer Financial Protection Bureau (CFPB) stipulates its authority to examine supervised financial institutions for risk to active-duty service members and their dependents from conduct that violates the Military Lending Act. 

CFPB acting director, Dave Uejio, said, “The Military Lending Act is an essential law protecting the finances of our military families and we are excited to announce this rule change prior to July, which is Military Consumer Month.” 

The MLA was enacted to protect military borrowers from predatory lenders and other creditors seeking to take advantage of military families. Predatory actions include:

1. Limiting the annual percentage rate on many loans to military borrowers to a maximum of 36%
2. Prohibiting lenders from requiring military borrowers to arbitrate disputes; prohibiting lenders from requiring military borrowers to waive their rights under any state or federal law
3. Prohibiting lenders from requiring military borrowers to use a military allotment to repay a loan. An allotment is an automatic payment system managed by the Department of Defense that provides service members with the ability to transmit funds directly from their military pay before their net pay goes to their designated bank account
4. Prohibiting lenders from charging military borrowers a penalty if they pay back part or all of a loan earlier than the agreed-upon schedule

“Through our enforcement of the MLA, companies that harmed military borrowers have been ordered to pay millions of dollars in redress and civil penalties. To fulfill its purpose and protect military borrowers we must supervise financial institutions and hold them accountable for endangering consumers,” Uejio added. 

In 2018, the CFPB discontinued MLA examination activities based on the belief Congress did not confer examination authority on the CFPB in respect to MLA. However, the current CFPB leadership is not persuaded by this belief and will resume MLA-related examination activities. 

For more information on the Military Lending Act and military consumer month, click the links provided. 

Jun 16, 2021
loanDepot And mellohome Introduce Home Services Bundle

loanDepot, Inc. and its sister company mellohome are launching a proprietary bundle of home buying and selling services.

Industry News
Jul 30, 2021
Gateway Mortgage Surpasses 165 Mortgage Centers With 10 New Additions

Gateway Mortgage reported significant growth in the company, prompting it to open 10 new locations across Colorado, Idaho, Oklahoma, Texas, Oregon, and Wyoming.

Industry News
Jul 30, 2021
FHFA Requires 30-Day Notice Prior To Eviction

Wednesday, the Federal Housing Finance Agency (FHFA) announced that tenants of multi-family properties must be given 30 days notice to vacate before the tenant is required to leave the premise.

Industry News
Jul 29, 2021
Houston-Based Stewart Acquires Title First Agency

Ohio-Based Agency Has 20 Offices And Operates in 32 States

Industry News
Jul 28, 2021
Planet Home Lending Reports Total Origination Volume Of $6.8B In Q2 2021

Planet Home Lending's total origination volume reached $6.8 billion in Q2 2021, up 77% from $3.9 billion in Q2 2020.

Industry News
Jul 22, 2021
FHFA Ends Controversial Refinance Fee

The FHFA announced that Fannie Mae and Freddie Mac will eliminate the Adverse Market Refinance Fee for loan deliveries, starting August 1, 2021.

Analysis and Data
Jul 19, 2021