Consumer Compliance (CC), Military Lending Act:
The Office of the Comptroller of the Currency’s (OCC) Comptroller’s Handbook booklet, “Military Lending Act,” is prepared for use by OCC examiners in connection with their examination and supervision of national banks, federal savings associations, and federal branches and federal agencies of foreign banks (collectively, banks).
This booklet applies to examinations of OCC-supervised institutions that consummate or establish consumer credit products covered by the Military Lending Act (MLA) and 32 CFR 232 as of October 3, 2016. The booklet provides background information and examination procedures for the MLA2 and its implementing regulation, 32 CFR 232.
Examiners decide which of these procedures are necessary, if any, after completing a compliance core assessment as outlined in the “Community Bank Supervision,” “Federal Branches and Agencies Supervision,” or “Large Bank Supervision” booklets of the Comptroller’s Handbook. Complaint information received by the Customer Assistance Group in the OCC’s Office of the Ombudsman and by the bank may also be useful in determining which examination procedures are necessary.
Contents
Introduction…………………………………………………………………………………………………….1
Risks Associated With the MLA ………………………………………………………………………. 1
Operational Risk …………………………………………………………………………………………….2
Compliance Risk ………………………………………………………………………………………….. 2
Strategic Risk ………………………………………………………………………………………………. 2
Reputation Risk ……………………………………………………………………………………………. 2
Risk Management ………………………………………………………………………………………… 3
Background and Summary ……………………………………………………………………………. 3
Key Definitions (32 CFR 232.3) ……………………………………………………………………… 5
Terms of Consumer Credit Extended to Covered Borrowers (32 CFR 232.4) ……… 7
Limit on Cost of Consumer Credit (32 CFR 232.4(b)) ……………………………………….. 7
Types of Fees to Include in MAPR Calculation (32 CFR 232.4(c)(1)) ………………….. 8
Computing MAPR for Closed-End Credit (32 CFR 232.4(c)(2)(i))………………………… 8
Computing MAPR for Open-End Credit (32 CFR 232.4(c)(2)(ii)) ………………………… 9
Bona Fide Fee Charged to a Credit Card Account (32 CFR 232.4(d))………………….. 9
Timing for Computing MAPR for Open-End Credit ………………………………………….. 11
MAPR Calculation Examples ……………………………………………………………………….. 12
Identification of Covered Borrowers (32 CFR 232.5) ……………………………………….. 13
Mandatory Loan Disclosures (32 CFR 232.6) ………………………………………………… 14
Limitations (32 CFR 232.8) …………………………………………………………………………. 16
Examination Procedures……………………………………………………………………………….19
Scope ………………………………………………………………………………………………………. 19
Evaluate Compliance Management System ………………………………………………….. 20
Conclusions ………………………………………………………………………………………………. 25
Appendixes………………………………………………………………………………………………….26
Appendix A: MLA Applicability Flowchart …………………………………………………. ….. 26
Appendix B: Examiner Scope and Root Cause Questionnaire …………………………. 27
Appendix C: Comparison of SCRA and MLA Protections …………………………………. 31
Appendix D: Fees and Charges Comparison (MLA MAPR and Regulation Z
Finance Charge) ……………………………………………………………………………………. … 35
References ………………………………………………………………………………………………..37