must-know details about the military lending act

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Inside the Beltway:Must-Know Details About the Military Lending Act

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2©2016 Experian Information Solutions, Inc. All rights reserved.Experian Public.

WELCOME &INTRODUCTIONS[ ]


Military Protections Extended

The CFPB strongly supports the Department’s efforts to strengthen consumer protections for our nation’s military families”...”As one of the agencies responsible for enforcing the Military Lending Act, we stand ready to stop illegal lending to military families.

“”— Richard Cordray, CFPB


Military Lending Act: At a Glance

The MLA provides service members and their dependents with specific protections for their “consumer credit” transactions.

— Military Lending Act of 2006 (MLA)

— Military Lending Act Final Rule in July, 2015


Speakers: Introducing…

Tom SikoraExecutive DirectorJPMorgan Chase

Keoki HuffmanDirector of ProductManagement-ConsumerExperian

Bill ButlerProduct DirectorExperian

Klaudette ChristensenVice President of Product Management Experian


INSIDERPERSPECTIVE[ ]


Military Lending Act

Military Lending Act of 2006 (MLA)

Protects military families from predatory lending Caps annual interest rates for consumer credit to 36% Requires written and oral disclosure of interest rates and payment obligations before a loan is issued Focus on payday lending, car title loans, and refund anticipation loans


Military Lending Act: Final Rule - 2015

MLA Final Rule – 2015New MLA rule effective Oct. 1, 2015. Compliance required by Oct. 3, 2016.

Extends MLA protections, including a 36% Military Annual Percentage Rate (MAPR) cap, toa wider range of credit products

Modifies the MAPR to include fees for credit-related ancillary products sold in connectionwith the credit transaction, finance charges, and certain application and participation fees.

Provides a Safe Harbor for creditors ascertaining whether a consumer is covered bythe final rule's protections

Modifies the existing prohibition on rolling over, renewing or refinancing consumer credit Subjects creditors to civil liability and administrative enforcement for MLA violations


Servicemembers Civil Relief Act

Servicemembers Civil Relief Act (SCRA)

Provides a range of protections in civil matters for servicemembers to allow them to devote their attention to the defense needs of the nation and relieve stress on the family members of those deployed

Provisions in the SCRA may postpone or suspend certain obligations, such as outstanding credit card debt, mortgage payments, pending trials, taxes, and terminations of leases for certain servicemembers

Extends protection to the consumer while they are on active duty service andthereafter for a period of time


MLA & SCRA: Differences You Need to Know

MLA SCRA

Who Active military members and their dependents Active military members and their dependents (indirectly)

When Applies at point of origination(compliance leverages MLA database)

Applies to existing debt (compliance leverages SCRA database)

What

• Payday loans• Vehicle title loans• Refund anticipation loans• Deposit advance loans• Installment loans• Unsecured open-end lines of credit• Credit cards (10/3/17)

• Outstanding credit card debt• Mortgage payments• Pending trials• Terminations of lease• Collection activity

How The MLA limits interest rates and fees to 36% MAPR (Military Annual Percentage Rate).

The SCRA caps interest rate charges, including late fees and other transaction fees, at 6%.


Key Regulation Impacts From the “Hill”

Expanded definitionof covered loans

Safe Harbor through:

• Department of Defense Database

• Nationwide ConsumerReporting Agency

Experian worked with the Financial Services Roundtable, Department of Defense and other industry leaders to arrive at the solution we offer you today.

MLA STANDARDSAFFECT:

Payday loans

Vehicle Title

Refund application, deposit advance and autoinstallment loans

Unsecured open-end linesof credit

Credit cards

FINANCIALPRODUCTS

CAPPED

Military AnnualPercentage Rate

All-inclusive rate, capturing fees, charges and the saleof credit-related products

MLA RULE INCLUDES:

No longer will banks require service members to:

• Submit to mandatory arbitration and legal requirements

• Waive the Servicemembers Civil Relief Act rights

• Provide a payroll allotment

• Allow continual refinance of apayday loan

• Provide a post-dated check

• Access a bank account or car title

Military Lending Act

36%


MLA: The Impact to Your Business

Oct. 3, 2016 Compliance Deadline

Penalties for non-compliance• Refund all fees and interests• Misdemeanor• Private lawsuits authorized• Reputational Risk

Oct. 3, 2017 Compliance Date for Credit Cards

Safe Harbor Recordkeeping

Products to be covered

System Integration • New Segment on credit report


INDUSTRYPERSPECTIVE[ ]


Why MLA Matters to You

Regulatory Economic Customer Technology

Multiple regulators: CFPB, FCC, FTC

Consumer disputes are increasing by over 40% on average the last three years

New MLA rulings require compliance at origination for Safe Harbor

Increased legal and compliance fees

Potential class action litigation, settlements and lawsuits

Millions of dollars in fines and penalties for non-compliance

Digital customer needs Customer treatment

strategies are essential, especially for military personnel and their families

Customer treatment and retention

Single customer, multiple accounts

Seamless workflow process at origination


Your Top MLA Questions Answered

How would you describe an ideal MLA process?



Which products in your organization do you consider

covered by the MLA?



What would you recommend an organization do around required

documentation, controls and data flow to partners?


MLA: Lender Best Practices & Key Challenges

Servicing Compliance

Develop internal procedures and train support staff Understand MAPR calculations

Build a process and plan to handle oral disclosures Manage DoD guidance

Establish processes to handle complaints/disputes and ways to obtain covered borrower status

Governance and tracking

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OUR NEXTSTEPS…[ ]


MLA Compliance & Safe Harbor for Lenders

To comply with MLA and be extended Safe Harbor, lenders need to identify who is an “MLA Covered Borrower”.

Experian offers lenders the indirect method of compliance

• Obtain information directly or indirectly from the Department of Defense’s DMDC database

• Identify who is an “MLA Covered Borrower” at point of originationHow?

• Compliance required by Oct. 3, 2016 (consumer credit)When?


Experian’s Role

To determine whether a consumer is a covered borrower, a creditor may verify the status of a consumer by using a statement, code, or similar indicator describing that status, if any, contained in a consumer report obtained from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis, or a reseller of such a consumer report…

“”— MLA §232.5(ii)

Credit Agency Role:• Department of Defense data connection• MLA covered borrower status segment, code, or indicator to describe the status


Experian MLA Solutions

MLA Status viaCredit Report

Stand-Alone MLA Status

PrescreenSolution

ConsumerDisclosure

• Add-on data segment with MLA Covered Borrower Indicator status

• Leverage existing credit report segment (lite coding solution)

• Solution accessible via default settings or MLA keyword

• Ability to deliver MLA Status outside of credit report

• Solution accessible via default settings orMLA keyword

• Request MLA status to be appended to a prescreen list

• MLA data CAN be usedfor suppression

• MLA data CANNOT be used in triggers nor as the sole selection criteria

• If consumers are MLA Covered Borrowers, the status will be on the consumer disclosure

• Full Dispute process being designed and implemented, awaiting further information from the Departmentof Defense

Additional Experian solutions coming soon.

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Credit Report MLA Indicator

BB&T 7-12 $17,000-O PAID CURR ACCT 1199117 BB I/L 3 1 10-28-12 10-12 ( 3) BCC 890810651093557 OWENSBORO NATIONAL BAN 6-09 $20,000-O PAID 2170303 BB SEC UNK 1 4-01-11 4-11 ( 1) B 13167205657 BK OF AMER 2-77 $13,500-L $3,061-H OPEN CURR ACCT 3202754 BC CRC REV 1 1-21-16 $248 1-16 (48) CCCCCCCCCCCCC 402411800737 1-16 $10 CCCCCCCCCCCC SYNCB/LOWES 10-03 $7,500-L $2,259-H OPEN CURR ACCT 1607340 LZ CHG REV 1 1-01-16 $0 1-16 (65) 000CCCCCCCCC0 7982220180170348 9-15 0000000000-- --------------------------------- MESSAGES ----------------------------------- MLA COVERED BORROWER CONSUMER ASSISTANCE CONTACT: EXPERIAN 701 EXPERIAN PARKWAY, PO BOX 2002, ALLEN, TX 75013 888.397.3742 END -- EXPERIAN







Benefits on the Indirect Solution

Uninterrupted AccessWith access to the DMDC data, Experian does not have a file size limitation.

ConvenienceExperian offers a one-stop solution to offer our lenders the MLA indicator on the credit report at point of origination.

SpeedExperian does not require a 24 hour+ turnaround time for the search results.

Cost SavingsAutomated process reduces manual efforts and costs for our clients


Experian MLA Solution Timelines: Key Dates

TODAY SEPTEMBER OCTOBER

Final Specifications published and available through

Account Executive

Testing environment available

Contracts available

Live Production Launch Financial Institution Compliance Commences


Your Road to MLA Compliance: Next Steps

If you are an Experian Client If you are new to Experian

Contact your Experian account rep or Client Support at 800-831-5614 or email [email protected] Sign contract/addendum

Start testing

Become a member by calling 800-831-5614 or email [email protected]

Experian’s Customer Support Center is available Monday through Friday from 7am to 7pm Central time to answer questions about our products and services

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QUESTIONS?[ ]

must-know details about the military lending act

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