NCUA Examining for MLA Compliance

• October 5, 2016
• CLA Regulatory Compliance Team

On October 4^th the National Credit Union Administration (NCUA) issued Letter to Credit Unions 16-CU-07 on its examination approach to the new Military Lending Act (MLA).  Compliance with MLA was required as of October 3, 2016.  NCUA has issued three regulatory alerts on the MLA:

• NCUA Regulatory Alert 16-RA-06, Department of Defense’s Interpretive Guidance on Military Lending Act Limitation on Terms of Consumer Credit Extended to Service Members and Dependents (September 2016)
• NCUA Regulatory Alert 16-RA-04, Guidance on Regulatory Changes Affecting Military Members (March 2016)
• NCUA Regulatory Alert 15-RA-04, Regulatory Changes Affecting Military Members (October 2015)

NCUA is taking the same approach to MLA compliance that they took with TRID and Qualified Mortgage/Ability-to-Repay requirements. NCUA states “examiners are instructed to accept a credit union’s reasonable and good faith efforts to comply with the new rule during the first examination following the implementation date. NCUA recognizes that some credit unions may need time to implement changes and work with their technology vendors to resolve problems that may arise from extensive testing and use, once their new MLA systems become fully operational”.  During the first exam covering MLA, examiners will:

• Ensure that a credit union is aware of amendments to the rule and determining the applicability of the amendments;
• Ensure that a credit union is making progress in complying with the rule, if applicable; and
• Assess the quality of a credit union’s compliance risk management systems and its policies and procedures for implementing the program.

Military Lending Act Examination Approach

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