Military Lending

Congress has created special protections and accommodations for military members as consumers of financial services, and banking regulators and the Department of Justice (DOJ), considering military members to be vulnerable consumers, enforce these laws aggressively. For a century, there have been different versions of what is now the Servicemembers Civil Relief Act (SCRA), which governs how financial institutions and others administer and enforce their contracts with servicemembers — not only loans of all kinds, but also deposits and other contracts. More recently, Congress enacted and then dramatically expanded the Military Lending Act (MLA), which creates special protections when making new loans to members of the military. The financial penalties associated with violations are costly, and the business and reputational risks to banks, mortgage lenders and servicers, auto finance companies, and credit card issuers are substantial.

Buckley has deep experience with these issues. Our team is regularly involved in SCRA-related compliance, investigations, enforcement actions, and litigation on behalf of banks, mortgage lenders, mortgage servicers, and other consumer financial services companies. We advise a diverse range of retail banks, card issuers, marketplace lenders, and others on implementing the amended MLA regulations. Our team is involved in creating, enhancing, and testing compliance programs, policies, and procedures, as well as designing training programs.

Over the past few years, Buckley has advised and continues to serve as counsel to more than 20 clients on dozens of SCRA-related matters. In the enforcement context, our comprehensive approach to addressing individual SCRA complaints has proven successful in reducing what, at the outset, appeared to be thousands of potential SCRA errors to single digits of violations for our clients.

Recent work in this area includes:

• Advised numerous large banks and card issuers, as well as installment and marketplace lenders regarding implementation of the amended MLA regulations
   
• Represented two major mortgage lenders in a suit brought by the DOJ alleging failure to comply with SCRA lending requirements and guidelines, including confirming independently whether borrowers were on active duty before initiating nonjudicial foreclosures, and that the credit card unit of one of the companies failed to give a small number of borrowers the SCRA's interest rate cap protection. Multiple cases settled collectively, without admission of fault
   
• Represented a major bank in a DOJ investigation and settlement resolving allegations of alleged violations of the SCRA relating to automobile repossessions
   
• Advised a major mortgage servicer, a major bank, a major credit card issuer, and a major auto lender in connection with state AG investigations relating to SCRA compliance
   
• Assisted a top five credit card issuer with enhancing its SCRA policies and procedures, compliance protocols, and training programs, and providing advice regarding discrete issues related to the SCRA and consent orders
   
• Represented a major student loan servicer in an enforcement action on SCRA’s 6% interest rate cap