Congress has created a number of unique financial protections for members of the military, many of which apply regardless of whether a financial institution is aware of a customer’s military status. The Department of Justice and federal banking agencies have aggressively enforced these laws — the Servicemembers Civil Relief Act and the Military Lending Act —with consumers and class action lawyers also looking to advance novel claims under them. Financial penalties associated with SCRA and MLA violations can be costly, to say nothing of the public relations challenges that can arise from allegations that a company may have mistreated servicemembers. More than half the states have also enacted similar laws offering protections to servicemembers and members of the National Guard.
Buckley lawyers have deep experience with military lending laws and have defended financial institutions in several market-setting regulatory and enforcement actions, regularly obtaining positive results for our clients. Our comprehensive approach to addressing SCRA allegations has proven successful in reducing what, at the outset, appeared to be thousands of potential SCRA errors in some instances to only a handful of violations. Not only do we understand the law as written, but also our extensive work on military lending gives us insights into regulatory expectations, industry best practices, and creative strategies to obtain the best possible outcome for our clients. We appreciate that reputational considerations associated with military lending can create challenges and provide companies with both legal and strategic advice that is sensitive to these dynamics.
We also provide ongoing regulatory guidance to identify risks and prevent enforcement actions before they arise. Buckley lawyers serve as outside compliance counsel to banks, mortgage lenders and servicers, motor vehicle finance companies, insurers, and other consumer financial services companies on dozens of military lending matters. We advise clients with military lending issues such as designing new credit and deposit products, addressing the MLA’s preclusion on mandatory arbitration clauses, creating legally compliant policies and procedures, providing training to senior management and front-line employees, conducting internal and due-diligence reviews, and responding to consumer complaints and regulatory inquiries.
When disasters strike — hurricanes, earthquakes, terrorist activity— governors call upon members of the National Guard to provide essential services, and state laws provide an inconsistent patchwork of both SCRA-like protections and specific protections to support those called to state service. Buckley attorneys monitor state legislative and regulatory developments and routinely advise clients regarding compliance with these laws.
Examples of our military lending representations include:
- Residential mortgage foreclosure: We represented two nationwide banks in the first major SCRA foreclosure actions arising from the financial crisis, in which DOJ developed the legal interpretations and remediation methodology that remain the core of all governmental SCRA foreclosure actions; multiple cases settled collectively, without admission of fault. As part of our work, we also helped these banks implement the injunctive relief provisions of these settlements and construct SCRA Compliance Programs to meet their obligations. We also represented a major mortgage servicer in negotiating and implementing a foreclosure lookback and remediation under the supervision of its federal banking regulator, allowing the bank to avoid a public enforcement action.
- Interest rate benefit: We defended a major federal and private student loan servicer in the first-ever application of the SCRA’s interest rate benefit and default judgment provisions to a student loan servicer, including addressing multiple novel questions of law; the matter settled to resolve all claims without admission of fault. We also directed a major remediation on behalf of a nationwide bank that failed to properly implement the interest rate benefit.
- Motor vehicle lease termination: We represented a major captive auto lender in the first-ever DOJ enforcement action addressing the SCRA’s early lease-termination provision and the refundability of fees; this landmark settlement established an industry-standard methodology for the calculation of amount subject to refund in similar situations and has been used by the DOJ as a precedent for subsequent lease-termination matters; the matter settled to resolve all claims without admission of fault.
- Motor vehicle repossession: We defended a major bank in one of the first-ever DOJ enforcement actions arising from the SCRA relating to automobile repossessions; the matter settled to resolve all claims without admission of fault.
- Wholesale SCRA compliance review: We conducted a wholesale review of SCRA and MLA compliance for a nationwide financial services company, including all traditional consumer credit and deposit products, ancillary products, affiliated insurance companies, and account-level reviews, in response to regulatory criticism.
- Industrywide representation and guidance: On behalf of the financial services industry, we advised several trade groups in a coordinated effort to analyze changes to MLA regulations and request amendments to bring the regulations in line with industry standards and the realities of the credit market, including participating in meetings with key federal policymakers and enforcement agencies.
- Policies, procedures, training, and testing: We have worked closely with dozens of companies to develop SCRA- and MLA-compliant policies and procedures across all consumer product classes, and where needed, have also conducted in-depth training for board members, senior management, and line-level employees, as well as account-level testing for legal and operational compliance.
"After storm and fire: How states protect service members" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
This has been an active year for National Guard call-ups to active duty, as the U.S. addresses hurricanes, wildfires and the novel coronavirus pandemic. National Guard activations are likely to remain high for several months due to ongoing responses to COVID-19, the National Oceanic and Atmospheric...Articles
"Dorian update: How state laws protect servicemembers" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
Hurricane Dorian devastated the Bahamas and southeastern United States in late August and early September, and the governors of Florida, Georgia, North Carolina, South Carolina and Puerto Rico authorized the activation of state National Guard forces for response efforts. In addition, the Rhode...Articles
"Takeaways from military member complaints at CFPB" by Jeffrey P. Naimon, Sasha Leonhardt, and Christina R. Smith (Law360)
The Consumer Financial Protection Bureau ’s Office of Servicemember Affairs recently released a report highlighting issues facing military consumers based on complaints submitted by service members, veterans and their families. This report identifies categories and trends among the approximately 48...Articles
"Hurricane Florence: How state laws protect service members" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
As the southeastern United States braces for Hurricane Florence, the governors of North Carolina, South Carolina and Virginia have authorized their state National Guard for response efforts, and neighboring governors in Maryland and West Virginia have placed their National Guard members on notice...Articles
Jeffrey P. Naimon and Sasha Leonhardt Authored a Law360 Article, "Harvey Crisis: How State Laws Will Protect Servicemembers"
As Hurricane Harvey devastated Houston and southeastern Texas this past weekend, thousands of first responders were called to action to provide critical assistance to communities along the Gulf Coast. Even as this storm continues to affect those along the water and move inland, rescue operations,...Articles
The Servicemembers Civil Relief Act enables servicemembers “to devote their entire energy to the defense needs of the Nation” by deferring or suspending certain obligations during active duty and for certain periods after the end of active duty. The SCRA’s core protections include interest-rate...Articles
The last few weeks of 2015 saw two important legislative developments relating to the Servicemembers Civil Relief Act (SCRA). First , in November, the Department of Justice (DOJ) submitted a legislative package to Congress with proposed revisions to several existing laws that protect service...Articles
The Servicemembers Civil Relief Act, 50 U.S.C.A. § 3901, provides certain protections to military servicemembers regarding their financial obligations. The act applies to virtually every type of debt that a service member may obtain. It provides benefits such as an interest rate cap and procedural...Articles
As President Obama slows the drawdown of troops overseas — and as the nation expands its fight against ISIS — a growing number of service members will seek the benefits and protections of a nearly century-old law that protects them on the homefront while they serve on active duty: the...Articles
With recent changes in the regulations implementing the Military Lending Act (“MLA”), creditors are now reevaluating their compliance plans to ensure they are prepared for the new regulations. Although there is no formal guidance on what federal regulators will look for in reviewing MLA compliance...Articles
When Congress reenacted the Servicemembers’ Civil Relief Act (“SCRA”) in 2003, Congress designed the SCRA to balance the interests of active duty servicemembers and their creditors, as it had done under the SCRA’s predecessor legislation. One of the benefits provided by the SCRA is a six-percent...Articles
As the subprime auto loan market has grown over the past few years, so too have the number of starter interrupters in use. According to a recent New York Times story, these devices have been installed in approximately 2 million vehicles and are used in about one-quarter of all subprime auto loans...Articles
Over the past few years, the U.S. Department of Justice and federal banking regulators have aggressively increased their efforts to enforce the SCRA. Both federal and state regulators now focus on SCRA compliance when examining institutions, and government enforcement attorneys are keenly aware of...Articles
Over the past few years, federal regulators — led by the Department of Justice — have sharply increased their focus on SCRA compliance. Although most recent headlines related to SCRA enforcement have arisen in the area of home mortgages, several major enforcement actions and multi-million dollar...Articles
Several federal statutes, including the Real Estate Settlement Procedures Act (“RESPA”), the Truth in Lending Act (“TILA”) and the Servicemembers Civil Relief Act (“SCRA”) permit the government to seek either civil or criminal penalties for the same conduct. While the executive branch has used its...Articles
Over the past two years, mortgage loan servicers have faced an onslaught of regulatory scrutiny, enforcement actions and targeted litigation. The Department of Justice, state attorneys general and the federal banking regulators have extracted tens of billions of dollars in settlements, borrower...Articles
Over the past year and a half, several federal agencies, including the Department of Justice, Office of the Comptroller of the Currency and Federal Reserve Board, have turned their attention to promoting compliance with the Servicemembers Civil Relief Act, 50 U.S.C. app. §§ 501. Because military...Articles
On January 13, the Illinois legislature unanimously passed the “Predatory Loan Prevention Act,” (available in House Amendment 3 to SB 1792), which would prohibit lenders from charging more than 36 percent APR on all consumer loans. Specifically, the legislation would apply to any non-commercial...InfoBytes
On December 30, the CFPB announced a settlement with a Nevada-based consumer lender resolving allegations that the company violated the Military Lending Act (MLA), the Electronic Fund Transfer Act (EFTA), and the CFPA when making installment loans. The settlement is part of “the Bureau’s sweep of...InfoBytes
On December 28, the Department of Veterans Affairs issued Circular 26-20-40 , which further extends foreclosure and eviction relief for borrowers affected by Covid-19 (previously covered here ). Specifically, all properties secured by VA-guaranteed loans, including those previously secured by VA-...InfoBytes
On December 4, the CFPB announced it filed a complaint in the U.S. District Court for the Northern District of California against a California-based online lender alleging violations of the Military Lending Act (MLA). According to the CFPB, the “action is part of a broader Bureau sweep of...InfoBytes
On October 30, the CFPB and the South Carolina Department of Consumer Affairs filed a proposed final judgment in the U.S. District Court for the District of South Carolina to settle an action alleging that two companies and their owner (collectively, “defendants”) violated the Consumer Financial...InfoBytes
On October 26, the CFPB announced a settlement with a ninth mortgage lender for mailing consumers advertisements for Department of Veterans Affairs (VA) mortgages that allegedly contained misleading statements or lacked required disclosures. According to the Bureau, the lender allegedly sent false...InfoBytes
On September 23, the U.S. District Court for the Eastern District of New York held that an active duty servicemember could not avail herself of the foreclosure protections provided by the Servicemembers Civil Relief Act (SCRA) even though she was a signatory on the mortgage, because she was not a...InfoBytes
On September 15, the DOJ announced a settlement with a Texas-based furniture and appliance company, resolving allegations that the company charged excess interest on servicemembers’ purchases in violation of the Servicemembers Civil Relief Act (SCRA). According to the press release, the DOJ...InfoBytes
On September 10, the DOJ announced a Servicemembers Civil Relief Act (SCRA) settlement with a Florida-based towing and storage company, resolving allegations that the company auctioned cars owned by active duty servicemembers without first obtaining a court order. According to the complaint , filed...InfoBytes
On September 14, the Department of Veterans Affairs issued Circular 26-20-33 , which clarifies whether, due to the impact of Covid-19, servicers may offer deferment as a Covid-19 loss mitigation option. Deferment may be used if the veteran is able to resume making monthly payment as scheduled under...InfoBytes
BuckleySandler LLP hosted its eighth annual Fair Lending Today conference in Washington, DC on March 13-14, 2016. The two-day event featured an evening of interactive roundtable discussions on fair lending issues, followed by a full day of seminars. The sessions were led by BuckleySandler attorneys...Press Releases
Our Military Lending Team
"After storm and fire: How states protect service members" by Jeffrey P. Naimon, Sasha Leonhardt, and Jessica M. Shannon (Law360)
Recent Blog Posts
January 14, 2021
Illinois legislature passes 36 percent rate cap for all consumer loans
January 8, 2021
CFPB reaches $2 million settlement with installment lender for MLA, EFTA violations
December 28, 2020
VA re-extends foreclosure and eviction moratorium for borrowers affected by Covid-19
December 9, 2020
CFPB charges online lender with MLA violations
November 6, 2020
CFPB and South Carolina settle with loan broker for veteran pension loans