Military Lending
Practice Overview
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
Articles
"Takeaways from military member complaints at CFPB" by Jeffrey P. Naimon, Benjamin K. Olson, 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...
ArticlesJeffrey 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,...
ArticlesCorporations May Be People, But They Are Not Servicemembers
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...
ArticlesExpanding the SCRA, If the DOJ Has Its Way
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...
ArticlesCitizen, Soldier, Small Business Owner? Commercial Lending and the Servicemembers Civil Relief Act
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...
ArticlesLandlords, Leases and The Servicemembers Civil Relief Act
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...
ArticlesSpotlight on the Military Lending Act, Part 3: Falling in Line with MLA Compliance
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...
ArticlesA New Balancing Act: The DOJ Provides New Direction Regarding the SCRA's Interest Rate Benefit
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...
ArticlesStarter Interrupters Expose Lenders to SCRA Risks
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
News & Blogs
CFPB settles with loan broker over veteran pension loans
On January 23, the CFPB announced a settlement with an online loan broker resolving allegations that the broker violated the Consumer Financial Protection Act by operating a website that connected veterans with companies offering high-interest loans in exchange for the assignment of some or all of...
InfoBytesBenjamin K. Olson quoted in American Banker article, “CFPB's Kraninger asks for 'clear authority' over military lending exams”
Benjamin K. Olson was quoted on January 17, 2019 in an American Banker article, “CFPB's Kraninger asks for 'clear authority' over military lending exams,” which discussed Consumer Financial Protection Bureau Director Kathy Kraninger’s request to Congress to give the bureau the authority to conduct...
In The NewsDistrict Court orders mortgage company to pay $260,000 in civil money penalties for deceiving veterans about refinance benefits
On December 21, the U.S. District Court for the District of Nevada ordered a non-bank mortgage company to pay $268,869 in redress to consumers and a civil penalty of $260,000 in an action brought by the CFPB for engaging in allegedly deceptive lending practices to veterans about the benefits of...
InfoBytesHouse Democrats urge Kraninger to resume MLA examinations
On December 14, Maxine Waters (D-CA) and 22 other House Democrats issued a letter urging the new CFPB Director, Kathy Kraninger, to resume supervisory examinations of the Military Lending Act (MLA). As previously covered by InfoBytes , according to reports citing “internal agency documents,” the...
InfoBytesCFPB sues mortgage company for allegedly deceiving veterans about refinance benefits
On December 6, the CFPB announced the filing of a complaint and proposed final judgment in the U.S. District Court for the District of Nevada against a non-bank mortgage company for allegedly deceiving veterans about the benefits of refinancing their mortgages in violation of the Consumer Financial...
InfoBytesVA clarifies effect of guarantee claim payments on home loan entitlement
On October 30, the Department of Veterans Affairs (VA) released Circular 26-18-25 , which clarifies the effect on a veteran’s home loan entitlement when the VA pays a guaranty on a home loan terminated by foreclosure, short sale, or deed-in-lieu of foreclosure. Specifically, for loans originated on...
InfoBytesDOJ settles with credit union for alleged SCRA violations
On November 2, the DOJ announced a $95,000 settlement with a credit union resolving allegations that the credit union violated the Servicemembers Civil Relief Act (SCRA) by repossessing vehicles owned by servicemembers without first obtaining the required court orders. According to the complaint ,...
InfoBytesNY AG sues jeweler for practices targeting servicemembers
On October 29, the New York Attorney General announced the filing of a complaint against a national jewelry store, headquartered in New York, for allegedly engaging in fraudulent and deceptive conduct, deceptive credit repair services, and illegal lending in the financing of jewelry sales to active...
InfoBytesBipartisan state Attorneys General coalition urge CFPB to examine for MLA compliance
On October 23, a bipartisan coalition of 33 state Attorneys General sent a letter to acting Director of the CFPB, Mick Mulvaney, expressing concern over reports that the Bureau is no longer supervising financial institutions for compliance with the Military Lending Act (MLA). The Attorneys General...
InfoBytesBenjamin K. Olson quoted in American Banker article, “Pentagon, others baffled by CFPB plan to cease military lending exams”
Benjamin K. Olson was quoted on October 11, 2018 in an American Banker article, “Pentagon, others baffled by CFPB plan to cease military lending exams,” which discussed the Consumer Financial Protection Bureau’s decision to stop examining compliance with the Military Lending Act. The article stated...
In The News
Press Releases & Announcements
BuckleySandler Hosts Eighth Annual Fair Lending Today Conference
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
Partners
FYI
Jeffrey P. Naimon and Sasha Leonhardt Authored a Law360 Article, "Harvey Crisis: How State Laws Will Protect Servicemembers"
Recent Blog Posts
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January 25, 2019
CFPB settles with loan broker over veteran pension loans
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January 3, 2019
District Court orders mortgage company to pay $260,000 in civil money penalties for deceiving veterans about refinance benefits
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December 19, 2018
House Democrats urge Kraninger to resume MLA examinations
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December 7, 2018
CFPB sues mortgage company for allegedly deceiving veterans about refinance benefits
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November 5, 2018
VA clarifies effect of guarantee claim payments on home loan entitlement