Pub. 12 2017-2018 Issue 5

WWW.NEBANKERS.ORG 26 Kimberly Graves, Associate General Counsel, Compliance Alliance MILITARY LENDING: LANDMINE OR GOLDMINE F ROM SOLDIERS IN THE CIVIL WAR under Ulysses S. Grant to current- ly deployed troops inAfghanistan, our military servicemembers have rested under the umbrella of fed- eral legislation to protect their financial welfare while serving. In 1948, the U.S. Supreme Court added texture to the legis- lative predecessor of the Servicemembers Civil Relief Act (SCRA): “The Act should be read with an eye friendly to those who dropped their affairs to answer their country's call.” LeMaistre v. Leffers, 333 U.S. 1, 6 (1948). Seven decades, incalcu- lable wars, and scores of unrefined law- makers later, the umbrella is once again in the spotlight. In October 2017, the Consumer Finan- cial Protection Bureau (CFPB) published a nationwide snapshot focused exclusively on servicemember complaints. Statistics in the report reflect a consistently upward trend in servicemember complaints filed with the CFPB, with two categories of complaints pulling in the largest number: debt collection andmortgages. The previ- ousmonth, the Federal Trade Commission (FTC) launched a dedicated website for its newly created Military Task Force, which followed two summits held in 2017 hosted by the FTC and dedicated entirely to dis- cussing and addressing servicemember financial challenges. A current senior official at the Office of the Comptroller of Currency (OCC) emphasized in a speech tomilitary bankers last August that banks should expect to be held accountable for violations. When the regulations are violated, both banks and servicemembers suffer the consequences; however, when the regula- tions are followed, landmines become goldmines for both the bank and the ser- vicemember. To ensure that conversion, banks must accomplish three objectives: (1) understand the various regulations; (2) evaluate bank compliance; and (3) implement missing compliance policies and procedures. Regulatory Perimeter The primary components of military lending regulation are the SCRA, Military Lending Act (MLA), Dodd-Frank Act pro- hibitions on unfair, deceptive, and abusive acts and practices (UDAAP), and state laws. Agencies, including the CFPB and the Department of Justice (DOJ), have filed suits against financial institutions for violations of these rules and have secured consent agreements or court verdicts pe- nalizing the institutions with civil fines up to $30 million. In2016,NavyFederal CreditUnionpaid $23 million in restitution to consumers