Pub. 12 2017-2018 Issue 5

NEBRASKA BANKERS ASSOCIATION 27 and a $5.5 million civil penalty for UDAAP violations consisting of training deficiencies and collection attempts threatening to contact servicemember commanding officers. Of note in the case, the CFPB found that these collection attempts were deceptive despite the servicemember having signed an account agreement expressly providing permission to contact a commanding officer because the languagewas buried in fine print, non-negotiable, and not bargained for. The previous year, Santander Bank and Bank of America felt the sting ofmulti-million-dollar civilmoney penalties resulting from violations of the SCRA. The DOJ website boasts of awards in cases against financial institutions ranging from just over $1,000 to just under $1 mil- lion. The cases include violations of the SCRA by lenders who repossessed servicemember vehicles. Recent private actions against banks by servicemembers include liability for foreclo- sure, repossession, and interest rate violations. SCRA Unlike other regulations that target specific areas of a bank, the SCRA is broad with provisions penetrating multiple depart- ments and product lines. The act primarily covers active-duty military and their dependents; in limited circumstances, busi- ness agreements are covered. Violations are subject to enforce- ment actions, civil penalties, and private suits. The SCRA piles on criminal penalties for several violations, making the stakes even higher for bankers. The crown jewel in the act for new servicemembers is the interest rate cap of 6 percent on all loans (including mortgages) consummated before enteringmilitary service. Servicemembers must expressly invoke this right within 180 days of release from the military. You read that correctly—the regulation permits retroactive interest reduction. Calculation of the interest rate is unique and can be tricky. The SCRA, among other things, also provides protections against default judgment, rights to terminate leases, judicial stays or extensions, revised statutes of limitation, amended contractual liability, and prohibition on creditor self-help ac- tions like foreclosure and repossession without court approval. MLA Three areas of the MLA for banks to note include: (1) Certain oral and written (yes, both) disclosures are to be made before extending credit; (2) Prohibitions are placed on mandatory ar- bitration clauses, prepayment penalties, and waivers of certain legal rights, including those under the SCRA; and (3) Rates are capped at 36 percent on all covered loans, with a distinct rate calculation inclusive of “add on” products like credit insurance and ancillary fees. Coverage is limited to servicemembers on active duty and dependents. Originally, MLA applicability was limited, but the 2015 amendments expanded coverage to most Truth in Lending Act (TILA) loans. Thus, most consumer credit subject to finance charges or with installments is now included. Credit cards and student loans are the big additions, while mortgages, most auto Military Lending — continued on page 28 Schedule a tour or demo today! Contact Tracy Dreessen, Cash Vault Services Sales Coordinator Call: 800/558-9323 E-mail: tdreessen@rocarmco.com Visit: RochesterArmoredCar.com Cash Vault Services Secure currency and coin storage Cash order preparation and deposit verification Inventory management Access to a secure web portal Reduce risk. Improve efficiencies. Lower costs. All with one service.