The Difference Between MLA & SCRA
In this Compliance Clip (video), Adam explains the different compliance requirements between MLA & SCRA and gives a general overview of each law. (Note: The ending on this is terrible as Adam never quite knows how to end his videos!)
Video Transcript
The following is a transcript of this video.
This compliance clip is going to talk about the difference between the Military Lending Act and the Servicemembers Civil Relief Act. Over the years, I've received a lot of questions on what the difference is, so we're going to address this in this Compliance Clip.
The question is, of course, what is the difference between the two - between MLA, the Military Lending Act, and SCRA, or the Servicemembers Civil Relief Act?
First of all, they both apply to active duty servicemembers. So we're talking about military individuals who are on active duty. The protections we have in the banking world don't apply to all military individuals. In fact, military individuals are not currently a protected class under fair lending laws. But the laws that we do have protect our active duty military individuals. So both of these laws relate to what? Active duty.
The difference is, however, is that the Military Lending Act applies to new debt that an active duty servicemember incurs while they're in active duty. It applies to new debt. While the Servicemembers Civil Relief Act or SCRA, applies to existing debt that was obtained before the active duty military individual went into active duty status. So MLA applies to new debt, while SCRA applies to existing debt. Though both apply to active duty servicemembers.
Breaking it down just a little bit further, the MLA, the Military Lending Act, has a number of protections that include: identifying covered borrowers, they have a maximum MAPR, it's a Military Annual Percentage rate that is applied on loans and this includes more than just your APR under Regulation Z. It includes fees, insurance premiums, and a number of things like that. But it has a maximum MAPR when you do loans to a covered borrower, who, of course, is an active duty military who is applying for new debt. It also has mandatory loan disclosures that must be provided at the time of loan origination.
The Servicemembers Civil Relief Act has coverage that includes rental agreements and security deposits. It includes prepaid rent and evictions. It includes installment contracts, credit cards, and mortgage interest rates, as well. So this all has to do with debt or leases that were incurred before the went on active duty. Of course, this one applies to foreclosures and insurance.
That's the difference between the two and that's all I have for you today.