United States Senator of California Dianne Feinstein joined 40 senators last week in supporting a proposal to update the Military Lending Act.
The update would close loopholes and expand protection to military members from “predatory lending,” according to a press release.
In a letter sent to U.S. Secretary of Defense Chuck Hagel, Feinstein and supporting senators expressed strong support for the proposal, according to a press release on Feinstein’s website.
“As our service members are asked to take on even more tasks in defense of our nation, we should take every opportunity to protect them and their families here at home, especially from unscrupulous lenders,” the letter stated.
The MLA, originally implemented in 2007, caps annual interest rates for consumer credit to service members and their dependents at 36 percent and gives the DOD authority to decide what loans are to be covered, according to a press release on the U.S. Department of Defense website.
The proposal from the Department of Defense to change regulations on the MLA comes after president Obama’s speech for a partnership with financial lenders for important financial home loan related protections to the military community, according to a DOD press release.
The DOD narrowly defined regulations for three types of closed-end credit; payday loans for no more than $2,000 with a term of 91 days or fewer, auto title loans with a term of 181 days or fewer and tax refund anticipation loans.
The proposed amendment would prohibit creditors from requiring service members to waive their rights under the Service members’ Civil Relief Act, which postpones certain civil obligations allowing them to devote full attention to their duty and relieves stress on family members, according to the DOD website.
The website also states that the amendment would require the creditor be responsible for providing additional disclosures encouraging the service member to seek out other options rather then high-cost credit, such as financial counseling and assistance from the Military Aid societies.
The comment period for the proposed changes on the Federal Register ends on Dec. 26.
