2015 Military Lending Act (MLA) Final Rule for Service Members – MAPR fees and charges

Compliance > Lending > Service Members > Military Lending Act
Q:   What fees and charges are included in the 2015 MLA rule’s MAPR calculation?
A:   The MLA regulation prohibits a creditor from imposing a Military Annual Percentage Rates (MAPR) greater than 36% in connection with an extension of consumer credit that is closed-end or in any billing cycle for open-end credit.  The regulation (32 CFR 232.4(c))) provides a calculation of MAPR, which is sometimes referred to in the industry as an “all in” APR.  It includes fees and charges that would not be considered as “finance charges” under Regulation Z. 
The MLA Regulation states that fees and charges to be included, as applicable to the extension of credit are:
  • (i) Any credit insurance premium or fee, any charge for single premium credit insurance, any fee for a debt cancellation contract, or any fee for a debt suspension agreement;
  • (ii) Any fee for a credit-related ancillary product sold in connection with the credit transaction for closed-end credit or an account for open-end credit; and
  • (iii) Except for a bona fide fee (other than a periodic rate) which may be excluded under paragraph (d) of this section [see “Bona fide fee charge to a credit card account” information]:
(A) Finance charges associated with the consumer credit;
(B) Any application fee charged to a covered borrower who applies for consumer credit, other than an application fee charged by a Federal credit union or an insured depository institution when making a short-term, small amount loan, provided that the application fee is charged to the covered borrower not more than once in any rolling 12-month period; and
(C) Any fee imposed for participation in any plan or arrangement for consumer credit, subject to paragraph (c)(2)(ii)(B) of this section.
  • (iv) Certain exclusions of Regulation Z inapplicable. Any charge set forth in paragraphs (c)(1)(i) through (iii) of this section shall be included in the calculation of the MAPR even if that charge would be excluded from the finance charge under Regulation Z.

ADDITIONAL INFORMATION:  See details in the Department of Defense’s 2015 Final Rule on “Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,” here:  https://www.federalregister.gov/articles/2015/07/22/2015-17480/limitations-on-terms-of-consumer-credit-extended-to-service-members-and-dependents

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