Q: Credit union indicates that, “My credit union is not near a military base. We have a few members in the military service. I know all of my members. Please explain why I need to check covered borrower status.”
A: Although your credit union is not required to make any particular kind of covered borrower check, remember the MLA protections extend to spouses, children, and other dependents of active duty service members. Your credit union could be liable for extending credit that doesn't comply with the MLA and its regulation to someone covered by the act.
By using one of the two safe harbor methods of checking statuses, either accessing the DMDC database or obtaining a credit report issued by a nationwide consumer reporting agency that notes covered borrower status, and by keeping proper records, your credit union is protected if it mistakenly extends non-compliant credit to a covered borrower. Your credit union will not have this safe harbor protection if it did not make the DMDC or credit report check.