Pub. 4 2015 Issue 9

December 2015 29 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s recourse under State or Federal law, including those provided under the Servicemembers Civil Relief Act. Creditors, however, are permitted to use the following techniques to ensure payment: • Require an electronic funds transfer to repay the consumer credit transaction if permitted by law, but note the Electronic Funds Transfer Act (Regulation E) prohibits requiring preauthorized (recurring) transfers; • Require direct deposit of the consumer’s salary as a condition of eligibility for covered credit or to debit automatically the checking account; or • Take a "security interest" in funds deposited after the extension of credit in an account established in connection with the consumer credit transaction. With a noted exception for banks and savings associations, creditors are prohibited from rolling over, renewing, repaying, refinancing, or consolidating any consumer credit extended to the same covered borrower by the same creditor, unless the consumer was not a covered borrower at the time of the original transaction. Again, with the stated exception for banks and savings associations, creditors are prohibited from using the title of a vehicle as security for a covered loan. Under the MLA a creditor must provide certain disclosures in writing to the customer at or before the time the borrower becomes obligated on the transaction or establishes an account. New disclosures must be provided any time a new transaction occurs or a renewal of a credit requires new disclosures under the Truth in Lending Act (Reg. Z). The disclosure must include a statement of the MAPR provided both in written form as well as orally, either in person or through a toll free telephone number. The disclosure must include a description of the payment obligation of the covered borrower, and may include either a payment schedule in the case of closed end credit or account opening disclosures for open end credit. In addition, the lender must provide any disclosures required under the Truth in Lending Act. 4 The final rule expands specific protections provided to service members and their families under the MLA and addresses a wider range of credit products than the DOD's previous regulation. Although the MLA became effective on October 1, 2015, it will apply only to consumer credit transactions or accounts that are consummated or established after October 3, 2016 for most products, and after October 3, 2017 for credit cards. In addition to the protections provided by the Military Lending Act, the Servicemembers Civil Relief Act continues to provide various protections to service members as well. Creditors should consider both bodies of law when extending credit to service members and their dependents. 1 http://www.census.gov/newsroom/facts-for-features/2014/cb14-ff24.html 2 32 CFR Part 232 - Limitations on Terms of Consumer Credit Extended to Service Members and Dependents 3 Ibid 4 Ibid Shawn Eidson 316-383-1368 | Dan Heinz 316-383-1415 | David White 316-383-1435 | Quinton Smith 316-383-1900 We’re a family-owned, Midwest financial institution, and we’ve helped community banks just like yours provide customers with financial services to rival even the biggest banks. Because we call many of the same communities home, we’re perfectly suited to help your bank – and your community – thrive. Our roots share the same soil. Client: Intrust Ad Title: Correspondent - Ranch Publication: Kansas Banker - 4c Trim: 7.5" x 4.625" Member FDIC I ©2015 INTRUST Bank intrustbank.com 33458_Correspondent_Flag_KansasBanker.indd 1 6/29/15 11:03 AM