Military APR Changes on the Horizon

Carleton announces the July release of the latest CarletonCalcs® Origination module to support the changes identified in the 2015 amendment of the Military Lending Act (MLA) effective October 3, 2016.    Previously the regulation was limited to payday, vehicle title, and refund anticipation loans but as of October 3, 2016 will affect nearly all lenders extending credit to active military personnel.   The purchase of motor vehicles and 1^st lien purchase mortgages have been excluded.

Credit insurance and fees for debt cancellation or debt suspension fees are included in the calculation of the MAPR in accordance with the John Warner National Defense Act in 2007.  The major change from the DOD to the new regulation is that “bona fide” fees may be now be excluded from the MAPR.  The Act defines interest for the purposes of complying to include:

• Application fees* (new requirement)
• Points, origination fees, participation fees – all fees in the TILA finance charge
• Single premium credit insurance premiums
• Single amount debt protection charges/fees (cancellation and suspension)
• Any credit-related ancillary product sold in conjunction with the transaction

The Military APR cannot exceed 36%.

Carleton has added the ability to the CarletonCalcs® Origination module to customize which fees will be included or excluded to allow lenders to customize which fee will affect the MAPR to meet their individual needs.

If you have any questions regarding this release and how Carleton can help you stay compliant with the MLA, contact your Carleton sales or support representatives at (800)433-0090.