Department of Defense Military Payday Lending Act or

John Warner National Defense Authorization Act for Fiscal Year 2007

 

           Regulations generally effective October 1, 2007

           Applies to all creditors making consumer loans to covered borrowers. 

           Intended to regulate the terms of consumer credit extended by creditors to active duty service members and their dependents.

           Requires oral and written disclosures

           Requires a 36% rate cap called a MAPR

           Prohibitions and/or restrictions on refinances and renewals by the same creditor

           Prohibits mandatory arbitration

           Prohibits creditor demands for certain notices from borrowers

           Prohibits creditor use of vehicle titles as security

           Prohibits prepayment penalties or fees

           Violators would be subject to criminal prosecution

           Contracts in violation of the proposed regulation would be void.

Be Aware that the Department of Defense Defines Payday Loan as:

           Closed-end credit with a term of 91 days or less, and

           The amount financed does not exceed $2,000, and

           The covered borrower provides the lender with a person check (payment instrument) to hold for more than one day or authorizes an electronic fund transfer after one or more days.