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	V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
and participation fees
have been specifically noted in the regulation as 
charges that generally must be inclu
ded in the MAPR, but would not be 
included in the APR under Regulation Z.
National Defense Authorization Act for Fiscal Year 2013, Pub. L. 112
239, 
section 662(b), 126 Stat. 1786.  
80 Fed. Reg. 43560.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
Previously, the MLA regulation only applied to 
certain
types 
of credit
, namely:
narrowly
defined
payday loans, motor 
vehicle title loans, and tax refund anticipation loans with 
particular 
terms.  The current rule defines “consumer credit” 
subject to the MLA much more broadly, generally paralleling 
the definition in Regulation Z.  
Some examples of 
add
itional 
credit 
products n
subject to 
MLA 
protections
when made 
to 
covered
borrowe
include: 
Credit cards
; 
Deposit advance products
; 
Overdraft lines of credit (but 
not
traditional overdraft 
services)
and
Certain
nstallment loans
(but 
not
installment loans 
expressly intended to finance the purchase of a vehicle or 
personal property when the credit is secured by the vehicle 
or personal 
property being purchased)
Credit agreements that 
violate the MLA
are void from 
in
ception.
For most produ
cts, creditors are required to come 
into compliance with DoD’s July 2015 rule on October 3, 
.  For credit card accounts, 
creditors 
are not required to 
come into compliance with the rule until October 3, 2017.
Definitions
232.3)
Consumer Credit
onsumer credit
is “credit offered or extended to a covered 
borrower primarily for personal, family, or ho
usehold 
purposes, and that is: 
ubject to a finance charge; or 
ayable by a written agreement in more than four 
installments.”
The MLA
regulation’s
efinition of “consumer credit” has 
been 
amended 
to 
align 
more closely
with
the definition of the 
same term in Regulation Z
t is DoD’s intent that the term 
as used in the MLA
regulation
should wherever possible be 
interpreted consistently with Regulation Z.  
Notably, 
An overdraft line of credit with a finance charg
e is a covered consumer 
credit product when: it is offered to a covered borrower; the credit extended 
by the creditor is primarily for personal, family, or household purposes; it is 
used to pay an item that overdraws an asset account and for which the 
cove
red borrower pays any fee or charge; and the extension of credit for the 
item and the imposition of a fee were previously agreed upon in writing.
For purposes of the extended compliance date, the credit card accounts 
must be under an open
end (not home
ecured) consumer credit plan. DoD 
may, by order, further extend the expiration of the limited exemption for 
credit card accounts to a date not later than October 3, 2018.  For all other 
credit products, a creditor must comply with the applicable requiremen
ts of 
the July 2015 rule by October 3, 2016 for all consumer credit transactions or 
accounts for consumer credit consummated or established on or after October 
3, 2016.
however, 
the 
and the implementing regulation
not 
apply to 
certain 
types of 
loans
extended to covered borrowers
that 
are
covered by Regulat
ion Z, including:
Residentia
l m
ortgage
(any credit transaction secured by 
an interest in a dwelling), including transactions to finance 
the 
purchase or initial construction of a dwelling, any 
refinance transaction, a home equity loan or line of credit, 
or a reverse mortgage;
Credit transactions 
expressly intended 
to finance the 
purchase of a motor vehicle
when the credit is secured 
by the motor vehicle being purchased; and
Credit transactions 
expressly intended 
to finance the 
purchase of personal property when the credit is 
secured 
by the property being purchased
Note: 
A transaction where a creditor simultaneously 
extends an additional cash advance beyond the purchase 
price
of the 
securing 
personal property
does not fall under 
this 
last 
exception
Covered Borrower 
cov
ered borrower
is a consumer who, at the time the 
consumer becomes obligated on a consumer credit 
transaction or establishes an account for consumer credit, is a 
covered member of the armed forces or a 
dependent of a 
covered 
member
(as defined 
in 
32 CFR 232
(g)(2) and 
(g)(3))
Covered members of the armed forces incl
ude
member
of 
the Army, Navy, Marine Corps, Air Force, or Coast Guard 
currently 
serving on active duty 
pursuant to title 10, title 14, 
or title 32 of the U.S
Code
under a call or order that does not 
specify a period of 30 days or fewer, or such a member 
serving on Active Guard and Reserve duty as that term is 
defined in 10 U
101(d)(6)
The term 
dependent
refers to 
a covered 
member’s
Spouse;
Children under ag
e 21; 
hildren under age 23 enrolled full
time at an approved 
institution of higher learning and dependent on a covered 
member (or dependent at the time of the member’s or 
former member’s death) for over one
half of their support; 
For purposes of the MLA, the term “vehicle” includes any self
propelled 
vehicle prima
rily used for personal, family, or household purposes for on
road transportation. The term does not include motor homes, recreational 
vehicles (RVs), golf carts, or motor scooters.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
hildren of any age i
ncapable of self
support due to 
mental or physical incapacity 
that occurred 
while a 
dependent of the covered member under the preceding two 
bullets
and dependent on a covered member (or dependent 
at the time of the member’s or former member’s death) for 
er one
half of their support.
Other relationships may also qualify 
an individual 
as 
depende
nt of
a covered member.  
aragraphs (E) and (I) of 
1072(2) 
reference 
other relationships that qualify 
individu
als as dependents under the MLA
Per 32 CFR 232.2(a)(1), the regulation does not apply to a 
credit transaction or account relating to a consumer who is 
not a covered borrower at the time that he or she becomes 
obligated on a credit transaction or establishes an account for 
credit.  Additi
onally, the regulation does not apply to a credit 
transaction or account 
(which would otherwise be consumer 
credit) 
relating to a consumer 
once 
the consumer n
o longer is 
a covered borrower.
Creditor
Except as provided in 
32 CFR
232.8(a), (f), and (g), 
editor
under the MLA 
is 
a person who is:
Engaged in the business of extending consumer credit;
An assignee of a person 
engaged in the business of 
extending consumer credit
with respect to any consumer 
credit extended
With respect to 
32 CFR 
232.8(a)
only
(relating to limitations 
on rollovers, renewals, repayments, refinancings
and 
consolidations)
, the term 
creditor
means a person engaged in 
the business of extending consumer credit subject to 
applicable law to engage in deferred presentment 
transact
ions or similar payday loan transactions.  
However, 
pursuant to
232.8(a)
, the term
does
not include a person that 
is chartered or licensed under Federal or State law as a bank, 
savings 
association, or credit union.  
With respect to
32 CFR 
232.8(f)
only
elating to limitations 
on the use of 
a vehicle
title as security)
the term 
creditor
does not include a person that is chartered or licensed under 
Federal or State law as a bank, savings association, or credit 
union. 
With respect to 
32 CFR 
232.8(g) 
only
(relating to limitations 
on requiring 
establishment of an allotment as a condition for 
extending credit)
, the term 
creditor
does not include a 
For the purposes of this definition, a creditor is engaged in the business of 
extending consumer credit if the creditor considered by itself and together 
with its affiliates meets the transaction standard for a “creditor” under 
Regulation Z with respect t
o extensions of consumer credit to covered 
borrowers.
The regulation also prohibits an institution from imposing an MAPR 
except as authorized by applicable Federal or State law.  Depending on the 
type of institution, different Federal or State laws may g
overn the maximum 
rates and fees an institution may impose for consumer credit transactions 
covered by the regulation, but in no instance may such rates and fees exceed 
the 36
percent MAPR cap contained in the regulation.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
are not required to 
comply
with DoD’s July 2015 rule until 
October 3, 2017.
The following 
charges included in the MAPR
(“charges”)
must 
be included in the calculation of the MAPR for both 
closed
and open
end credit, as applicable
Any credit insurance premium or fee, any charge for 
single premium credit insurance, any fee for a d
ebt 
cancellation contract, or any fee for a debt suspension 
agreement; 
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
Except for a bona fide fee
ther than a periodic rate) 
charged to a credit card account, 
which may be excluded
if 
the bona fide fee is reasonable
: 
Finance charges associated with the consumer 
credit;
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
see
note below)
; and
In general, a
ny fee imposed for participation in any 
plan or arrangement for consumer credit
See
No 
Balance 
ring 
Billing Cycle
section 
below for 
more information on the MAPR calculation rules 
when there is no balance during a billing cycle for 
open
end credit).
These charges are to be included in the MAPR calculation 
even if they would be excluded from the
calculation of the 
fin
ance charge under Regulation Z.
Note
:  O
application fee charged by a 
creditor
making a 
short
term, small amount loan can be excluded from the 
computation of the MAPR
under the conditions 
noted in the 
definition of
a short
term, sm
all amount loan.  However
f a 
creditor charges a second application fee to a covered 
borrower who applies for a second short
term, small amount 
loan within 
rolling 
month period, then that second fee 
(and any subsequent application fee
charged durin
g that 
period) is not eligible for the exclusion and must be included 
when computing the MAPR for that loan.
Computing the MAPR for Closed
End Credit
For closed
end credit, the MAPR shall be calculated 
following the rules for calculating and disclosing the 
“Annual Percentage Rate (APR)” for credit transactions 
under Regulation Z based on the 
MAPR 
charges
listed 
above
See
Examination C
hecklist for 
the 
types 
of fees that 
would be included or exclu
ded from the MAPR calculation. 
Computi
ng the MAPR for Open
End Credit
Generally, the MAPR for open
end credit should be 
calculated following the rules for calculating the effective 
annual percentage rate for a 
billing cycle as set forth in 
12 
CFR 
1026.14(c) and (d) of Regulation Z
(as if a creditor 
must comply with that section) based on the charges 
listed 
above
Even if
a fee is otherwise
eligible to be excluded under 
12 
CFR 1026.14(c) and (d)
, the amount of
charges related to 
opening, renewing, or continuing an account must be 
included in the calculation of the MAPR to the extent those 
charges are 
among those
in
the 
above
“Types of Fees to 
Include in MAPR Calculation”
o Balance 
During 
Billing Cycle.
For
open
end credit, if 
the MAPR cannot be calculated in a billing cycle because 
there is no balance in the billing cycle, a creditor may not 
impose any fee or charge during that billing cycle, except 
that the creditor may impose a fee for participation in an
plan or arrangement for that open
end credit so long as the 
participation fee does not exceed $100
.00
annually, 
regardless of the billing cycle in which the participation fee 
is imposed
Note: the $100
.00
per
year limitation on the amount of the 
partic
ipation fee does not apply to a bona fide participation 
fee charged to a credit card account 
consistent with 32 CFR 
232.4(d)
Creditors 
may
impose fees or charges that are excluded from 
the calculation of the MAPR during a particular billing cycle
where there is no balance
during the billing cycle
For 
example, if a creditor charged a late fee for a late payment in 
accordance with its credit agreement with the covered 
borrower and in compliance with Regulation Z, the creditor 
may charge the fee, r
Sections 1026.14(c) and (d) of R
egulation Z provide for the methods of 
computing the APR under several  scenarios, such as: (1) when the finance 
charge is determined solely by applying one or more periodic rates; (2) when 
the finance charge during a billing cycle is or includes a fixed o
r other charge 
that is not due to application of a periodic rate, other than a charge with 
respect to a specific transaction; and (3) when the finance charge during a 
billing cycle is or includes a charge relating to a specific transaction during 
the billi
ng cycle.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
provided
the
fee 
is
both
bona fide and reasonable
for the type 
of fee
There is no exclusion for “bona fide fees” on 
accounts that are not credit card accounts. 
he exclusion for bona fide fees 
on credit card accounts
does 
not apply to the following fees: 
Any credit insurance premium or fee, including any charge 
for single premium credit insurance, any fee for a debt 
cancellation contract, or any fee for a debt suspension 
agreement; or 
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.
Note:  A
minimum interest charge on a credit card account 
that is generally disclosed in an account
opening table 
can 
be a bona fide fee excludable from the MAPR calculation 
if
it mee
ts the conditions for exclusion. 
http://www.consumerfinance.gov/credit
cards/agreements/
), agreements posted on creditors’ own 
sites
, or commercially
compiled sources of information
For purposes of choosing creditors for comparison, note that 
A bona fide fee that is higher than an average amount 
calculated 
using the safe harbor standard 
also may be 
reasonable depending on other factors relating to the credit 
card acco
unt.  A bona fide fee charged by a creditor is not 
unreasonable solely because other creditors do not charge a 
fee for the same or a substantiall
y similar product or service.  
Effect of 
Charging Fees on 
Bona Fide Fees.
If a creditor 
imposes 
fee
or fees
that cannot be excluded from the 
MAPR (
see
“Types of Fees to Include in MAPR 
Calculation” 
and imposes a finance charge 
a covered 
borrower, the total amount of 
the 
fee(s) and finance charge(s) 
shall be included in the MAPR.  This does not affect 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
fee for a debt cancellation product, a finance charge, a
reasonable
bona fide foreig
n transaction fee, and a bona 
fide, but unreasonable cash advance fee.  All of the fees
including the foreign transaction fee that otherwise would 
qualify for the exclusion 
as a bona fide fee
and the 
finance charge must be incl
uded when calculating the 
MAP
Timing for Computi
ng the MAPR for Open
End Credit
Computing
. 
In general, creditors can be reasonably expected 
indirectly from the DoD’
s database, located 
at 
https://mla.dmdc.osd.mil/
(or 
via any URL or direct 
connection 
to the database 
that may be provided by the 
DoD)
Searches require entry of the consumer’s last 
name, date of birth, and Social Security number.  
Note: 
Historic lookbacks
are prohibited under the rule.  
After a consumer has entered into a transaction or 
established an account, 
creditor 
(including an a
ssignee) 
may not, directly or indirectly, obtain any information 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
provision does not pre
vent creditors from adopting a risk 
management plan that includes periodically screening 
credit portfolios
for other purposes, such as determining 
 
Verifying the status of a consumer by using a 
statement, 
code, or similar indicator describing that status, if any, 
contained in a consumer report obtained from a consumer 
reporting agency that compiles and maintains files on 
consumers on a nationwide basis, or a reseller of such 
consumer reports
, as 
those terms are defined in the Fair 
Credit Reporting Act
(FCRA)
and any implementing 
regulations
Note:
he consumer reporting agency 
(CRA)
must be a 
nationwide agency or a reseller of reports from such an 
agency 
as 
both of those terms are
defined by the 
FCRA
; 
many specialty CRAs may not qualify.
A creditor’s one
time determination, by using one of the 
methods provided in 32 CFR 232.5(b)(2), is permitted and 
deemed to be conclusive with respect to that transaction or 
ained, solely at the time that:
The consumer initiates the transaction or 30 days prior to 
that time;
The consumer applies to establish the accoun
t or 30 days 
prior to that time; or 
The creditor develops or processes a firm offer of credit 
that includes the status of the consumer as a covered 
borrower, so long as the consumer responds 
to that offer
no later than 60 days after the creditor provides 
the offer to 
the consumer.
The MLA rule extends the covered borrower check safe 
harbor to a creditor’s assignee provided that the assignee 
continues to maintain the original record created by the 
creditor that initially extended the credit.  
Neither the ML
nor 32 CFR 232 specify how and for how long creditors are 
to maintain these records, noting only that the records must 
be created ti
mely and maintained thereafter.
An action by a creditor within an existing account, such as to 
increase the available cred
it that a consumer may draw upon, 
does not alter the status of the creditor’s prior determination 
for that account.  However, in order to benefit from the 
optional safe harbor provisions, a creditor must use one of 
the safe harbor methods when extending a 
new consumer 
credit product or newly establishing an account for consumer 
credit, including a new line of consumer credit that might be 
associated with a pre
existing transactional account held by 
the borrower (for example, when a consumer applies for an 
verdraft line of credit associated with a
n existing checking 
account).
Mandatory Loan Disclosures (
§ 232.6
If a creditor extends consumer credit (including any 
consumer credit originated or extended through the internet) 
to a covered borrower, the credito
r must provide the covered 
borrower with certain information before or at the time the 
borrower becomes obligated on the transaction or establishes 
an a
ccount for the consumer credit:
A statement of the MAPR applicable to the extension of 
consumer credit;
Any disclosure required by Regulation Z, which shall
be 
provided only in accordance 
with the requirements of 
Regulation Z that apply to that disclosure; and
A clear description of the payment obligation of the 
covered borrower, as applicable.  
Note that a
payment 
schedule (in the case of closed
end credit) or account
opening disclosure (in the case of open
end credit) 
provided pursuant to 
Regulation Z
satisfies this 
requirement.
A creditor may satisfy the requirement to provide a statement 
of the MAPR by de
scribing the charges the creditor may 
impose, in accordance with 
the regulation
and subject to the 
terms and conditions of the agreement, relating to the 
consumer credit to calculate the MAPR.  A creditor is not 
required to describe the MAPR as a numerical
value or to 
describe the total dollar amount of all charges in the MAPR 
that apply to the extension of consumer credit.  A creditor 
may include a statement of the MAPR applicable to the 
consumer credit in the agreement with the covered borrower 
involving 
the consumer credit transaction.  
The regulation
does not require a statement of the MAPR to
be included in 
advertisements.
Under 
32 CFR 
232.6(c)(3)
a statement substantially similar 
to the following 
model statement may be used to satisfy the 
requirement 
to p
rovide a statement of the MAPR:
Federal law provides important 
protections to members of the 
Armed Forces and their 
dependents relating to 
extensions of consumer credit.  
In general, the cost of consumer 
credit to a member of the Armed 
Forces and his o
r her dependent 
may not exceed an annual 
percentage rate of 36 percent.  
This rate must include, as 
applicable to the credit 
transaction or account: 
he costs 
associated with credit insurance 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
premiums; fees for ancillary 
products sold in connection with 
th
e credit transaction; any 
application fee charged (other 
than certain application fees for 
specified credit transactions or 
accounts); and any participation 
fee charged (other than certain 
participation fees for a credit 
card account).
If a transaction involves more than one creditor, then only 
one of those creditors must provide the required disclosures.  
The creditors may agree among themselves which creditor 
will 
provide the
statement of the MAPR and the clear 
description of the payme
nt obligation
The statement of the MAPR and the clear description of the 
payment obligation must be provided
in writing in a form the 
covered borrower can keep.  
A creditor 
shall also
provide 
such required information
orally.
A creditor may satisfy 
the requirement to provide oral disclosures if the cre
ditor 
provides:
The information to the covered borrower in person; 
A toll
free telephone number in order to deliver the oral 
disclosures to a covered borrower when the covered 
borrower contacts the c
reditor for this purpose.
If a creditor elects to provide a toll
free telephone number in 
order to deliver the oral disclosures, the toll
free teleph
one 
number must be included on:
A form the creditor directs the consumer to use to apply 
for the transactio
n or account involving consumer credit; 
The
written disclosure the creditor provides to the covered 
borrower.
The 
oral disclosures provided through the 
toll
free number 
need only be available for a duration of time reasonably 
necessary to allow a covere
d borrower to contact the creditor 
for the purpose of listening to the disclosure.
A creditor may 
orally provide a clear description of the payment obligation 
of the covered borrower by providing a general description 
of how the payment obligation is calc
ulated or a description 
of what the borrower’s payment obligation would be based 
on an estimate of the amount the borrower may borrow.  For 
example, a creditor could generally describe how minimum 
payments are calculated on open
end credit plans issued by 
the creditor and then refer the covered borrower to the 
written materials the borrower will receive in connection 
2 CFR 232.6(b)(2).
2 CFR 232.6(d)(2).
with opening the plan.  Alternatively, a creditor could choose 
to generally describe borrowers’ obligations to make a 
monthly, bi
monthly, or 
weekly payment as the case may be 
under the borrowers’ agreements. 
The requirement of a 
clear, oral payment obligation disclosure has sufficient 
, that the term does 
not include a person that is chartered or licensed under 
Federal or State law as a bank, savings 
association, or cr
edit 
union. 
Note
:  T
his prohibition
does
not apply to a transaction when 
the same creditor extends consumer credit to a covered 
borrower to refinance or renew an extension of credit that 
was not covered by this paragraph because the consumer was 
not a covered borrower at the time of the original
transaction.  
Terms
Relating to Dispute Resolution
.  
creditor cannot 
require 
a covered
borrower to:
aive the covered borrower’s right to legal recourse 
under any otherwise applicable provision of Federal 
or 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
State 
law, including any provision of the 
rvicemembers 
Civil Relief Act
Submit to arbitration 
or 
other onerous legal notice 
provisions in the case of a dispute
; or 
Give unreasonable notice as a condition for legal action.
Payment Terms and Conditions 
General.  
creditor 
cannot:
se the 
title of a vehicle as security for the obligation 
involving the consumer credit
ote
that for the purposes of this paragraph, the term 
“creditor” does not include a person that is chartered or 
licensed under Federal or State law as a bank, savings 
associ
ation, or credit union
equire as a condition for the extension of consumer 
credit that the covered borrower establish an allotment to 
repay the obligation
(note that for the purposes of this 
paragraph only, the term “creditor” shall not include a 
“milit
50 U.S.C. 3901 
et
seq
Require direct deposit of the consumer’s salary as a 
condition of 
eligibility for consumer credit, unless 
otherwise prohibited by law; or
If not otherwise prohibited by applicable law, take a 
security interest in funds deposited after the extension of 
credit in an account established in connection with the 
consumer credi
t transaction.
This section prohibits a creditor from using the borrower’s 
account information to create a remotely created check or 
remotely created 
payment order in order to collect payments 
on consumer credit from a covered borrower.  Similarly, a 
credi
tor may not use a post
dated check provided at or 
around the time credit is extended that deprives the borrower 
of control over payment decisions, as is common in certain 
payday lending transactions.  However, t
he prohibition on 
account access does not in 
any way prevent covered 
borrowers from tendering a check or authorizing access to a 
deposit, savings
or other financial account to repay a 
creditor.  Section 232.8(e) also does not prohibit a covered 
borrower from authorizing automatically recurring payme
nts, 
provided that such recurring payments comply with other 
laws, including 
the Electronic Fund Transfer Act and its 
implementing regulations, such as 
12 CFR 1005.10, as 
applicable.
The prohibition in 
32 CFR
232.8(e) also does 
not prohibit covered borro
wers from granting a security 
interest to a creditor in the covered borrower’s checking, 
savings, or other financial account, provided that it is not 
otherwise prohibited by applicable law and the creditor 
complies with the MLA regulation including the 
percent 
limitation on the MAPR.
Savings Clauses.  
A creditor may include a proscribed term 
under 
section
232.8, such as a mandatory arbitration clause, 
within a standard written credit agreement with a covered 
borrower, provided that the agreement includes a contractual 
“savings” clause limiting the application of the proscribed 
term to only non
covered borr
owers, consistent with any 
other applicable law.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
Examination Objectives
Determine the institution’s compliance with the 
provisions of 32 CFR 232, as applicable.
Assess
the quality of the institution’
s compliance risk 
management systems and its policies and
procedures for 
implementing the provisions.
This reflects the interagency examination procedures in their entirety.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
Evaluate Compliance Management System
accordance with 32 CFR 232.5(b)(3)
If a creditor elects to use a method other than one of the 
two optional safe harbor methods, determine whether 
the chosen method is performed prior to a consumer 
becoming obligated on a c
redit transaction or 
ote
: 
Section 232.5 contains no specific timing and 
recordkeeping requirements if the creditor uses an 
alternative to one of t
he safe harbors to verify covered 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
covered because the consumer was not a covered 
borrower at the time of the original transaction.
dated check provided at or around the 
time credit is extended.
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
Examination Checklist 
Military Lending Act
Applicability of the Regulation
Does the creditor
or assignee
offer, extend, or purchase credit primarily for personal, family, or 
household purposes?
If the answer is Yes, proceed. If the answer is No or N
A, conclude the review.
Evaluate Compliance Management System
Does the institution have adequate policies, procedures, and practices for ensuring and monitoring 
compliance with the 
MLA
 
 
Does the institution 
provide
adequate training for individuals whose responsibilities relate to 
compliance with the 
MLA
 
 
Does the institution have policies or procedures in place to:
Provide account disclosure information to covered borrowers in accordance with 32 CFR 
232.6;
Properly create and maintain records of covered borrower checks?
 
 
 
Based on a review of the institution’s compliance reviews 
and/or 
audit material
, including 
workpapers and reports:
Does the scope of any audits 
address all provisions of the regulation, as applicable?
Does transaction testing include samples covering all relevant product types and decision 
centers?
Is the work performed accurate?
Are significant deficiencies and their causes included in reports to
management or to the board 
of directors?
Has management taken corrective actions to follow up on previously identified deficiencies?
Is the frequency of review/audit appropriate (including review/audit of implemented corrective 
action related to previousl
y identified deficiencies)?
 
 
Are the institution’s internal controls adequate to ensure compliance?
Identification of Covered Borrowers  
Do the creditor’s policies, procedures, and training materials accurately reflect the scope of the 
“covered borrower” definition?
 
 
as the creditor elected to use one of the optional safe harbor methods provided in 32 CFR 
232.5(b)?
 
 
If a creditor elects to use one of the two optional safe harbor methods to check a consumer’s status:
Does the 
creditor timely create a record of the information obtained, in accordance with 32 
CFR 232.5(b)(3)?
Does the creditor thereafter maintain a record of the information obtained, in accordance with 
32 CFR 232.5(b)(3)?
 
 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
Examination Checklist 
Military Lending Act
Regarding an action by a creditor 
relating to a covered borrower with an existing account, does 
If a creditor elects to use a method other than one of the two optional safe harbor methods: 
Is the chosen method performed prior to a consumer becoming obligated o
n a credit 
transaction or establishing an account for credit?
Does the creditor maintain a record of the information obtained?
 
 
Calculation of MAPR
Does the creditor include the following charges in the calculation of the MAPR for both closed
and 
open
end credit, as applicable:
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; 
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 
Except for a bona fide fee (other than a periodic rate) charged to a credit card account, which 
may be excluded if the bona fide fee is reasonable for t
hat type of fee:
Finance charges associated with the consumer credit;
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 wh
en 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
In general, any fee imposed for participation in any plan or arrangement for consumer 
cred
it.
For closed
end credit, does the creditor appropriately calculate the MAPR following the rules for 
calculating and disclosing the “Annual Percentage Rate (APR)” for credit transactions under 
Regulation Z based on the MAPR charges?
 
 
For open
end 
credit, does the creditor appropriately calculate the MAPR following the rules for 
 
 
Mandatory Loan Disclosures
Does the creditor properly provide 
covered
borrower with required information before or at 
the time the borrower becomes obligated on the transaction or establishes an account for the 
consumer credit, 
(or at a later time provided for in Regulation Z
if any)
, including:
A statement of the MAPR 
applicable to the extension of consumer credit;
Any disclosure required by Regulation Z, which shall be provided only in accordance with the 
requirements of Regulation Z that apply to that disclosure; and
A clear description of the payment obligation of 
the covered borrower, as applicable.  Note 
that a payment schedule (in the case of closed
end credit) or account
opening disclosure (in 
the case of open
end credit) provided pursuant to Regulation Z satisfies this requirement.
Does the creditor provide
the statement of the MAPR and the clear description of the payment 
V. Lending 
Military Lending Act
FDIC 
Consumer 
Compliance Examination Manual 
September
2016
Examination Checklist 
Military Lending Act
obligation both in writing in a form the covered borrower can keep and orally?
If the creditor elects to provide a toll
free telephone number in order to deliver the oral disclosures 
o a covered borrower, does the creditor include the toll
free telephone number on either
: 
form the creditor directs the consumer to use to apply for the transaction or account 
inv
olving consumer credit; or 
he written disclosure the creditor provides 
to the covered borrower?
 
 
If the creditor elects to provide a toll
free telephone number in order to deliver the oral disclosures 
to a covered borrower, is the toll
free telephone number available for a duration of time reasonably 
necessary to allow a c
overed borrower to contact the creditor for the purpose of listening to the 
disclosure?
 
 
Other Limitations
Does the creditor abide by the prohibition on rolling over, renewing, repaying, refinancing, or 
consolidating consumer credit?
  
Note that this prohibition does not apply to a creditor that is 
chartered or licensed under Federal or State law as a bank, savings association, or credit union, or 
when the credit is being extended by the same creditor to refinance or renew an extension
of credit 
that was not covered because the consumer was not a covered borrower at the time of the original 
transaction. 
 
 
Does the creditor abide by the prohibitions against requiring covered borrowers to: 
Waive their rights to legal recourse under 
any otherwise applicable law;
Submit to arbitration or other onerous legal notice provisions in the case of a dispute; or
Provide unreasonable notice as a condition for legal action?
 
 
Does the creditor
refrain from
Requiring that a covered borrower 
repay the obligation by military allotment (note that for 
purposes of this provision of the regulation, the term “creditor” does not include “military 
Prohibiting a covered borrower from prepaying the cons
umer credit; or
Charging a covered borrower a penalty fee for prepaying all or part of the consumer credit?
 
 
Does the creditor 
refrain from 
ing
the title of a vehicle as security for the obligation involving the 
consumer credit?
Note that this 
prohibition does not apply when the transaction is expressly 
intended to finance the purchase of a vehicle and the credit is secured by the vehicle or when the 
creditor is chartered under Federal or State law as a bank, savings association, or credit union
 
 
Does the creditor 
refrain from 
improperly requir
ing
access to a deposit, savings, or other financial 
account 
maintained by the covered borrower 
for repayment
by:
Obtaining payment through a remotely created check or remotely created payment order; or
Obtaining a post
dated check provided at or around the time credit is extended?
 
 
  
  
   
  
   
  
  
   
  
   
  
  
  
   
  
  
   
  
   
  
  
  
  
  
  
  
   
  
   
V.
 Lending 
Military Lending Act 
Military Lending Act 
Background 
Examiners should reference the Military Lending Act 
examination procedures (Chapter V
13.1 in the Compliance 
Examination Manual) for consumer credit 
transactions 
occurring on or after October 3, 2016, as relevant. For 
consumer credit transactions occurring prior to these dates, 
examiners should reference the Talent Amendment 
examination procedures (Chapter V
12.1 in the Compliance 
Examination Manual). 
The Military Lending Act
(MLA)
, enacted in 2006 
and 
implemented 
by the Department of Defense 
(DoD)
, protects 
active duty members of the military, their spouses, and their 
dependents from certain 
lending practices.  These practices 
could pose risks for se
rvice members and their families
and 
could 
pose a threat 
to 
military readiness and 
affect service 
cancellation and suspension, and other credit
related 
ancillary products sold in connection with the transaction. 
The total charge
as expres
sed through an 
annualized rate 
ref
erred to as the 
ilitary 
nnual 
ercentage 
ate 
(MAPR)
may not exceed 
36 percent.
The 
MAPR includes charges 
that are 
not included in t
he finance charge or the annual 
percentage rate 
(APR) 
disclosed under the Truth in 
nding 
Act (TILA)
10 U.S.C. 987. 
32 CFR part 
232. 
32 CFR 232.3(i). 
The MAPR is calculated in accordance with 32 CFR 232.4(c). 
32 CFR 232.4(b). 
The MAPR largely parallels the APR, as calculated in accordance with 
Regulation Z, with some exceptions to ensure that creditors do not have 
incentiv
es to evade the interest rate cap by shifting fees for the cost of the 
credit product away from those categories that would be included in the 
MAPR. Generally, a charge that is excluded as a “finance charge” under 
Regulation Z also would be excluded from 
the charges that must be included 
when calculating the MAPR.  Late payment fees and required taxes
i.e., 
fees that are not directly related to the cost of credit
are examples of items 
excluded from both the APR and the MAPR. But certain other fees more 
rectly related to the cost of credit are typically included in the MAPR, but 
not the APR.  The most common examples of these fees
application fees 
In addition, among other provisions, the 
MLA, as 
implemented by DoD
Provides a
n optional 
safe harbor 
from liability for certain 
procedures that 
creditors 
may 
use 
in connection with 
identifying 
covered borrowers
Requires credit
ors to provide written and oral 
disclosures 
in addition to those required by TILA
Prohibits certain 
loan terms, such as prepayment 
penalties, 
man
datory arbitration clauses, and 
certain unreasonable 
notice requirements
and 
Restricts loan rollovers
renewals, 
and refinancings 
by 
some types of creditors
Statutory a
mendments to the MLA in 2013 granted 
enforcement authority 
for the 
MLA’s 
requirements to the 
agencies specified in section 108 of TILA.
These agencies 
include 
the Board of Governors of the Federal Reserve 
System, the Consumer Financial Protection Bureau 
(CFPB)
the Federal Deposit Insurance Corporation, the National 
Credit Union Administration, the Office of the Comptroller 
of the Currency
, and the Federal Trad
e Commission
State 
regulators also supervise 
state
chartered institutions for MLA 
requirements pursuant to authority granted by state law. 
In July 2015, 
DoD 
published revisions to the MLA 
implementing regulation
that
xtend 
the MLA’s 
protections to a broader range of 
credit 
roducts; 
Modif
the MAPR to include certain additional fees and 
charges
Alter the provisions of 
the 
optional safe harbor available to 
creditors 
for identification of covered borrowers
odif
the 
disclosures 
creditors are 
required 
to provide to 
covered borrowers
Modif
the prohibition on rolling over, renewing, or 
financing consumer credit; and 
Implement statutory changes, including provisions related 
to 
administrative enforcement and civil liability for ML
violations 
(for knowingly violating the MLA, there is 
potential for criminal penalties)
and participation fees
have been specifically noted in the regulation as 
charges that generally must be inclu
ded in the MAPR, but would not be 
included in the APR under Regulation Z.
National Defense Authorization Act for Fiscal Year 2013, Pub. L. 112
239, 
section 662(b), 126 Stat. 1786.
80 Fed. Reg. 43560. 
￿￿FDIC 
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Compliance Examination Manual 
September 
2016 
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V.
 Lending 
Military Lending Act 
provided 
the 
fee 
is 
both 
bona fide and reasonable for the type 
of fee
There is no exclusion for “bona fide fees” on 
accounts that are not credit card accounts. 
he exclusion for bona fide fees 
on credit card accounts 
does 
not apply to the following fees: 
Any credit insurance premium or fee, including any charge 
for single premium credit insurance, any fee for a debt 
cancellation contract, or any fee for a debt suspension 
agreement; or 
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. 
Note:  A minimum interest charge on a credit card account 
that is generally disclosed in an account
opening table 
be a bona fide fee excludable from the MAPR calculation 
if 
it mee
ts the conditions for exclusion. 
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Consumer 
Compliance Examination Manual 
September 
2016 
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V.
 Lending 
Military Lending Act 
are not required to 
comply 
with DoD’s July 2015 rule until 
October 3, 2017. 
The following 
charges included in the MAPR 
(“charges”) 
must 
be included in the calculation of the MAPR for both 
closed
and open
end credit, as applicable
Any credit insurance premium or fee, any charge for 
single premium credit insurance, any fee for a d
ebt 
cancellation contract, or any fee for a debt suspension 
agreement; 
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 
Except for a bona fide fee 
ther than a periodic rate) 
charged to a credit card account, which may be excluded 
if 
the bona fide fee is reasonable
Finance charges associated with the consumer 
credit; 
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 
see 
note below)
; and 
In general, a
ny fee imposed for participation in any 
plan or arrangement for consumer credit
. (
See 
Balance 
ring a 
Billing Cycle
section 
below for 
more information on the MAPR calculation rules 
when there is no balance during a billing cycle for 
open
end credit). 
These charges are to be included in the MAPR calculation 
even if they would be excluded from the 
calculation of the 
fin
ance charge under Regulation Z. 
Note
application fee charged by a 
creditor 
making a 
short
term, small amount loan can be excluded from the 
computation of the MAPR under the conditions noted in the 
definition of 
a short
term, sm
all amount loan.  However
, i
f a 
creditor charges a second application fee to a covered 
borrower who applies for a second short
term, small amount 
loan within 
rolling 
month period, then that second fee 
(and any subsequent application fee
charged durin
g that 
period) is not eligible for the exclusion and must be included 
when computing the MAPR for that loan. 
Computing the MAPR for Closed
End Credit 
For closed
end credit, the MAPR shall be calculated 
following the rules for calculating and disclosing the 
“Annual Percentage Rate (APR)” for credit transactions 
under Regulation Z based on the 
MAPR 
charges 
listed 
above
See 
Examination Checklist for 
the 
types 
of fees that 
would be included or exclu
ded from the MAPR calculation. 
Computi
ng the MAPR for Open
End Credit 
Generally, the MAPR for open
end credit should be 
calculated following the rules for calculating the effective 
annual percentage rate for a 
billing cycle as set forth in 
CFR 
1026.14(c) and (d) of Regulation Z
(as if a creditor 
must comply with that section) based on the charges 
listed 
above
Even if 
a fee is otherwise eligible to be excluded under 
12 
CFR 1026.14(c) and (d), the amount of 
charges related to 
opening, renewing, or continuing an account must be 
included in the calculation of the MAPR to the extent those 
charges are 
among those 
in 
the 
above 
“Types of Fees to 
Include in MAPR Calculation”
o Balance 
During 
Billing Cycle. 
For 
open
end
 credit, if 
the MAPR cannot be calculated in a billing cycle because 
there is no balance in the billing cycle, a creditor may not 
impose any fee or charge during that billing cycle, except 
that the creditor may impose a fee for participation in an
plan or arrangement for that open
end credit so long as the 
participation fee does not exceed $100
.00 
annually, 
regardless of the billing cycle in which the participation fee 
is imposed
Note: the $100
.00
per
year limitation on the amount of the 
partic
ipation fee does not apply to a bona fide participation 
fee charged to a credit card account 
consistent with 32 CFR 
232.4(d)
Creditors 
may 
impose fees or charges that are excluded from 
the calculation of the MAPR during a particular billing cycle 
where there is no balance 
during the billing cycle
For 
example, if a creditor charged a late fee for a late payment in 
accordance with its credit agreement with the covered 
borrower and in compliance with Regulation Z, the creditor 
V–13.4 
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September 
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V.
 Lending 
Military Lending Act 
hildren of any age i
ncapable of self
support due to 
mental or physical incapacity that occurred while a 
dependent of the covered member under the preceding two 
bullets 
and dependent on a covered member (or dependent 
at the time of the member’s or former member’s death) for 
er one
half of their support. 
Other relationships may also qualify 
an individual 
depende
nt of 
a covered member. 
aragraphs (E) and (I) of 
.S.C. 
1072(2) 
reference 
other relationships that qualify 
individu
als as dependents under the MLA
Per 32 CFR 232.2(a)(1), the regulation does not apply to a 
credit transaction or account relating to a consumer who is 
not a covered borrower at the time that he or she becomes 
obligated on a credit transaction or establishes an account for 
credit.  Additi
onally, the regulation does not apply to a credit 
transaction or account 
(which would otherwise be consumer 
credit) 
relating to a consumer 
once 
the consumer n
o longer is 
a covered borrower. 
Creditor 
Except as provided in 
32 CFR 
232.8(a), (f), and (g), 
editor 
under the MLA 
is 
a person who is: 
Engaged in the business of extending consumer credit;
An assignee of a person 
engaged in the business of 
extending consumer credit 
with respect to any consumer 
credit extended
With respect to 
32 CFR 
232.8(a) only 
(relating to limitations 
on rollovers, renewals, repayments, refinancings
and 
consolidations)
, the term 
creditor 
means a person engaged in 
the business of extending consumer credit subject to 
applicable law to engage in deferred presentment 
transact
ions or similar payday loan transactions. 
However, 
pursuant to 
232.8(a)
, the term 
does 
not include a person that 
is chartered or licensed under Federal or State law as a bank, 
savings 
association, or credit union. 
With respect to 
32 CFR 
232.8(f) only 
elating to limitations 
on the use of 
a vehicle 
title as security)
the term 
creditor 
does not include a person that is chartered or licensed under 
Federal or State law as a bank, savings association, or credit 
union. 
With respect to 
32 CFR 
232.8(g) only 
(relating to limitations 
on requiring establishment of an allotment as a condition for 
extending credit), the term 
creditor 
does not include a 
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2016 
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 Lending 
Military Lending Act 
Previously, the MLA regulation only applied to 
certain 
types 
of credit
, namely: 
narrowly 
defined 
payday loans, motor 
vehicle title loans, and tax refund anticipation loans with 
particular 
terms. The current rule defines “consumer credit” 
subject to the MLA much more broadly, generally paralleling 
the definition in Regulation Z. 
Some examples of 
add
itional 
credit 
products n
subject to 
MLA 
protections 
when made 
to 
covered 
borrowe
rs 
include: 
Credit cards
Deposit advance products
Overdraft lines of credit (but 
not 
traditional overdraft 
services)
and 
Certain 
nstallment loans 
(but 
not 
installment loans 
expressly intended to finance the purchase of a vehicle or 
personal property when the credit is secured by the vehicle 
or personal property being purchased)
Credit agreements that 
violate the MLA 
are void from 
in
ception. 
For most produ
cts, creditors are required to come 
into compliance with DoD’s July 2015 rule on October 3, 
.  For credit card accounts, 
creditors 
are not required to 
come into compliance with the rule until October 3, 2017.
Definitions 
232.3) 
Consumer Credit 
onsumer credit 
is “credit offered or extended to a covered 
borrower primarily for personal, family, or ho
usehold 
purposes, and that is: 
ubject to a finance charge; or 
ayable by a written agreement in more than four 
installments.” 
The MLA 
regulation’s 
efinition of “consumer credit” has 
been amended 
align 
more closely 
with 
the definition of the 
same term in Regulation Z
t is DoD’s intent that the term 
as used in the MLA 
regulation 
should wherever possible be 
interpreted consistently with Regulation Z. 
Notably, 
An overdraft line of credit with a finance charg
e is a covered consumer 
credit product when: it is offered to a covered borrower; the credit extended 
by the creditor is primarily for personal, family, or household purposes; it is 
used to pay an item that overdraws an asset account and for which the 
cove
red borrower pays any fee or charge; and the extension of credit for the 
item and the imposition of a fee were previously agreed upon in writing. 
For purposes of the extended compliance date, the credit card accounts 
must be under an open
end (not home
-s
ecured) consumer credit plan. DoD 
may, by order, further extend the expiration of the limited exemption for 
credit card accounts to a date not later than October 3, 2018.  For all other 
credit products, a creditor must comply with the applicable requirements of 
the July 2015 rule by October 3, 2016 for all consumer credit transactions or 
accounts for consumer credit consummated or established on or after October 
3, 2016. 
however, the 
and the implementing regulation 
not 
apply to 
certain 
types of 
loans 
extended to covered borrowers 
that 
are 
covered by Regulat
ion Z, including: 
Residentia
l m
ortgage
(any credit transaction secured by 
an interest in a dwelling), including transactions to finance 
the 
purchase or initial construction of a dwelling, any 
refinance transaction, a home equity loan or line of credit, 
or a reverse mortgage; 
Credit transactions 
expressly intended to finance the 
purchase of a motor vehicle
when the credit is secured 
by the motor vehicle being purchased; and 
Credit transactions 
expressly intended to finance the 
purchase of personal property when the credit is 
secured 
by the property being purchased
Note: 
A transaction where a creditor simultaneously 
extends an additional cash advance beyond the purchase 
price 
of the 
securing 
personal property does not fall under 
this last 
exception
Covered Borrower 
cov
ered borrower 
is a consumer who, at the time the 
consumer becomes obligated on a consumer credit 
transaction or establishes an account for consumer credit, is a 
covered member of the armed forces or a 
dependent of a 
covered 
member 
(as defined 
32 CFR 232
(g)(2) and 
(g)(3))
Covered members of the armed forces incl
ude member
the Army, Navy, Marine Corps, Air Force, or Coast Guard 
currently 
serving on active duty 
pursuant to title 10, title 14, 
or title 32 of the U.S
Code 
under a call or order that does not 
specify a period of 30 days or fewer, or such a member 
serving on Active Guard and Reserve duty as that term is 
defined in 10 U
.S.C. 
101(d)(6)
The term 
dependent 
refers to 
a covered 
member’s
Spouse; 
Children under ag
e 21; 
hildren under age 23 enrolled full
time at an approved 
institution of higher learning and dependent on a covered 
member (or dependent at the time of the member’s or 
former member’s death) for over one
half of their support; 
For purposes of the MLA, the term “vehicle” includes any self
propelled 
vehicle prima
rily used for personal, family, or household purposes for on
road transportation. The term does not include motor homes, recreational 
vehicles (RVs), golf carts, or motor scooters. 
￿￿V–13.2 
FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
  
  
V.
 Lending 
Military Lending Act 
Examination Objectives 
Determine the institution’s compliance with the 
provisions of 32 CFR 232, as applicable. 
Assess 
the quality of the institution’
s compliance risk 
management systems and its policies and 
procedures for 
implementing the provisions. 
V–13.10 
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September 
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V.
 Lending 
Military Lending Act 
State 
law, including any provision of the 
rvicemembers 
Civil Relief Act
Submit to arbitration 
or 
other onerous legal notice 
provisions in the case of a dispute
; or 
Give unreasonable notice as a condition for legal action. 
Payment Terms and Conditions 
General. 
creditor 
cannot: 
se the 
title of a vehicle as security for the obligation 
involving the consumer credit
ote 
that for the purposes of this paragraph, the term 
“creditor” does not include a person that is chartered or 
licensed under Federal or State law as a bank, savings 
associ
ation, or credit union
equire as a condition for the extension of consumer 
credit that the covered borrower establish an allotment to 
repay the obligation 
(note that for the purposes of this 
paragraph only, the term “creditor” shall not include a 
“milit
FDIC 
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Compliance Examination Manual 
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2016 
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 Lending 
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premiums; fees for ancillary 
products sold in connection with 
th
e credit transaction; any 
application fee charged (other 
than certain application fees for 
specified credit transactions or 
accounts); and any participation 
fee charged (other than certain 
participation fees for a credit 
card account). 
If a transaction involves more than one creditor, then only 
one of those creditors must provide the required disclosures. 
The creditors may agree among themselves which creditor 
will 
provide the 
statement of the MAPR and the clear 
description of the payme
nt obligation
The statement of the MAPR and the clear description of the 
payment obligation must be provided 
in writing in a form the 
covered borrower can keep. A creditor 
shall also 
provide 
such required information 
orally.
A creditor may satisfy 
the requirement to provide oral disclosures if the cre
ditor 
provides: 
The information to the covered borrower in person; 
A toll
free telephone number in order to deliver the oral 
disclosures to a covered borrower when the covered 
borrower contacts the c
reditor for this purpose. 
If a creditor elects to provide a toll
free telephone number in 
order to deliver the oral disclosures, the toll
free teleph
one 
number must be included on: 
A form the creditor directs the consumer to use to apply 
for the transactio
n or account involving consumer credit; 
The 
written disclosure the creditor provides to the covered 
borrower. 
The 
oral disclosures provided through the 
toll
free number 
need only be available for a duration of time reasonably 
necessary to allow a covere
d borrower to contact the creditor 
for the purpose of listening to the disclosure. 
A creditor may 
orally provide a clear description of the payment obligation 
of the covered borrower by providing a general description 
of how the payment obligation is calculated or a description 
of what the borrower’s payment obligation would be based 
on an estimate of the amount the borrower may borrow. For 
example, a creditor could generally describe how minimum 
payments are calculated on open
end credit plans issued by 
the creditor and then refer the covered borrower to the 
written materials the borrower will receive in connection 
2 CFR 232.6(b)(2). 
2 CFR 232.6(d)(2). 
with opening the plan.  Alternatively, a creditor could choose 
to generally describe borrowers’ obligations to make a 
monthly, bi
monthly, or 
weekly payment as the case may be 
under the borrowers’ agreements. The requirement of a 
clear, oral payment obligation disclosure has sufficient 
V–13.8 
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V.
 Lending 
Military Lending Act 
provision does not pre
vent creditors from adopting a risk 
management plan that includes periodically screening 
credit portfolios for other purposes, such as determining 
reporting agency that compiles and maintains files on 
consumers on a nationwide basis, or a reseller of such 
consumer reports
, as 
those terms are defined in the Fair 
Credit Reporting Act 
(FCRA) 
and any implementing 
regulations
Note: 
he consumer reporting agency 
(CRA) 
must be a 
nationwide agency or a reseller of reports from such an 
agency 
both of those terms are 
defined by the 
FCRA
many specialty CRAs may not qualify. 
A creditor’s one
time determination, by using one of the 
methods provided in 32 CFR 232.5(b)(2), is permitted and 
deemed to be conclusive with respect to that transaction or 
ained, solely at the time that: 
The consumer initiates the transaction or 30 days prior to 
that time; 
The consumer applies to establish the accoun
t or 30 days 
prior to that time; or 
The creditor develops or processes a firm offer of credit 
that includes the status of the consumer as a covered 
borrower, so long as the consumer responds 
to that offer 
no later than 60 days after the creditor provides 
the offer to 
the consumer. 
The MLA rule extends the covered borrower check safe 
harbor to a creditor’s assignee provided that the assignee 
continues to maintain the original record created by the 
creditor that initially extended the credit. 
Neither the ML
nor 32 CFR 232 specify how and for how long creditors are 
to maintain these records, noting only that the records must 
be created timely and maintained thereafter. 
An action by a creditor within an existing account, such as to 
increase the available cred
it that a consumer may draw upon, 
does not alter the status of the creditor’s prior determination 
for that account.  However, in order to benefit from the 
optional safe harbor provisions, a creditor must use one of 
the safe harbor methods when extending a 
new consumer 
credit product or newly establishing an account for consumer 
credit, including a new line of consumer credit that might be 
associated with a pre
existing transactional account held by 
the borrower (for example, when a consumer applies for an 
verdraft line of credit associated with a
n existing checking 
account). 
Mandatory Loan Disclosures (
§ 232.6) 
If a creditor extends consumer credit (including any 
consumer credit originated or extended through the internet) 
to a covered borrower, the credito
r must provide the covered 
borrower with certain information before or at the time the 
borrower becomes obligated on the transaction or establishes 
an a
ccount for the consumer credit: 
A statement of the MAPR applicable to the extension of 
consumer credit; 
Any disclosure required by Regulation Z, which shall 
be 
provided only in accordance 
with the requirements of 
Regulation Z that apply to that disclosure; and 
A clear description of the payment obligation of the 
covered borrower, as applicable. Note that a 
payment 
schedule (in the case of closed
end credit) or account
opening disclosure (in the case of open
end credit) 
provided pursuant to 
Regulation Z 
satisfies this 
requirement. 
A creditor may satisfy the requirement to provide a statement 
of the MAPR by de
scribing the charges the creditor may 
impose, in accordance with 
the regulation 
and subject to the 
terms and conditions of the agreement, relating to the 
consumer credit to calculate the MAPR.  A creditor is not 
required to describe the MAPR as a numerical 
value or to 
describe the total dollar amount of all charges in the MAPR 
that apply to the extension of consumer credit.  A creditor 
may include a statement of the MAPR applicable to the 
consumer credit in the agreement with the covered borrower 
involving 
the consumer credit transaction. The regulation 
does not require a statement of the MAPR to 
be included in 
advertisements. 
Under 
32 CFR 
232.6(c)(3)
a statement substantially similar 
to the following 
model statement may be used to satisfy the 
requirement 
to p
rovide a statement of the MAPR: 
Federal law provides important 
protections to members of the 
Armed Forces and their 
dependents relating to 
extensions of consumer credit. 
In general, the cost of consumer 
credit to a member of the Armed 
Forces and his or her dependent 
may not exceed an annual 
percentage rate of 36 percent. 
This rate must include, as 
applicable to the credit 
transaction or account: 
he costs 
associated with credit insurance 
￿￿FDIC 
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Compliance Examination Manual 
September 
2016 
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V.
 Lending 
Military Lending Act 
fee for a debt cancellation product, a finance charge, a 
reasonable 
bona fide foreig
n transaction fee, and a bona 
fide, but unreasonable cash advance fee.  All of the fees
including the foreign transaction fee that otherwise would 
qualify for the exclusion 
as a bona fide fee
and the 
finance charge must be incl
uded when calculating the 
MAP
Timing for Computi
ng the MAPR for Open
End Credit 
Computing
In general, creditors can be reasonably expected 
indirectly from the DoD’s database, located 
https://mla.dmdc.osd.mil/ 
(or 
via any URL or direct 
connection 
to the database 
that may be provided by the 
DoD)
Searches require entry of the consumer’s last 
name, date of birth, and Social Security number. 
Note: 
Historic lookbacks 
are prohibited under the rule. 
After a consumer has entered into a transaction or 
established an account, 
creditor 
(including an a
ssignee) 
may not, directly or indirectly, obtain any information 
V–13.6 
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Consumer 
Compliance Examination Manual 
September 
2016 
  
   
   
   
   
  
   
  
   
   
  
   
  
  
   
V.
 Lending 
Military Lending Act 
Examination Checklist 
Military Lending Act 
obligation both in writing in a form the covered borrower can keep and orally? 
If the creditor elects to provide a toll
free telephone number in order to deliver the oral disclosures 
o a covered borrower, does the creditor include the toll
free telephone number on either
form the creditor directs the consumer to use to apply for the transaction or account 
inv
olving consumer credit; or 
he written disclosure the creditor provides to the covered borrower? 
If the creditor elects to provide a toll
free telephone number in order to deliver the oral disclosures 
to a covered borrower, is the toll
free telephone number available for a duration of time reasonably 
necessary to allow a c
overed borrower to contact the creditor for the purpose of listening to the 
disclosure? 
Other Limitations 
Does the creditor abide by the prohibition on rolling over, renewing, repaying, refinancing, or 
consolidating consumer credit? Note that this prohibition does not apply to a creditor that is 
chartered or licensed under Federal or State law as a bank, savings association, or credit union, or 
when the credit is being extended by the same creditor to refinance or renew an extension of credit 
that was not covered because the consumer was not a covered borrower at the time of the original 
transaction. 
Does the creditor abide by the prohibitions against requiring covered borrowers to: 
Waive their rights to legal recourse under any otherwise applicable law; 
Submit to arbitration or other onerous legal notice provisions in the case of a dispute; or 
Provide unreasonable notice as a condition for legal action? 
Does the creditor 
refrain from
Requiring that a covered borrower 
repay the obligation by military allotment (note that for 
purposes of this provision of the regulation, the term “creditor” does not include “military 
Prohibiting a covered borrower from prepaying the cons
umer credit; or 
Charging a covered borrower a penalty fee for prepaying all or part of the consumer credit? 
Does the creditor 
refrain from 
ing 
the title of a vehicle as security for the obligation involving the 
consumer credit? 
Note that this 
prohibition does not apply when the transaction is expressly 
intended to finance the purchase of a vehicle and the credit is secured by the vehicle or when the 
creditor is chartered under Federal or State law as a bank, savings association, or credit union
Does the creditor 
refrain from 
improperly requir
ing 
access to a deposit, savings, or other financial 
account 
maintained by the covered borrower 
for repayment 
by: 
Obtaining payment through a remotely created check or remotely created payment order; or 
Obtaining a post
dated check provided at or around the time credit is extended? 
￿￿FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
V–13.17 
  
   
   
 
   
   
  
  
   
  
   
  
   
   
   
V.
 Lending 
Military Lending Act 
Examination Checklist 
Military Lending Act 
Regarding an action by a creditor 
relating to a covered borrower with an existing account, does 
If a creditor elects to use a method other than one of the two optional safe harbor methods: 
Is the chosen method performed prior to a consumer becoming obligated o
n a credit 
transaction or establishing an account for credit? 
Does the creditor maintain a record of the information obtained? 
Calculation of MAPR 
Does the creditor include the following charges in the calculation of the MAPR for both closed
and 
open
end credit, as applicable: 
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; 
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 
Except for a bona fide fee (other than a periodic rate) charged to a credit card account, which 
may be excluded if the bona fide fee is reasonable for t
hat type of fee: 
Finance charges associated with the consumer credit; 
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 wh
en 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 
In general, any fee imposed for participation in any plan or arrangement for consumer 
cred
it. 
For closed
end credit, does the creditor appropriately calculate the MAPR following the rules for 
calculating and disclosing the “Annual Percentage Rate (APR)” for credit transactions under 
Regulation Z based on the MAPR charges? 
For open
end 
credit, does the creditor appropriately calculate the MAPR following the rules for 
Mandatory Loan Disclosures 
Does the creditor properly provide 
covered 
borrower with required information before or at 
the time the borrower becomes obligated on the transaction or establishes an account for the 
consumer credit, 
(or at a later time provided for in Regulation Z
if any)
, including: 
A statement of the MAPR applicable to the extension of consumer credit; 
Any disclosure required by Regulation Z, which shall be provided only in accordance with the 
requirements of Regulation Z that apply to that disclosure; and 
A clear description of the payment obligation of 
the covered borrower, as applicable.  Note 
that a payment schedule (in the case of closed
end credit) or account
opening disclosure (in 
the case of open
end credit) provided pursuant to Regulation Z satisfies this requirement. 
Does the creditor provide 
the statement of the MAPR and the clear description of the payment 
￿￿V–13.16 
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Compliance Examination Manual 
September 
2016 
  
   
   
  
   
   
 
   
   
  
  
  
   
   
   
 
 
   
 
 
 
 
 
   
V.
 Lending 
Military Lending Act 
Examination Checklist 
Military Lending Act 
Applicability of the Regulation 
Does the creditor 
or assignee 
offer, extend, or purchase credit primarily for personal, family, or 
household purposes? 
If the answer is Yes, proceed. If the answer is No or N
A, conclude the review. 
Evaluate Compliance Management System 
Does the institution have adequate policies, procedures, and practices for ensuring and monitoring 
compliance with the 
MLA
Does the institution 
provide 
adequate training for individuals whose responsibilities relate to 
compliance with the 
MLA
Does the institution have policies or procedures in place to: 
Provide account disclosure information to covered borrowers in accordance with 32 CFR 
232.6; 
Properly create and maintain records of covered borrower checks? 
Based on a review of the institution’s compliance reviews 
and/or 
audit material
, including 
workpapers and reports: 
Does the scope of any audits 
address all provisions of the regulation, as applicable? 
Does transaction testing include samples covering all relevant product types and decision 
centers? 
Is the work performed accurate? 
Are significant deficiencies and their causes included in reports to 
management or to the board 
of directors? 
Has management taken corrective actions to follow up on previously identified deficiencies? 
Is the frequency of review/audit appropriate (including review/audit of implemented corrective 
action related to previousl
y identified deficiencies)? 
Are the institution’s internal controls adequate to ensure compliance? 
Identification of Covered Borrowers  
Do the creditor’s policies, procedures, and training materials accurately reflect the scope of the 
“covered borrower” definition? 
as the creditor elected to use one of the optional safe harbor methods provided in 32 CFR 
232.5(b)? 
If a creditor elects to use one of the two optional safe harbor methods to check a consumer’s status: 
Does the 
creditor timely create a record of the information obtained, in accordance with 32 
CFR 232.5(b)(3)? 
Does the creditor thereafter maintain a record of the information obtained, in accordance with 
32 CFR 232.5(b)(3)? 
￿￿FDIC 
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Compliance Examination Manual 
September 
2016 
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V.
 Lending 
Military Lending Act 
covered because the consumer was not a covered 
borrower at the time of the original transaction. 
dated check provided at or around the 
time credit is extended. 
￿￿V–13.14 
FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
  
  
  
  
  
  
V.
 Lending 
Military Lending Act 
FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
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V.
 Lending 
Military Lending Act 
Evaluate Compliance Management System 
Organization charts
accordance with 32 CFR 232.5(b)(3)
If a creditor elects to use a method other than one of the 
two optional safe harbor methods, determine whether 
the chosen method is performed prior to a consumer 
becoming obligated on a credit transaction or 
ote: 
Section 232.5 contains no specific timing and 
recordkeeping requirements if the creditor uses an 
alternative to one of the safe harbors to verify covered 
V–13.12 
FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
  
V.
 Lending 
Military Lending Act 
￿￿FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
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V.
 Lending 
Military Lending Act 
Military Lending Act 
Background 
Examiners should reference the Military Lending Act 
examination procedures (Chapter V
13.1 in the Compliance 
Examination Manual) for consumer credit 
transactions 
occurring on or after October 3, 2016, as relevant. For 
consumer credit transactions occurring prior to these dates, 
examiners should reference the Talent Amendment 
examination procedures (Chapter V
12.1 in the Compliance 
Examination Manual). 
The Military Lending Act
(MLA)
, enacted in 2006 
and 
implemented 
by the Department of Defense 
(DoD)
, protects 
active duty members of the military, their spouses, and their 
dependents from certain 
lending practices.  These practices 
could pose risks for se
rvice members and their families
and 
could 
pose a threat 
to 
military readiness and 
affect service 
cancellation and suspension, and other credit
related 
ancillary products sold in connection with the transaction. 
The total charge
as expres
sed through an 
annualized rate 
ref
erred to as the 
ilitary 
nnual 
ercentage 
ate 
(MAPR)
may not exceed 
36 percent.
The 
MAPR includes charges 
that are 
not included in t
he finance charge or the annual 
percentage rate 
(APR) 
disclosed under the Truth in 
nding 
Act (TILA)
10 U.S.C. 987. 
32 CFR part 
232. 
32 CFR 232.3(i). 
The MAPR is calculated in accordance with 32 CFR 232.4(c). 
32 CFR 232.4(b). 
The MAPR largely parallels the APR, as calculated in accordance with 
Regulation Z, with some exceptions to ensure that creditors do not have 
incentiv
es to evade the interest rate cap by shifting fees for the cost of the 
credit product away from those categories that would be included in the 
MAPR. Generally, a charge that is excluded as a “finance charge” under 
Regulation Z also would be excluded from 
the charges that must be included 
when calculating the MAPR.  Late payment fees and required taxes
i.e., 
fees that are not directly related to the cost of credit
are examples of items 
excluded from both the APR and the MAPR. But certain other fees more 
rectly related to the cost of credit are typically included in the MAPR, but 
not the APR.  The most common examples of these fees
application fees 
In addition, among other provisions, the 
MLA, as 
implemented by DoD
Provides a
n optional 
safe harbor 
from liability for certain 
procedures that 
creditors 
may 
use 
in connection with 
identifying 
covered borrowers
Requires credit
ors to provide written and oral 
disclosures 
in addition to those required by TILA
Prohibits certain 
loan terms, such as prepayment 
penalties, 
man
datory arbitration clauses, and 
certain unreasonable 
notice requirements
and 
Restricts loan rollovers
renewals, 
and refinancings 
by 
some types of creditors
Statutory a
mendments to the MLA in 2013 granted 
enforcement authority 
for the 
MLA’s 
requirements to the 
agencies specified in section 108 of TILA.
These agencies 
include 
the Board of Governors of the Federal Reserve 
System, the Consumer Financial Protection Bureau 
(CFPB)
the Federal Deposit Insurance Corporation, the National 
Credit Union Administration, the Office of the Comptroller 
of the Currency
, and the Federal Trad
e Commission
State 
regulators also supervise 
state
chartered institutions for MLA 
requirements pursuant to authority granted by state law. 
In July 2015, 
DoD 
published revisions to the MLA 
implementing regulation
that
xtend 
the MLA’s 
protections to a broader range of 
credit 
roducts; 
Modif
the MAPR to include certain additional fees and 
charges
Alter the provisions of 
the 
optional safe harbor available to 
creditors 
for identification of covered borrowers
odif
the 
disclosures 
creditors are 
required 
to provide to 
covered borrowers
Modif
the prohibition on rolling over, renewing, or 
financing consumer credit; and 
Implement statutory changes, including provisions related 
to 
administrative enforcement and civil liability for ML
violations 
(for knowingly violating the MLA, there is 
potential for criminal penalties)
and participation fees
have been specifically noted in the regulation as 
charges that generally must be inclu
ded in the MAPR, but would not be 
included in the APR under Regulation Z.
National Defense Authorization Act for Fiscal Year 2013, Pub. L. 112
239, 
section 662(b), 126 Stat. 1786.
80 Fed. Reg. 43560. 
￿￿FDIC 
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Compliance Examination Manual 
September 
2016 
V–13.1 
  
   
   
   
   
  
   
  
   
   
  
   
  
  
   
V.
 Lending 
Military Lending Act 
Examination Checklist 
Military Lending Act 
obligation both in writing in a form the covered borrower can keep and orally? 
If the creditor elects to provide a toll
free telephone number in order to deliver the oral disclosures 
o a covered borrower, does the creditor include the toll
free telephone number on either
form the creditor directs the consumer to use to apply for the transaction or account 
inv
olving consumer credit; or 
he written disclosure the creditor provides to the covered borrower? 
If the creditor elects to provide a toll
free telephone number in order to deliver the oral disclosures 
to a covered borrower, is the toll
free telephone number available for a duration of time reasonably 
necessary to allow a c
overed borrower to contact the creditor for the purpose of listening to the 
disclosure? 
Other Limitations 
Does the creditor abide by the prohibition on rolling over, renewing, repaying, refinancing, or 
consolidating consumer credit? Note that this prohibition does not apply to a creditor that is 
chartered or licensed under Federal or State law as a bank, savings association, or credit union, or 
when the credit is being extended by the same creditor to refinance or renew an extension of credit 
that was not covered because the consumer was not a covered borrower at the time of the original 
transaction. 
Does the creditor abide by the prohibitions against requiring covered borrowers to: 
Waive their rights to legal recourse under any otherwise applicable law; 
Submit to arbitration or other onerous legal notice provisions in the case of a dispute; or 
Provide unreasonable notice as a condition for legal action? 
Does the creditor 
refrain from
Requiring that a covered borrower 
repay the obligation by military allotment (note that for 
purposes of this provision of the regulation, the term “creditor” does not include “military 
Prohibiting a covered borrower from prepaying the cons
umer credit; or 
Charging a covered borrower a penalty fee for prepaying all or part of the consumer credit? 
Does the creditor 
refrain from 
ing 
the title of a vehicle as security for the obligation involving the 
consumer credit? 
Note that this 
prohibition does not apply when the transaction is expressly 
intended to finance the purchase of a vehicle and the credit is secured by the vehicle or when the 
creditor is chartered under Federal or State law as a bank, savings association, or credit union
Does the creditor 
refrain from 
improperly requir
ing 
access to a deposit, savings, or other financial 
account 
maintained by the covered borrower 
for repayment 
by: 
Obtaining payment through a remotely created check or remotely created payment order; or 
Obtaining a post
dated check provided at or around the time credit is extended? 
￿￿FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
V–13.17 
  
   
   
 
   
   
  
  
   
  
   
  
   
   
   
V.
 Lending 
Military Lending Act 
Examination Checklist 
Military Lending Act 
Regarding an action by a creditor 
relating to a covered borrower with an existing account, does 
If a creditor elects to use a method other than one of the two optional safe harbor methods: 
Is the chosen method performed prior to a consumer becoming obligated o
n a credit 
transaction or establishing an account for credit? 
Does the creditor maintain a record of the information obtained? 
Calculation of MAPR 
Does the creditor include the following charges in the calculation of the MAPR for both closed
and 
open
end credit, as applicable: 
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; 
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 
Except for a bona fide fee (other than a periodic rate) charged to a credit card account, which 
may be excluded if the bona fide fee is reasonable for t
hat type of fee: 
Finance charges associated with the consumer credit; 
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 wh
en 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 
In general, any fee imposed for participation in any plan or arrangement for consumer 
cred
it. 
For closed
end credit, does the creditor appropriately calculate the MAPR following the rules for 
calculating and disclosing the “Annual Percentage Rate (APR)” for credit transactions under 
Regulation Z based on the MAPR charges? 
For open
end 
credit, does the creditor appropriately calculate the MAPR following the rules for 
Mandatory Loan Disclosures 
Does the creditor properly provide 
covered 
borrower with required information before or at 
the time the borrower becomes obligated on the transaction or establishes an account for the 
consumer credit, 
(or at a later time provided for in Regulation Z
if any)
, including: 
A statement of the MAPR applicable to the extension of consumer credit; 
Any disclosure required by Regulation Z, which shall be provided only in accordance with the 
requirements of Regulation Z that apply to that disclosure; and 
A clear description of the payment obligation of 
the covered borrower, as applicable.  Note 
that a payment schedule (in the case of closed
end credit) or account
opening disclosure (in 
the case of open
end credit) provided pursuant to Regulation Z satisfies this requirement. 
Does the creditor provide 
the statement of the MAPR and the clear description of the payment 
￿￿V–13.16 
FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
  
   
   
  
   
   
 
   
   
  
  
  
   
   
   
 
 
   
 
 
 
 
 
   
V.
 Lending 
Military Lending Act 
Examination Checklist 
Military Lending Act 
Applicability of the Regulation 
Does the creditor 
or assignee 
offer, extend, or purchase credit primarily for personal, family, or 
household purposes? 
If the answer is Yes, proceed. If the answer is No or N
A, conclude the review. 
Evaluate Compliance Management System 
Does the institution have adequate policies, procedures, and practices for ensuring and monitoring 
compliance with the 
MLA
Does the institution 
provide 
adequate training for individuals whose responsibilities relate to 
compliance with the 
MLA
Does the institution have policies or procedures in place to: 
Provide account disclosure information to covered borrowers in accordance with 32 CFR 
232.6; 
Properly create and maintain records of covered borrower checks? 
Based on a review of the institution’s compliance reviews 
and/or 
audit material
, including 
workpapers and reports: 
Does the scope of any audits 
address all provisions of the regulation, as applicable? 
Does transaction testing include samples covering all relevant product types and decision 
centers? 
Is the work performed accurate? 
Are significant deficiencies and their causes included in reports to 
management or to the board 
of directors? 
Has management taken corrective actions to follow up on previously identified deficiencies? 
Is the frequency of review/audit appropriate (including review/audit of implemented corrective 
action related to previousl
y identified deficiencies)? 
Are the institution’s internal controls adequate to ensure compliance? 
Identification of Covered Borrowers  
Do the creditor’s policies, procedures, and training materials accurately reflect the scope of the 
“covered borrower” definition? 
as the creditor elected to use one of the optional safe harbor methods provided in 32 CFR 
232.5(b)? 
If a creditor elects to use one of the two optional safe harbor methods to check a consumer’s status: 
Does the 
creditor timely create a record of the information obtained, in accordance with 32 
CFR 232.5(b)(3)? 
Does the creditor thereafter maintain a record of the information obtained, in accordance with 
32 CFR 232.5(b)(3)? 
￿￿FDIC 
Consumer 
Compliance Examination Manual 
September 
2016 
V–13.15