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Compliance13 januari, 2021

Episode 15: Lending to military service members

Banking Compliance Insights is a podcast series created to deliver insights on compliance trends and provide strategies for navigating today's regulatory and risk environments.


Is your financial institution missing an opportunity to serve our military service members?

Financial institutions that are military-friendly often have a good reputation in the community and are viewed as a supporter of those serving our nation. In this new podcast episode, “Lending to Military Service Members,” Wolters Kluwer Vice President of Banking Compliance Solutions, Samir Agarwal, and Wolters Kluwer compliance expert Matthew Frank, will focus on navigating the intricacies of military lending and how Wolters Kluwer can assist. Additionally, we’ll review everything you need to know about the Military Lending Act (MLA) and Servicemembers Civil Relief Act (SCRA) and share best practices that you can implement today to ensure your MLA/SCRA program is compliant.

Topics discussed in this episode:

  • What are the types of assistance that your bank can give to service members? How does that play a role in MLA?
  • What does the SCRA say about military lending and what do lenders need to be aware of?
  • How can an adverse financial history impede, or even prevent, granting security clearance to service members?
  • Why do lenders need to pay attention to service members in a way that they don't for the general public?
  • How does the military perceive the viability of technology advancement?
  • How can Wolters Kluwer help banks that support military personnel?
Some of the things that keep service members from being able to deploy would be ongoing financial issues. For example, if they were currently in default or something like that. So, you can see how this sort of financial situation is important to our service members as they prepare to go overseas.
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer
The views expressed by Matthew Frank are his personal views in his civilian professional capacity and do not reflect the views or endorsement of the Department of Defense, United States Army, or Minnesota National Guard
Samir Agarwal
Vice President & Segment Leader, GRC Community Banking, Compliance Solutions

Transcript:

Greg Corombos, News Director at Radio America  00:00
Hi, I'm Greg Corombos. Welcome to Banking Compliance Insights, a podcast series from Wolters Kluwer. This series was created to deliver insights on compliance trends and strategies for navigating today's regulatory and risk environments. Today's episode, “How to Support Lending to our Nation’s Servicemembers,” will focus on navigating the intricacies of lending to this group. Here to lead our discussion on this subject is Wolters Kluwer Vice President of Banking Compliance Solutions, Samir Agarwal. He is joined by Matthew Frank, a Regulatory Compliance Analysis Consultant with Wolters Kluwer. Samir, let me pass the conversation over to you.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  00:42
Thank you, Greg. Today, we're going to talk about the different service member-oriented policies and lending criteria that really help with the unique responsibilities that these individuals have. As they serve our Armed Forces, there are a lot of complications that can happen with timing, with when bills are due, or when mortgages need to be paid. And there are different avenues that lending institutions must make available for those that serve in our Armed Forces. Welcome, Matt. Tell us a little bit about your role and what you do on a day-to-day basis with Wolters Kluwer.
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  01:15
Thank you, Samir. I am a Regulatory Compliance Analysis Consultant, which means that I work in our department that produces content for lending institutions. We make sure that all content is up to date. We make sure that it is tailored to meet the needs of our customers. And when it comes to this topic, I have been the subject matter expert for the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA). I first got started with this a couple of years ago. I'm not entirely sure when for the SCRA, but for the Military Lending Act, I started first getting involved back in 2015 when the Department of Defense did their MLA updates.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  01:59
The way I understand it, Matt, I think you have a little bit of personal experience. 
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  02:07
I currently am a Judge Advocate in the Minnesota Army National Guard. I'm what they call M-Day, meaning it's not my full-time job. I do the traditional one weekend a month, two weeks a year, or at least that's what they promised us. In 2018, our unit was mobilized to go to the Middle East in support of Operation Spartan Shield. We mainly had people in Kuwait and Jordan, with a few others scattered throughout the region. One of the duties of Judge Advocates is to assist our soldiers with legal issues, which can include advising on issues, such as the Servicemembers Civil Relief Act and how it can impact our soldiers.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  02:47
 What are the types of special circumstances that you would assist them with?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  02:51
All sorts of things, honestly. For example, we assist them if they had any ongoing civil suits. We would make sure that those were either resolved or were dealt with in some way. Otherwise, we would make sure that they are currently legally prepared to deploy. And some of the things that may keep service members from being able to deploy would be ongoing financial issues. For example, if they were currently in default or something like that. You can see how this sort of financial situation is important to our service members as they prepare to go overseas.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  03:28
It's very interesting to hear exactly what you said about being an advocate and also a liaison to make sure all the affairs are in order before they embark on their mission. Let's focus on lending. What are the types of help or assistance that you can give to them? And how does that play a role in what the MLA or the SCRA really say about lending that lenders need to be aware of?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  03:53
I think to understand the impact of legal things, such as the Military Lending Act and the Servicemembers Civil Relief Act, we have to understand the unique challenges that service members have. Financial institutions need to understand those challenges and work to address them, which will benefit both the service members but also the institutions because service members talk. They talk about lending institutions that are able to craft a good customer experience that meets their needs. Financial institutions can gain a good reputation by doing that. One unique aspect of military lending is that the financial situation of a service member is not simply a personal thing. It actually impacts the military as a whole. The vast majority of service members require security clearance of some sort. And as part of the approval process, they check the credit score. They check the debt. And a negative financial history can impede, or even prevent, granting the service member security clearance.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  05:01
Is that something that's done on an iterative process, like multiple times while they're on a mission? Or is it one time and then they're good to go?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  05:10
You have to get a security clearance renewed. It's either 10 years or five years. There may be some other special different timeframes. But for just a basic secret security clearance, it would be every 10 years. So, it is something that needs to be looked at on a repeating basis. There is a little bit of downtime between the renewal process, but it does mean that service members do have to keep their financial records and their financial history good enough for them to not be looked at with concern.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  05:44
What are some other concerns that a service member would have from a financial perspective?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  05:49
Financial situations can be very consuming when it comes to the amount of time, energy and thought that you have to put into dealing with them. A service member who is worrying about, say, whether he or she is going to miss a payment on a mortgage loan, thus causing a default and triggering a foreclosure. That person is not likely going to be 100 percent focused on the mission.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  06:16
Are there any other extenuating circumstances why lenders should pay attention to service members in a way that they don't for the general public?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  06:25
Absolutely. The Department of Defense (DoD) is a large government organization and there sometimes can be issues, unfortunately, with getting paid on time. Things such as government shutdowns could cause anxiety, even if pay isn't ultimately impacted. There might be administrative errors due to the incredibly complicated nature of military pay that causes service members to be paid later than they should be. And when you talk about reservists, whether it's the Federal Reserves or the National Guard, when they take leave of absence from their civilian job, there could be a gap between when they last received pay from their civilian job and when they first receive military pay. It's possible that this is more of a concern for National Guard members because, oftentimes, the administrative systems used by Guard units is somehow separate from the systems used by the regular Army. I'm not by any means an expert on that. But I have seen it happen. The Federal Reserves may have that issue as well. But again, I'm with the Guard. And regular full-time service members have their own unique challenges as well. They may move from regular duty station to duty station every couple of years. I just actually saw a presentation this morning where it was talking about the spouses of regular service members. Because of their unique situation, especially moving and not being able to stay in one place, they have a much higher rate of unemployment and underemployment than spouses of civilians, so that can be an issue as well. And going back to the service members, they may be stationed overseas, or they may be in a combat zone with very limited or no access to regular phone or email. And this, of course, makes it difficult to respond to issues. Say there is a service member deployed to a combat zone who spends most of the time outside the wire and has very little access to phone or internet. And there's some sort of administrative error, and the service member doesn't get paid on time and misses a mortgage payment. The bank sends the notice of missed payment and indicates the loan will default if the situation is not remedied. That service member may have significant difficulties trying to address the problem, especially if that person doesn't have a trustworthy person acting as the agent under a power of attorney, which sadly happens more than you might think. Or maybe it's not a pay error at all. But the person who is the agent under the power of attorney has just cleaned out the bank account and disappeared with the money.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  09:03
Does that happen often?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  09:07
I don't know if I would say often, but it happens enough where it's pretty much a cliché in the military.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  09:15
I want to dive into the idea of the power of attorney with you, and understand what kind of clients you are advising or your teams have advised in the past. How do you stay really smart and vigilant about how to manage finances while being away?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  09:34
Of course, we get a mix of different clients with different experiences and whatnot. But the people we really try to focus on are the young kids, essentially, people who are 18, 19, 20. They probably aren't terribly financially sophisticated. They may never have actually had to open a bank account. They're limited in their experience. And because of such things, like powers of attorney, we don't assume they know what that means. When we sit down with them, we say, “OK, a power of attorney is a very powerful thing.” This is something that allows someone to act as you. And because of this, you need to have someone that you trust because this person could conceivably clear out your bank accounts, and could buy things with your money. Sometimes, we have service members who enter into relationships and even get married quicker than they would if they were not being deployed. And for active duty service members, there are also different benefits for getting married, such as married housing and moving out of the barracks. That are inducements to perhaps rush a little bit to get married. And so, when you're talking to these younger service members, you need to explain to them all of their legal rights, obligations, etc., that come along with either giving someone the power under a power of attorney or getting married to someone. What's different marital interest and whatnot, and how that may play out. Those are the kind of the young, financially unsophisticated soldiers and service members that these sorts of regulations are trying to come in and protect.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  11:23
Are there different levels? Can someone be a power of attorney designee for just certain types of transactions? If it was a mortgage, can they only transact on the mortgage versus maybe administer a bank account?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  11:39
Yes, absolutely. The different States tend to have different model forms. For example, the one from Minnesota states that I have given “so and so” the power to be my agent as power of attorney and then it lists a checklist of different things. You can check off which things you want the agent to have power. For example, I want the agent to have power to dispose of real property, and if you want that, you check that off. If not, you leave that blank. I want the agent to have the power to give gifts in my name, etc. There are also other things, such as you can put a time limit. This power of attorney will expire at a certain date. We go through all those different customizations on the power of attorney forms to really have it fit their needs.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  12:29
When we have personnel deployed overseas, I understand how difficult it can be to have a physical presence back home to make these transactions work. But technology has advanced quite a bit. And there's a lot of electronic means today to assist. How does the military perceive or look at the viability of that?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  12:51
I would say it really kind of depends on where the service member is deployed and what the mission is. Certainly, you are absolutely correct, it does make it much easier to interact with lenders, fulfill financial obligations, and respond to any sort of concerns that may arise. And this is really one area where lenders can enhance the experience for service members and make it easier for them. If you have such things as online banking, which I realize may be very common nowadays, but the more online services and the more ways that people have to interact with the financial institution, the easier they're going to make it for their service members as well. That being said, there may be situations or circumstances where service members simply do not have access to stable phones or internet, especially if they are in a combat zone or if they are doing missions in remote regions of the world. And of course, there are also different challenges, such as different time zones. If you are half the world away, it's going to be more difficult contacting a lender when it's midnight and it's noon there. So, yes, newer advances in technology can certainly help. Does it completely erase the challenges that military service members face? No, I don't think so. There still needs to be a way to address the needs of military service members that cannot be fully addressed with technology while still having technology facilitating a better experience for both the financial institution and the service member.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  14:38
What happens when the individual is ready to be deployed? Is there a standard practice that every lender knows? Do they have a checklist? They have to have these conversations with individuals to make sure they're really taking care of their lives back at home.
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  14:53
There is a mobilization process, and in that process, we go through different stations. There's the medical station to make sure that you're medically fit, etc. And then one of the stations is going to be a legal station, where we go through all the legal things, such as anything that deals with the Servicemembers Civil Relief Act, if there's any pending civil actions, etc. And they do, at least in the Army, that's the only thing I have experience with. I would imagine the other services have similar things. They do have different resources available for service members to come and discuss any outstanding financial issues.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  15:34
Let's talk about military lending. From your opinion, is it a unique type of lending? Because I don't recall us putting service members into a protected class in the lending process. But I'd like to learn what your perspective is, and what does it mean if an institution goes above and beyond to make sure that they're compliant and giving the best foot forward for those personnel?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  15:59
Yes, while it's not a legally protected class, there are some unique aspects, especially when you get young service members with money. For example, when I went to college, I worked part-time, just a little bit in the summers and whatnot. I had to pay for certain things, any sort of food. I didn't have much disposable income, really. And of course, I was getting college student loans and all that good stuff. Now, you have these young service members who are, say 19 years old, got promoted, even just once to Second Class Private, and they're earning about $2,000 a month pre-tax. When they're living in the barracks, and they're probably eating food paid for by the government, they don't really have that many bills to pay. Perhaps just the cell phone and maybe advanced Wi-Fi, if they don't like the Wi-Fi provided to them. They have a lot of money burning in their pockets compared to most young people. And when you're that young, you're kind of susceptible. When I was driving around Fort Benning, I was looking at billboards that would say, “E-2 and above guaranteed financing.” E-2 is the pay grade of the Second Level of Private. So, these lenders were targeting these young, financially inexperienced soldiers and saying, “Hey, you can get this nice, fancy car.” And when you're young, and you have excess money burning in your pocket, it's unfortunately a common stereotype in the military that you will go buy that expensive car. And if you don't know what APR is, then you might get that car at an exorbitant APR rate like 25 percent. Those kinds of payments, they start to add up. You have that nice new car. You're buying a brand new TV, buying video games and video game systems, you're buying junk food, and all of a sudden, you realize, "Hey, my money's running out." So, what do you do? You go and you either get a title loan on that car that you're already paying off, or you go get a paycheck loan.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  18:17
When we were talking about the individual who's run into some positive cash flow, decides to buy a big-ticket item like a vehicle, some would say, “Hey, that's freedom of choice for making a decision.” But then, as you and I both know, a younger individual who probably doesn't have a lengthy credit history is a little bit more of a risky customer to a bank. Are they being treated unfairly, or is it just that in this situation they're learning responsibility from a credit perspective, and banks are giving them maybe even a better deal than they would for someone in the same situation who did not have military service employment?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  19:05
I think this all goes back to the whole idea that it's not just the individual burden on the service member because of the impact it has on the military. For example, in the MLA's 2015 rule, the DoD basically says this is a ready issue. This is my own interpretation of it, but this is how I look at it. Regulations like the Military Lending Act and statutes like the Servicemembers Civil Relief Act, they're not financial laws that deal with the military. I think you need to look at them as military laws, military rules, regulations, and statutes that deal with finances. The DoD has said that they believe that this impacts our military readiness and that was a discussion with the MLA. When the proposed rule was first put out, these lenders would say, “Hey, this isn't how we normally do things, and we feel like we're going to be limited in what sort of products we provide service members if you set these strict restrictions for the certain types of transactions, these certain credit types,” The Department of Defense basically said, “You guys will figure it out because this is important to us, and it is a military readiness issue.”
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  20:26
Let's get back to the story that you're telling me. Now I'm borrowing against my paycheck, or I'm borrowing against the title of the big-ticket item. What happens next?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  20:35
Then you get into a credit-debt cycle where you're stuck. And this is where you start to worry if the service member can get security clearance now. Is this service member going to be dealing with these financial issues when they are deployed overseas when they really should be focused on the mission? And this is the reason why we have things such as the Military Lending Act. It's to prevent these service members from getting into these situations where it will impact their military service.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  21:08
Explain that just a little bit further. Give me an example that’s hard-hitting. In the storyline that we're talking about, instead of getting a 25 percent APR, what would I get because of the Military Lending Act?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  21:20
The Military Lending Act has its own specific military APR and it's capped at 36 percent. And I know there have been proposals to lower that cap because 36 percent is still pretty high.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  21:34
It's really high.
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  21:36
It really is. But you can see the fact that they felt the need to have a 36 percent cap means that they were being charged super exorbitant APRs. And especially when it comes to things, such as paycheck loans and title loans, the APR would be just ridiculous. And other things the MLA prohibits is  prepayment clauses. You can't prohibit the right to prepay the entire loan. You can't have the conditions of the loan require the borrower to give up the rights. Any sort of important waivers that they may have under federal or state law, the MLA says you can't have them sign a waiver saying, “No, I waive my right to x,” because they know that these individuals may not even know what rights they are waiving. Arbitration. They can't be forced to submit to arbitration in MLA transactions because, again, the borrowers are not sophisticated and they might not know, “Well, what rights am I giving up if I agree to arbitration?” These are the sort of circumstances that these young financially unsophisticated service members have and the provisions try to address.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  22:58
It sounds like some pretty good provisions are in place to protect the novice or the beginner individual who's just getting their credit history bill and really organizing their finances. What about the ones that have already been there and are kind of seasoned with day-to-day finances. How do they keep things moving along for themselves?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  23:17
Certainly. We talked about the situations where we have service members who are perhaps unable to contact lenders or financial institutions because of their circumstances. The Military Lending Act does prohibit certain things that are trying to address that situation as well. One big prohibition is that lenders cannot impose onerous legal notice provisions when there's any kind of dispute. Because the DoD recognizes that even if it’s standard practice to require a borrower to respond to a bank notice within a certain timeframe, it may be unreasonable for a deployed service member to do so. And this probation works both ways as well because a lender is prohibited from demanding unreasonable notice from the borrower as a condition for the borrower’s legal action. And these terms, Owners Legal Notice Provisions and Unreasonable Notice, are not defined or explained, which is why it's important for lenders to understand the unique difficulties that service members face so they can modify the practices, credit agreements, and notes accordingly. This is especially important because any credit agreement, note, or other contracts that contain prohibited provisions is void from inception. And there are other noteworthy provisions as well. Again, the prohibition against arbitration, that doesn't just apply to the younger service members. And the requirements to waive rights again applies to everyone. You can see how this protects everyone because there may be circumstances where there are two different parties on a note or credit agreement. If one of them is away, and the other is required to submit to arbitration that could unduly infringe the rights or obligations of the deployed service member. All those things are custom-tailored to both advance the interests or protect the interests of younger service members and also the more experienced ones.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  25:24
Are there any limitations with where the protection goes or is enforced?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  25:28
Limitations are once there are no covered borrowers on the transaction, which basically means once there are no military members on active duty, then the MLA no longer applies.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  25:40
You have to be active duty in order to apply?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  25:44
Yes, correct.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  25:46
Let's turn to SCRA. What does that cover as opposed to MLA?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  25:50
It covers a lot actually. I'll start off with hat's it especially good to reservees’, myself included. SCRA creates a six percent interest rate cap for debt, as long as the service member was obligated prior to entering active duty service. essentially, if you have a credit card or a mortgage loan, and of course, nowadays with low-interest rates and mortgages, it's not that impressive. But a higher interest rate for any sort of car loan, any sort of line of credit that you have before you are called up to active duty, there's a six percent rate cap on that. This is one of the examples of where lenders can actually build a reputation and help out service members because I know of banks that actually do a four percent interest rate cap. I know of one that even did a zero percent interest rate cap, because again, people were talking about it and it was impressive.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  26:50
New business for them, and it helps the service members out quite a bit.
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  26:55
Absolutely. And it made me reconsider my opinion. Maybe these financial institutions are worth checking out. It benefits multiple parties, which is really nice. And aside from the interest rate cap, the biggest protections really are those addressing contract breaches, defaults, repossession, and foreclosure. Like the interest rate cap, these provisions generally only apply to transactions where the service member was obligated before entering active duty military service. So, when you talk about how there are limitations in the SCRA, it recognizes that it would be unfair if you were to be in military service, and then try to get a house or get a car, and then be protected from foreclosure knowing that you would be protected. Essentially, this is really for the situation where reservists are called up. And it’s a change in life circumstances because they are no longer in their civilian role. Now, they are going to be deployed overseas and they want to put things on pause while they are serving the country. Mortgage foreclosure proceedings have protection letters that they can't seize, foreclose, or sell the property without court approval or a valid waiver by the service member. And this is important, that waiver must be made during military service, not during loan origination. As I just said a minute ago, the protections apply to credit lines and loans that are made prior to entering into service. That means that there is going to be a considerable time period between the loan origination and when that waiver must be signed. In other words, you can't just have that waiver be a standard part of your loan origination package.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  28:49
It's always going to be part of the loan modification of some sort?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  28:52
I don't think it necessarily has to be part of a modification. But it would need to be some time during the servicing process if the lender wanted to, once they receive word that their borrower is going into military service. Say they get the notification from the service member because they're asking for the six percent interest rate cap. And if they wanted to ask whether or not the service member would be willing to waive SCRA rights when it comes to things such as foreclosure, they could do so at that point. I don't know how good that would be for their reputation, honestly. But it would be an option.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  29:26
What else does this apply to?
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  29:28
There are not only protections for mortgage foreclosure proceedings, but also protections for residential motor vehicle leases because you're not going to get much value out of a house lease or a car lease when you have been called up to deploy somewhere else. This helps out reservists who are called to service with little advance warning to due to an emergency because they're suddenly moved to a deployed unit to replace someone else or for whatever reason. The ability to terminate a lease also does apply to active duty service members who entered into a lease under certain conditions. Again, this would be more of an unexpected, unplanned, life event. One final thing I think we should note for the SCRA is that courts interpret it very liberally. In fact, it's been mandated by the Supreme Court all the way back since 1943. And this is for its direct predecessor, the Soldiers, and Sailors Civil Relief Act, but it does apply also to the SCRA. As a case from 1948 says, “It should be interpreted with an eye-friendly, to those who drop their affairs to answer the country's call.” And we took this court ruling, and we thought to ourselves when we were looking at our content for MLA, that if courts very liberally construed the SCRA to be friendly to service members, we're guessing that they will also construe the MLA similarly. This is why when you go back to your comment about it not being a protected class. True, it’s not. But courts are going to generally be very protective of service members.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  31:10
Both of these provisions and military lending as a whole, or service member lending as a whole, is really an opportunity for lenders to help mitigate some of the challenges for those that serve in our Armed Forces. There could potentially be rewards for doing so because those that serve are so vast in volume that it can be looked at as patriotic, new business, as well as just doing our part in making the country function.
 
Matthew Frank, Regulatory Compliance Analysis Consultant, Wolters Kluwer  31:40
Absolutely. Of course, for smaller institutions and even larger institutions, we recognize that there may be some challenges with implementing and addressing the needs of military service members. That's why Wolters Kluwer is here to help. For example, our E-Forms and Expere products, they support MLA transactions. We continue to monitor for any updates for military lending, whether it involves the MLA, SCRA, or anything else. They are not alone. We can help, and as you said, there is a good opportunity for business growth and reputational growth.
 
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  32:18
Matt, thank you for talking to me today. I definitely think our listeners have something to ponder a little bit further and really think about. Greg, let me turn things back over to you.
 
Greg Corombos, News Director at Radio America  32:30
That's Wolters Kluwer Vice President of Banking Compliance Solutions. Samir Agarwal, joined on this episode by Matthew Frank, a Regulatory Compliance Analysis Consultant with Wolters Kluwer. Wolters Kluwer hosts this podcast and is a market-leading provider of advisory services and technology solutions for optimizing compliance and risk management programs. For more information and additional guidance, please visit Wolterskluwer.com or call 1-800-397-2341. Please join us for future podcasts focused on navigating emerging trends in regulatory compliance.
 
The views expressed by Matthew Frank are his personal views in his civilian professional capacity and do not reflect the views or endorsement of the Department of Defense, United States Army, or Minnesota National Guard

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