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New Credit Card Rate-Limit Rules in Effect

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credit

By Debbie Gregory.

The Federal Military Lending Act credit card rules took effect in October was enacted to add consumer protections for service members and their dependents.

Defense Department rules on new credit cards issued to service members and their dependents specify that interest rates cannot exceed an annual percentage rate of 36 percent. Since most credit cards issued offer interest rates well below the 36 percent rate cap, the rules probably won’t impact many military consumers.

But the rule was put in to play to thwart payday lenders who prey on the military community. There was the potential that some predatory credit cards could evolve in the future.

“As it will become more difficult for payday lenders to continue to make loans to service members, there was the chance payday lenders could try to evolve their products to become credit card products,” said Christopher Peterson, a professor of law at the University of Utah, who has conducted research on payday lending and effects on the military community.

Predatory lenders have been very resourceful in their attempts to take advantage of military members and their  families. So for the last several years, the DoD has been working to keep in front of them.

Many unscrupulous lenders salivate over the prospect of lending to people with financial immaturity and a steady income, such as young adults who have just started a four-year enlistment.

In October, 2016, the DoD implemented expanded rules to include all types of consumer credit, such as overdraft lines of credit, deposit advance loans and installment loans extended to active-duty members and their dependents.

It is important to remember that the rule only applies to new credit cards obtained since the rule went into effect. Service members with questions about the rule or who think that a new card doesn’t comply with the rules can see their judge advocate general for legal advice.

Military Connection salutes and proudly serves veterans and service members in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve,  and their families.

Protecting Veterans from High-Pressure Mortgage Refinances

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By Debbie Gregory.

After volunteering to protect their country, servicemembers and veterans are often targeted by disreputable forces at home: predatory lenders.

Government-owned Ginnie Mae, whose purpose is to make mortgages more affordable, is conducting an investigation into unscrupulous mortgage lenders who allegedly pressured servicemembers and veterans into unneeded mortgage refinances.

Ginnie Mae backs loans made through the Department of Veterans Affairs.

Under investigation are lenders who push consumers to refinance loans over and over again in a short period of time, a practice known as churning.

Senator Elizabeth Warren, an outspoken critic of the finance industry sent a letter to Ginnie Mae’s Acting President, Michael Bright, asking whether some lenders were abusing Ginnie Mae’s program by engaging in aggressive marketing tactics.

Bright replied that Ginnie Mae and the Department of Veterans Affairs have created a task force to address abusive practices by lenders approved to issue Ginnie Mae-backed bonds.

VA loans do not require a down payment and closing costs are added to loan balances, so borrowers don’t have to pay them at the time of the sale. But this also makes these loans prime targets for churning.

Some lenders are persuading servicemembers to refinance loans at rates that barely reduce their mortgage payment.

Ginnie Mae has been trying to slow down the refinancing rush by putting a six-month moratorium between new mortgages and a refinance.

However, once the six-month mark passed, Bright said Ginnie Mae saw a blitz of lenders once again preying on servicemembers. Bright said that some lenders apparently targeted veterans for a refinance at “six months and one day.”

Military Connection salutes and proudly serves veterans and service members in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve,  and their families.

DOJ Seeking Input on Predatory Lenders

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By Debbie Gregory.

Predatory lending practices, broadly defined, are the fraudulent, deceptive, and unfair tactics some lenders use to dupe people to take out loans they can’t afford. So if a lender practices deception, exploitation, violates consumer protection laws, or charges more than reasonable loan terms, they are considered to be  predatory lenders. Now, the Department of Justice (DOJ) wants troops and military law officials to pass on their complaints about these predatory lenders.

The DOJ is relaunching its Servicemembers.gov site to include expanded assistance to service members looking for legal help, education and information about ongoing pertinent cases.

“Servicemembers.gov is a work in progress and we are just at the beginning of a long process toward creating the best possible educational resource for you and your families, and for the people who want to help protect your rights,” said Stuart Delery, Acting Associate Attorney General. “We look forward to feedback from the military community as we work to make the website as useful as possible.”

To that end, the DOJ is conducting a series of town hall-style visits at military installations across the country.

The Department of Justice protects a servicemember’s civilian employment rights by enforcing the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), voting rights by enforcing the Uniformed and Overseas Citizens Absentee Voting Act of 1986 (“UOCAVA”), and financial security through SCRA.

Servicemembers who believe their rights under USERRA, UOCAVA, or the SCRA have been violated will be able to file a complaint with the Department of Justice on this site.  Servicemembers, veterans, and their families will also find information about where to obtain legal assistance.

The Servicemembers and Veterans Initiative focuses on case enforcement over financial protections and education on troops’ consumer and legal rights under SCRA.

“I believe we have come a long way since the launch of the Service Members and Veterans Initiative one year ago, but there is more we can do to fight for those who fight for our country,” Delery said. “It is vital that we at the Justice Department do our jobs to enforce the criminal and civil laws designed to protect service members, veterans and their Families, so that you can focus on your invaluable work protecting our nation,” Delery said

Military Connection salutes and proudly serves veterans and service members in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve,  and their families.

USA Discounters Shutters Stores : Military Connection

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By Debbie Gregory.

USA Discounters’ ads used to say, “Bad Credit? Slow Credit? No Credit? No Problem!” The company sought out service members and their families, placing their stores in close proximity to military bases. But the easy lending had a flip side. Customers who fell behind in their payment then had to deal with well-oiled collection operation. And this part of its business didn’t take place where customers bought their goods, but rather in two local courthouses just a short drive from the company’s Virginia Beach headquarters.

USA Discounters filed lawsuits against service members based anywhere in the world, no matter how much inconvenience or expense they would incur to attend a Virginia court date. Between 2006 and last July, USA Discounters had filed more than 13,000 suits in Virginia courts. More often than not (around 89 percent of the time) USA Discounters won, and seized the pay of more active-duty military than any company in the country.

The company sold everything from appliances to jewelry to computers, all at overly inflated prices. It was not unusual for a $650 laptop to end up costing closer to $3,000 after the markup, add-ons and finance charges.

Well, now the tables have turned, and it is time for this deceptive, unscrupulous company to pay the price. On August 26, 2015, USA Discounters filed for bankruptcy protection Monday after closing its last store. The company cited lower sales, “regulatory investigations and adverse media reports” in its bankruptcy filing as reasons for its collapse.

Yes, a class-action lawsuit alleging “unconscionable sales practices and usury,” a lawsuit filed by Colorado’s attorney general, and an investigation by North Carolina’s Attorney General doesn’t bode well for any company.And from where we sit, it couldn’t have happened to a more deserving company.

If you didn’t believe in karma before, then this outcome might, perhaps, change your mind?

Military Connection salutes and proudly serves veterans and service members in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve,  and their families.

Protecting Those Who Serve: Military Connection

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Military Connection: pdloans

By Debbie Gregory.

The Obama administration and U.S. Department of Defense issued a new rule to clamp down on predatory lenders who take advantage of American servicemen and women

When service members return from active duty, they’re more likely to face severe financial challenges than civilians. That’s why the Obama administration and Department of Defense have updated the Military Lending Act—a law that capped interest rates and add-on fees to members of the military and their families at 36 percent. Unfortunately, the original regulations implementing the law capped rates for just a small number of loan types, such as “payday loans” of 91 days or less and so-called “car title loans” of 181 day or less. Since that time, unethical loan sharks have evaded the rules by extending the terms or restructuring the loans.

The new rule is an important advance to control the widespread abuse in the payday and small loan market. Research by the Department of Defense released last year found that as many as one out of every ten enlisted serviceman and woman continued to be targeted by high-cost credit designed to evade the Military Lending Act.

Unfortunately, service members are almost twice as likely as their civilian counterparts to carry some credit card debt from month-to-month. Furthermore, twice as many service members as civilians have paid less than the minimum required payment in the last 12 months.

The DoD estimates that the final rule will reduce involuntary separation caused by financial hardship, resulting in a savings of $14 million a year or more.

With the winding down of the wars in Iraq and Afghanistan, the U.S. economy, especially the job market, is challenging. The transition to civilian life has been tough for many veterans. But hopefully, with this new ruling, they won’t be starting out civilian life already in debt.

Military Connection proudly serves those who serve in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve, Veterans and their families. We are the go-to site for Veteran Employment and information on Veteran education. Militaryconnection.com provides Veterans with and Directory of Employers, a Job Board, information on the Post-9/11 GI Bill, and a blog that offers Veterans boundless information. Be sure to visit Militaryconnection.com, the go-to site.

Protecting Those Who Serve: Military Connection: by Debbie Gregory


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