California Reinvestment Coalition Supports New DoD Military Lending Act Rules To Protect Military Families from Predatory Lending
San Francisco, CA: Oct. 6th-The California Reinvestment Coalition applauds the Department of Defense for issuing new proposed rules to protect service members and their families from predatory lending practices. Thenew rules, announced last week, update implementation of the Military Lending Act, bipartisan legislation passed by Congress and signed into law by President George W. Bush, to close loopholes that predatory lenders have exploited in order to prey on soldiers and their families.
Liana Molina, payday organizer with CRC, explains: “These proposed rules are especially important here in California, the state with the highest number of active duty military personnel, with over 150,000 active duty members. For too long, lenders exploited loopholes to offer destructive loans that create financial heartaches for military families.”
The Military Lending Act limited loans to members of the military to a 36% annual percentage interest rate.Predatory lenders have used loopholes and created new, sky-high interest rate loan products to circumvent the narrow definitions the Department of Defense used in its original regulations implementing the law. Often marketed as a quick fix to a one-time cash crunch, the defective and predatory loans trap soldiers and their families in a cycle of debt they cannot escape. Many lenders charge effective interest rates over 400% when factoring in exorbitant fees and worthless insurance products often sold with loans.
“We’ve seen this industry’s “creativity” in circumventing rules that were put in place to protect our soldiers. The new rules should put a stop to that. Our military families deserve better than to be taken advantage of by predatory lenders” explains Molina. Back to all news