Two laws, the Military Lending Act (MLA) and Servicemembers Civil Relief Act (SCRA), shield members of the armed forces from interest rates beyond certain thresholds, with the intention of allowing them to focus on their service. 

• MLA applies to active duty servicemembers (including those on active Guard or active Reserve duty), spouses, and certain dependents. If an account is subject to MLA, the interest rate is limited to 36%.
• SCRA also applies to active duty servicemembers, reducing the rate of pre-service accounts to 6% and protecting them against foreclosures and collateral repossessions.

Failing to comply with these requirements could result in significant fines for credit providers, but manually requesting documentation from servicemembers is  time-consuming and prone to errors.

That’s why LoanPro provides verification and monitoring for MLA and SCRA.  LoanPro can check individual borrowers against the Defense  Department’s Military Database, either through ongoing or an ad hoc verification.

Sign up and configuration

Before using these tools LoanPro clients will need to have the process configured in LMS. Reach out to your normal LoanPro contact, and they’ll get you started.

The processes can be customized to suit your needs and business logic, using LoanPro tools like Agent Walkthroughs, Quick Actions, or the Automation Engine  to streamline or fully automate the check.

Verification process

The details will vary depending on your configuration preferences, but in any case, the process will go something like this:

1. An agent or automation triggers a check. When an agent gets word that a borrower has gone active duty, they can request a verification through LoanPro’s streamlined UI tools, like Agent Walkthroughs and Quick Actions. You can also set up ongoing monitoring for service members who could potentially switch to active duty service.
2. LoanPro checks the borrower against the Military Database. Regardless of what triggered the verification, LoanPro will run a search in the Defense Department’s database using the borrower's first name, last name, and Social Security Number. The results of that search (either a positive match or no) are automatically sent back to LMS.
3. The borrower is updated in LoanPro.
   1. If they’re confirmed in the database, LoanPro will receive a notification including start and estimated end date of their active duty period, as well as their military branch and a verification certificate from the DOD. With that information, LoanPro will write a note on the borrower. For SCRA,it reads verified: {Customer_Name}, is SCRA certified through the "Military Branch”. Their active duty service dates are estimated to begin on "active_duty_start_date" and end on "active_duty_end_date". Additionally, The SCRA certification form has been uploaded to the documents section. For MLA, it reads: Verified: Your borrower, {Customer_Name}, is MLA certified. We have uploaded the MLA certification PDF to their profile. LoanPro then uploads the SCRA or MLA certificate to the customer documents section. They also updates the appropriate fields: MLA Certified, SCRA Certified, Active Duty Start Date and Military Branch.
   2. If they do not exist in the DOD Database, LoanPro will write a note that states:”We are unable to confirm if [Customer Name] is SCRA certified.” or  ”We are unable to confirm [Customer Name] is MLA certified”.
4. LoanPro performs any other automations connected to the check. LoanPro can then perform other automations to keep the account compliant, like adjusting the interest rate or marking that the collateral should not be repossessed.

By leveraging LoanPro's MLA and SCRA verification tools, you can ensure accurate portfolio management and compliance all while maintaining operational efficiency.