MLA or SCRA - What’s the Difference?

Donna Cameron, Director of Regulatory I/O, CRCM, CCBCO

Nov 07, 2017

With the recent changes to the Military Lending Act (MLA), financial institutions are taking a closer look at the rules that govern transactions with servicemembers, and sometimes finding themselves confused between the requirements of the MLA and the Servicemembers’ Civil Relief Act (SCRA). Are they parts of the same rule? When does each apply? Do they apply to all servicemembers?

While both were created to provide protections to servicemembers, they are not the same rule. The SCRA was implemented in 2003 (replacing the 1940 Soldiers’ and Sailors’ Civil Relief Act) and covers many types of transactions, while the MLA was implemented in 2007 and covers only consumer loans and lines of credit (including credit cards). There are differences in the timing of coverage, depending on when the servicemember’s active duty status begins, as well as different loan APR considerations.


The following chart provides a high-level overview of each rule. 


MLA (32 CFR 232)

SCRA (50 US 3901-4043)

Covered persons

Servicemembers and dependents

Servicemembers and dependents

Covered products

Consumer-purpose loans and lines of credit. Effective 10/1/2017, coverage extended to credit cards.

Residential mortgage loans and purchase transactions are generally not covered.

Consumer- and commercial-purpose transactions, such as loans, leases, default judgments, foreclosures, evictions, and repossessions.


Military APR (MAPR) cannot exceed 36%. MAPR calculation includes interest rate as well as certain other fees and charges.

MAPR must be calculated at loan consummation for closed-end loans and for each billing cycle for open-end products.

APR on loans and lines must be reduced to and fixed at 6%, effective on date of activation.

Other protections, such as restrictions on terminations of leases, foreclosures, evictions, repossessions and default judgments

Timing of coverage

Servicemember must be on active duty at the time of loan consummation or opening of the line of credit or credit card.

6% APR applies if the loan was originated or the line was opened prior to the servicemember’s activation.

Other protections, such as restrictions on terminations of leases, foreclosures, and evictions, apply if the servicemember is currently on active duty, regardless of the person’s status at loan origination.

Status determination

Safe harbor for compliance if MLA database or consumer credit report is used to determine consumer’s status.

Servicemember must present copy of activation orders. Status may be confirmed via the SCRA database.

Disclosures required

Specific MLA disclosures must be provided (both orally and in written form) before or at loan consummation or opening of the line of credit or credit card. Standard Regulation Z disclosures are also required.

Notice of SCRA protections must be provided when a mortgage loan is 45 days past due.


It’s important that our servicemembers receive the protections they have earned. To ensure this, financial institutions must implement strong compliance processes, such as:

  • Identifying and “flagging” accounts that are held by servicemembers so that no action is taken that could violate either the MLA (for example, an MAPR that exceeds 36% on an open-end account during any billing cycle) or the SCRA (such as APRs over 6% or prohibited foreclosures);
  • Being especially sensitive to complaints received from servicemembers - perhaps even establishing a special category or flag for servicemember complaints and disputes;
  • Training staff so they understand the rules’ requirements and which rule applies in which situations; and
  • Implementing monitoring and auditing plans that include reviewing MLA and SCRA compliance. 


Our servicemembers have enough to think about without the added stress of worrying about financial services. By understanding and complying with the MLA and SCRA, you can do your part to reduce some of the burden these men and women face.



Continuity’s RegControls™can assist you in monitoring and tracking MLA and SCRA compliance. Contact us if you'd like to learn more about how we can help! If you would like more information about RegControls, please reach out to us at info@continuity.net. 

Topics: SCRA, MLA

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