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In addition, the SCRA requires a creditor to file an affidavit with the court regarding whether or not a customer is in military service before obtaining a default judgment against a customer or whether the creditor is unable to determine whether the defendant is in the military. It also permits a court to stay (delay) the repossession of a vehicle in certain circumstances. It requires a court to review and approve any repossession or termination of a lease if the service member entered into the credit sale, loan, or lease and made a payment before entering military service. The court may delay the repossession or require the creditor to refund prior payments before repossessing. It can also appoint an attorney to represent the service member, require the creditor to post a bond with the court, and issue any other orders it deems necessary to protect the service member. The law also imposes special requirements on a creditor accepting a voluntary surrender of a vehicle. A large subprime auto finance creditor agreed to pay millions to settle a SCRA claim with the DOJ related to charges that the creditor failed to obtain court orders before repossessing motor vehicles owned by protected service members, preventing them from obtaining a court’s review on whether their repossessions should be delayed or adjusted in light of their military service. The Military Lending Act The Military Lending Act (MLA) is a federal law that imposes limitations on the cost and terms of certain extensions of credit to service members and their dependents (“covered borrowers”). The MLA applies to “consumer credit” extended by a creditor to a “covered borrower.” For purposes of the MLA, “consumer credit”means “credit offered or extended to a covered borrower primarily for personal, family, or household purposes, and that is: (i) subject to a finance charge; or (ii) payable by a written agreement in more than four installments.”There are only four narrow exceptions to this definition of consumer credit, along with a temporary exemption for credit cards: (i) residential mortgages; (ii) any credit transaction that is expressly intended to finance the purchase of a motor vehicle when the credit is secured by the vehicle being purchased; (iii) any credit transaction that is expressly intended to finance the purchase of personal property when the credit is secured by the property being purchased; and (iv) any credit transaction that is an exempt transaction for the purposes of Regulation Z. These narrow exceptions were not clearly defined in the MLA and are subject to interpretation. In December 2017, the Department of Defense released guidance clarifying that whether a transaction qualifies for the purchase-money exceptions described above depends upon “what the credit beyond the purchase price of the motor vehicle or personal property is used to finance.” More specifically, “financing costs related to the object securing the credit will not disqualify the transaction from the exceptions, but financing credit-related costs will disqualify the transaction from the exceptions .”The Department of Defense failed to define the term“credit-related cost,”but provided two examples: Guaranteed Auto Protection insurance and credit insurance. Various trade associations immediately petitioned the Department of Defense to withdraw its guidance, in particular, due to its retroactive effect. Efforts remain ongoing at this time. Under the MLA, a “covered borrower” is a consumer, who, at the time the consumer becomes obligated on a consumer credit transaction or establishes an account for consumer credit, is a covered member or a dependent of a covered member. A “covered member” includes members of the armed forces on active duty or on active Guard and Reserve Duty, and their dependents. Dependents can include the spouse, in some cases a child, parent or parent-in-law, or an unmarried person in the legal custody of the military member.

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203 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE