Military Lending Act Limitations on Terms of Consumer Credit Extended to Service Members and Dependents, 11842-11844 [2020-04041]

Download as PDF 11842 Federal Register / Vol. 85, No. 40 / Friday, February 28, 2020 / Rules and Regulations 1. On page 66997, in the third column, the last line from the bottom of the last full paragraph, the language ‘‘years beginning Monday’’ is corrected to read ‘‘years beginning on or after Monday’’. 2. On page 67007, in the third column, the second line of the second full paragraph, the language ‘‘taxable years beginning Monday’’ is corrected to read ‘‘taxable years beginning on or after Monday’’. Martin V. Franks, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. 2020–03277 Filed 2–27–20; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR PART 85 [Docket ID: DOD–2019–OS–0111] RIN 0790–AK25 Promotion and Disease Prevention’’ (available at: https://www.esd.whs.mil/ Portals/54/Documents/DD/issuances/ dodi/101010p.PDF?ver=2018-01-12113645-193). It is a general practice and goal of DoD to provide healthy environments for Service members, medical beneficiaries, civilian DoD employees, and visitors on military installations. The rule also sets forth an outdated smoking policy on DoD property. However, since codification of this part, GSA issued a rule at title 41 CFR part 102–74, ‘‘Facility Management’’ (70 FR 67798, Nov. 8, 2005), which regulates smoking policies for the executive branch of the government and superseded this part. Part 85 should now be removed as its content is either internal or obsolete. This rule is not significant under Executive Order (E.O.) 12866, ‘‘Regulatory Planning and Review,’’ therefore, the requirements of E.O. 13771, ‘‘Reducing Regulation and Controlling Regulatory Costs’’ do not apply. List of Subjects in 32 CFR Part 85 Health Promotion Government employees, Health. Department of Defense. ACTION: Final rule. AGENCY: This final rule removes an unnecessary and outdated Department of Defense (DoD) rule relating to a health promotion program. The majority of the content of this part includes internal DoD policy, which does not require rulemaking. Additionally, since this rule was codified, the General Services Administration (GSA) issued a rule that superseded the public-facing content of this part. Therefore, this part can be removed from the CFR. DATES: This rule is effective on February 28, 2020. FOR FURTHER INFORMATION CONTACT: Donald Shell, MD, MA, Director, Disease Prevention, Disease Management and Population Health, OASD (HA) Health Services Policy and Oversight, Email: Donald.shell4civ@ mail.mil, Phone: (703) 681–1705. SUPPLEMENTARY INFORMATION: This final rule removes an unnecessary and outdated Department of Defense (DoD) regulation on a health promotion program, which was last updated August 30, 1988 (53 FR 33123). The DoD program continues to operate under the existing internal policies, the General Services Administration (GSA) has since issued a rule that superseded the public-facing content of this part. Internal policies are available in DoD Instruction (DoDI) 1010.10, ‘‘Health SUMMARY: jbell on DSKJLSW7X2PROD with RULES PART 85—[REMOVED] VerDate Sep<11>2014 15:45 Feb 27, 2020 Jkt 250001 Accordingly, by the authority of 5 U.S.C. 301, 32 CFR part 85 is removed. ■ Dated: February 24, 2020. Morgan E. Park, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. 2020–04045 Filed 2–27–20; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 232 [Docket ID: DOD–2013–OS–0133] RIN 0790–ZA14 Military Lending Act Limitations on Terms of Consumer Credit Extended to Service Members and Dependents Under Secretary of Defense for Personnel and Readiness, Department of Defense. ACTION: Interpretive rule. AGENCY: The Department of Defense (Department) is amending its interpretive rule for the Military Lending Act (the MLA). The MLA, as implemented by the Department, limits the military annual percentage rate (MAPR) that a creditor may charge to a SUMMARY: PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 maximum of 36 percent, requires certain disclosures, and provides other substantive consumer protections on ‘‘consumer credit’’ extended to Service members and their families. On July 22, 2015, the Department amended its regulation primarily for the purpose of extending the protections of the MLA to a broader range of closed-end and openend credit products (the July 2015 Final Rule). On August 26, 2016, the Department issued the first set of interpretations of that regulation in the form of questions and answers. On December 14, 2017, the Department issued a second set of interpretations of that regulation in the form of amended questions and answers. The Department is now withdrawing the amended question and answer number 2 (Q&A #2), published in the December 14, 2017 Interpretive Rule, which discussed when credit is extended for the purpose of purchasing a motor vehicle or personal property and the creditor simultaneously extends credit in an amount greater than the purchase price of the motor vehicle or personal property. In withdrawing this amended question and answer, the Department is reverting back to the original Q&A #2 published in the August 26, 2016 Interpretive Rule. This will allow the Department to conduct additional analysis on this matter. The Department is also adding a new question and answer to address questions about the use of Individual Taxpayer Identification Numbers to identify covered borrowers in the Department’s database. DATES: Effective Date: This interpretive rule is effective February 28, 2020. FOR FURTHER INFORMATION CONTACT: Andrew Cohen, 703–692–5286. SUPPLEMENTARY INFORMATION: I. Background and Purpose In July 2015, the Department of Defense (Department) issued a final rule 1 (July 2015 Final Rule) amending its regulation implementing the Military Lending Act (MLA) 2 primarily for the purpose of extending the protections of the MLA to a broader range of closedend and open-end credit products, rather than the limited credit products that had been defined as ‘‘consumer credit.’’ 3 Among other amendments, the July 2015 Final Rule modified provisions relating to the optional mechanism a creditor may use when assessing whether a consumer is a ‘‘covered borrower,’’ modified the 1 80 FR 43560 (July 22, 2015). U.S.C. 987. 3 32 CFR 232.3(b) as implemented in a final rule published at 72 FR 50580 (Aug. 31, 2007). 2 10 E:\FR\FM\28FER1.SGM 28FER1 Federal Register / Vol. 85, No. 40 / Friday, February 28, 2020 / Rules and Regulations disclosures that a creditor must provide to a covered borrower, and implemented the enforcement provisions of the MLA. Subsequently, the Department received requests to clarify its interpretation of points raised in the July 2015 Final Rule. In an effort to assist industry in complying with the July 2015 Final Rule, the Department elected to answer these requests through an interpretive rule in the form of questions and answers. The Department issued the first set of such interpretations on August 26, 2016 (August 26, 2016 Interpretive Rule).4 The Department issued a second set of such interpretations on December 14, 2017 (December 14, 2017 Interpretive Rule).5 The present interpretive rule amends and adds to those questions and answers. Subsequent to the publication of the December 14, 2017 Interpretive Rule, the Department received several formal requests for the Department to withdraw the amended Q&A #2 from the December 14, 2017 Interpretive Rule.6 One point raised in the requests for withdrawal was a concern that creditors’ would be unable to technically comply with the MLA if the purchase included products not expressly related to the purchase of the vehicle as described in the amended Q&A #2 from the December 14, 2017 Interpretive Rule, because § 232.8(f) of the regulation would prohibit creditors from taking a security interest in the vehicle in those circumstances and creditors may not extend credit if they could not take a security interest in the vehicle being purchased. The Department finds merit in this concern and agrees additional analysis is warranted. In withdrawing the amended Q&A #2, published on December 14, 2017, because of unforeseen technical issues between the amended Q&A #2 and 32 CFR 232.8(f), the Department, absent of additional analysis, takes no position on any of the arguments or assertions advanced as a basis for withdrawing the amended Q&A #2 from the December 14, 2017 Interpretive Rule. In addition, the Department is adding Q&A #21 to its interpretations in response to inquiries regarding the use 4 81 FR 58840 (August 26, 2016). FR 58739 (December 14, 2017). 6 The Department received formal requests from the National Automobile Dealers Association/ American Financial Services Association (January 18, 2018), American Bankers Association (January 19, 2018), Consumer Bankers Association (January 30, 2018), National Association of Federally-Insured Credit Unions/Defense Credit Union Council (January 31, 2018), National Independent Automobile Dealers Association (February 2, 2018), and the Guaranteed Asset Protection Alliance (February 12, 2018). jbell on DSKJLSW7X2PROD with RULES 5 82 VerDate Sep<11>2014 15:45 Feb 27, 2020 Jkt 250001 of an Individual Taxpayer Identification Number when an individual does not possess a Social Security Number to conclusively determine if an individual is covered borrower in the Department’s MLA database for the purpose of safe harbor. This amended interpretive rule does not change the regulation implementing the MLA, but merely states the Department’s preexisting interpretations of an existing regulation. Therefore, under 5 U.S.C. 553(b)(A), this rulemaking is exempt from the notice and comment requirements of the Administrative Procedure Act, and, pursuant to 5 U.S.C. 553(d)(2), this rule is effective immediately upon publication in the Federal Register. II. Interpretations of the Department The following questions and answers represent official interpretations of the Department on issues related to 32 CFR part 232. For ease of reference, the following terms are used throughout this document: MLA refers to the Military Lending Act (codified at 10 U.S.C. 987); MAPR refers to the military annual percentage rate, as defined in 32 CFR 232.3(p). In order to provide further guidance to industry and the public on the Department’s view of its existing regulation, the Department is amending its guidance on one question and answer, and by adding one new question and answer. The numbering of this document follows the numbering of the questions and answers provided in the August 26, 2016 and December 14, 2017 Interpretive Rules. The text of the amended and new questions and answers follows: 2. Does credit that a creditor extends for the purpose of purchasing personal property, which secures the credit, fall within the exception to ‘‘consumer credit’’ under 32 CFR 232.3(f)(2)(iii) where the creditor simultaneously extends credit in an amount greater than the purchase price? Answer: No. Section 232.3(f)(1) defines ‘‘consumer credit’’ as credit extended to a covered borrower primarily for personal, family, or household purposes that is subject to a finance charge or payable by written agreement in more than four installments. Section 232.3(f)(2) provides a list of exceptions to subparagraph (f)(1), including an exception for any credit transaction that is expressly intended to finance the purchase of personal property when the credit is secured by the property being purchased. A hybrid purchase money and cash advance loan is not expressly PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 11843 intended to finance the purchase of personal property, because the loan provides additional financing that is unrelated to the purchase. To qualify for the purchase money exception from the definition of consumer credit, a loan must finance only the acquisition of personal property. Any credit transaction that provides purchase money secured financing of personal property along with additional ‘‘cashout’’ financing is not eligible for the exception under § 232.3(f)(2)(iii) and must comply with the provisions set forth in the MLA regulation. 21. Does a creditor qualify for the safe harbor set forth in 32 CFR 232.5(b)(2)(i)(A) if the creditor uses an Individual Taxpayer Identification Number (ITIN) to search the Department’s database to conclusively determine whether credit is offered or extended to a covered borrower, and thus may be subject to 10 U.S.C. 987 and the requirements of 32 CFR 232.5(b)? Answer: Yes. The Department recognizes that while all members of the Armed Forces will have a Social Security Number (SSN), a limited population of dependents, who meet the definition of a covered borrower in 32 CFR 232.3(g), may not qualify for a SSN due to their citizenship status. An ITIN is a tax processing number issued by the Federal government in lieu of a SSN. ITINs are only available for certain nonresident and resident aliens, their spouses, and dependents who cannot obtain a SSN and can be used in searches of the Department’s database.7 Since all covered borrowers will have a SSN or ITIN, the Defense Manpower Data Center (DMDC) MLA database contains ITINs for covered borrowers who are not eligible to obtain an SSN. Therefore, for purposes of 32 CFR 232.5(b)(2)(i)(A), an ITIN is a ‘‘Social Security number.’’ III. Regulatory Impact Executive Order 12866, ‘‘Regulatory Planning and Review’’ and Executive Order 13563, ‘‘Improving Regulation and Regulatory Review’’ Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 7 Internal Revenue Service, ‘‘Taxpayer Identification Numbers (TIN)’’ (last updated May 2, 2018). E:\FR\FM\28FER1.SGM 28FER1 11844 Federal Register / Vol. 85, No. 40 / Friday, February 28, 2020 / Rules and Regulations emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. It has been determined that this rule is a significant regulatory action under Executive Order 12866, and it has been reviewed by the Office of Management and Budget. It is not a major rule under 5 U.S.C. 804. Executive Order 13771, ‘‘Reducing Regulation and Controlling Regulatory Costs’’ This rule is exempt from the requirements of Executive Order 13771 because it results in no more than de minimis costs. I. Table of Abbreviations Public Law 96–511, ‘‘Paperwork Reduction Act’’ (44 U.S.C. Chapter 35) This rule does not impose reporting and record keeping requirements under the Paperwork Reduction Act of 1995. CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code Dated: February 24, 2020. Aaron T. Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense. II. Background Information and Regulatory History The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are ‘‘impracticable, unnecessary, or contrary to the public interest.’’ Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard did not receive the necessary information to publish notice for this event until January 28, 2020, which is 32 days before the event is scheduled to occur. Any delay in the effective date of this rule would be contrary to the public interest because immediate action is needed to minimize potential danger to the race participants, participating vessels, spectators and the general public. It is impracticable to publish an NPRM because we must establish this special local regulation by Febuary 28, 2020. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register for the same reasons listed above. [FR Doc. 2020–04041 Filed 2–27–20; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [Docket Number USCG–2020–0108] RIN 1625–AA08 Special Local Regulation, Salinas Power Boat Race; Bahia De Rincon, PR Coast Guard, DHS. Temporary final rule. AGENCY: ACTION: The Coast Guard is establishing a special local regulation on the waters of Bahia De Rincon, Puerto Rico during the Salinas Power Boat Race. Approximatly 50 high speed boats and personal water crafts are expected to participate in the race. The special local regulation is necessary to ensure the safety to race participants, participant vessels, and the general pubic during the event. The special local regulation establishes a race area, where all persons and vessels, except those participating in the race, will be prohibited from entering, transiting through, anchoring in, or remaining within unless authorized by the Captain of the Port San Juan or a designated representatives. DATES: This rule is effective daily from 6 a.m. until 6 p.m. on Febuary 29, 2020 and March 1, 2020. SUMMARY: jbell on DSKJLSW7X2PROD with RULES To view documents mentioned in this preamble as being available in the docket, go to https:// www.regulations.gov, type USCG–2020– 0108 in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this rule. FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, call or email LCDR Pedro L. Mendoza, Waterways Management division, U.S. Coast Guard; telephone 787–691–7058, email Pedro.L.Mendoza@uscg.mil. SUPPLEMENTARY INFORMATION: ADDRESSES: VerDate Sep<11>2014 15:45 Feb 27, 2020 Jkt 250001 III. Legal Authority and Need for Rule The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port San Juan (COTP) has PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 determined that potential hazards associated with the event will be a safety concern for anyone in the area. This rule is needed to ensure safety of life on navigable waters of the United States during the event. IV. Discussion of the Rule This rule extablishes a special local regulation daily from 6 a.m. until 6 p.m. on Febuary 29, 2020 and March 1, 2020. The municipality of Salinas and the Caribbean Power Boat Association is sponsoring the Salinas Power Boat Championship—a high speed power boat and personal water craft (PWC) race in the waters near Salinas, Puerto Rico. Approximately 50 high speed boats and PWC’s are expected to participate in the races. The special local regulation encompasses certain waters of the Municipality of Salinas, Puerto Rico in Bahia de Rincon, and will consist of one large area in which there will be: One race area for high-speed power boats, once race area for PWC’s and a buffer area. All persons and vessels, except those persons and vessels participating in the race or enforcing the special local regulation, are prohibited from entering, transiting through, anchoring in, or remaining within the area. Persons and vessels may request authorization to enter, transit through, anchor in, or remain within the race area by contacting the Captain of the Port San Juan by telephone at 787–289–2041, or a designated representative via VHF radio on channel 16. If authorization is granted by the Captain of the Port San Juan or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the Captain of the Port San Juan or a designated representative. The Coast Guard will provide notice of the regulated area by Broadcast Notice to Mariners, and on-scene designated representatives. V. Regulatory Analyses We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors. A. Regulatory Planning and Review Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a E:\FR\FM\28FER1.SGM 28FER1

Agencies

[Federal Register Volume 85, Number 40 (Friday, February 28, 2020)]
[Rules and Regulations]
[Pages 11842-11844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04041]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 232

[Docket ID: DOD-2013-OS-0133]
RIN 0790-ZA14


Military Lending Act Limitations on Terms of Consumer Credit 
Extended to Service Members and Dependents

AGENCY: Under Secretary of Defense for Personnel and Readiness, 
Department of Defense.

ACTION: Interpretive rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Defense (Department) is amending its 
interpretive rule for the Military Lending Act (the MLA). The MLA, as 
implemented by the Department, limits the military annual percentage 
rate (MAPR) that a creditor may charge to a maximum of 36 percent, 
requires certain disclosures, and provides other substantive consumer 
protections on ``consumer credit'' extended to Service members and 
their families. On July 22, 2015, the Department amended its regulation 
primarily for the purpose of extending the protections of the MLA to a 
broader range of closed-end and open-end credit products (the July 2015 
Final Rule). On August 26, 2016, the Department issued the first set of 
interpretations of that regulation in the form of questions and 
answers. On December 14, 2017, the Department issued a second set of 
interpretations of that regulation in the form of amended questions and 
answers. The Department is now withdrawing the amended question and 
answer number 2 (Q&A #2), published in the December 14, 2017 
Interpretive Rule, which discussed when credit is extended for the 
purpose of purchasing a motor vehicle or personal property and the 
creditor simultaneously extends credit in an amount greater than the 
purchase price of the motor vehicle or personal property. In 
withdrawing this amended question and answer, the Department is 
reverting back to the original Q&A #2 published in the August 26, 2016 
Interpretive Rule. This will allow the Department to conduct additional 
analysis on this matter. The Department is also adding a new question 
and answer to address questions about the use of Individual Taxpayer 
Identification Numbers to identify covered borrowers in the 
Department's database.

DATES: Effective Date: This interpretive rule is effective February 28, 
2020.

FOR FURTHER INFORMATION CONTACT: Andrew Cohen, 703-692-5286.

SUPPLEMENTARY INFORMATION: 

I. Background and Purpose

    In July 2015, the Department of Defense (Department) issued a final 
rule \1\ (July 2015 Final Rule) amending its regulation implementing 
the Military Lending Act (MLA) \2\ primarily for the purpose of 
extending the protections of the MLA to a broader range of closed-end 
and open-end credit products, rather than the limited credit products 
that had been defined as ``consumer credit.'' \3\ Among other 
amendments, the July 2015 Final Rule modified provisions relating to 
the optional mechanism a creditor may use when assessing whether a 
consumer is a ``covered borrower,'' modified the

[[Page 11843]]

disclosures that a creditor must provide to a covered borrower, and 
implemented the enforcement provisions of the MLA.
---------------------------------------------------------------------------

    \1\ 80 FR 43560 (July 22, 2015).
    \2\ 10 U.S.C. 987.
    \3\ 32 CFR 232.3(b) as implemented in a final rule published at 
72 FR 50580 (Aug. 31, 2007).
---------------------------------------------------------------------------

    Subsequently, the Department received requests to clarify its 
interpretation of points raised in the July 2015 Final Rule. In an 
effort to assist industry in complying with the July 2015 Final Rule, 
the Department elected to answer these requests through an interpretive 
rule in the form of questions and answers. The Department issued the 
first set of such interpretations on August 26, 2016 (August 26, 2016 
Interpretive Rule).\4\ The Department issued a second set of such 
interpretations on December 14, 2017 (December 14, 2017 Interpretive 
Rule).\5\
---------------------------------------------------------------------------

    \4\ 81 FR 58840 (August 26, 2016).
    \5\ 82 FR 58739 (December 14, 2017).
---------------------------------------------------------------------------

    The present interpretive rule amends and adds to those questions 
and answers. Subsequent to the publication of the December 14, 2017 
Interpretive Rule, the Department received several formal requests for 
the Department to withdraw the amended Q&A #2 from the December 14, 
2017 Interpretive Rule.\6\ One point raised in the requests for 
withdrawal was a concern that creditors' would be unable to technically 
comply with the MLA if the purchase included products not expressly 
related to the purchase of the vehicle as described in the amended Q&A 
#2 from the December 14, 2017 Interpretive Rule, because Sec.  232.8(f) 
of the regulation would prohibit creditors from taking a security 
interest in the vehicle in those circumstances and creditors may not 
extend credit if they could not take a security interest in the vehicle 
being purchased. The Department finds merit in this concern and agrees 
additional analysis is warranted. In withdrawing the amended Q&A #2, 
published on December 14, 2017, because of unforeseen technical issues 
between the amended Q&A #2 and 32 CFR 232.8(f), the Department, absent 
of additional analysis, takes no position on any of the arguments or 
assertions advanced as a basis for withdrawing the amended Q&A #2 from 
the December 14, 2017 Interpretive Rule. In addition, the Department is 
adding Q&A #21 to its interpretations in response to inquiries 
regarding the use of an Individual Taxpayer Identification Number when 
an individual does not possess a Social Security Number to conclusively 
determine if an individual is covered borrower in the Department's MLA 
database for the purpose of safe harbor.
---------------------------------------------------------------------------

    \6\ The Department received formal requests from the National 
Automobile Dealers Association/American Financial Services 
Association (January 18, 2018), American Bankers Association 
(January 19, 2018), Consumer Bankers Association (January 30, 2018), 
National Association of Federally-Insured Credit Unions/Defense 
Credit Union Council (January 31, 2018), National Independent 
Automobile Dealers Association (February 2, 2018), and the 
Guaranteed Asset Protection Alliance (February 12, 2018).
---------------------------------------------------------------------------

    This amended interpretive rule does not change the regulation 
implementing the MLA, but merely states the Department's preexisting 
interpretations of an existing regulation. Therefore, under 5 U.S.C. 
553(b)(A), this rulemaking is exempt from the notice and comment 
requirements of the Administrative Procedure Act, and, pursuant to 5 
U.S.C. 553(d)(2), this rule is effective immediately upon publication 
in the Federal Register.

II. Interpretations of the Department

    The following questions and answers represent official 
interpretations of the Department on issues related to 32 CFR part 232. 
For ease of reference, the following terms are used throughout this 
document: MLA refers to the Military Lending Act (codified at 10 U.S.C. 
987); MAPR refers to the military annual percentage rate, as defined in 
32 CFR 232.3(p).
    In order to provide further guidance to industry and the public on 
the Department's view of its existing regulation, the Department is 
amending its guidance on one question and answer, and by adding one new 
question and answer.
    The numbering of this document follows the numbering of the 
questions and answers provided in the August 26, 2016 and December 14, 
2017 Interpretive Rules. The text of the amended and new questions and 
answers follows:
    2. Does credit that a creditor extends for the purpose of 
purchasing personal property, which secures the credit, fall within the 
exception to ``consumer credit'' under 32 CFR 232.3(f)(2)(iii) where 
the creditor simultaneously extends credit in an amount greater than 
the purchase price?
    Answer: No. Section 232.3(f)(1) defines ``consumer credit'' as 
credit extended to a covered borrower primarily for personal, family, 
or household purposes that is subject to a finance charge or payable by 
written agreement in more than four installments. Section 232.3(f)(2) 
provides a list of exceptions to subparagraph (f)(1), including an 
exception for any credit transaction that is expressly intended to 
finance the purchase of personal property when the credit is secured by 
the property being purchased. A hybrid purchase money and cash advance 
loan is not expressly intended to finance the purchase of personal 
property, because the loan provides additional financing that is 
unrelated to the purchase. To qualify for the purchase money exception 
from the definition of consumer credit, a loan must finance only the 
acquisition of personal property. Any credit transaction that provides 
purchase money secured financing of personal property along with 
additional ``cash-out'' financing is not eligible for the exception 
under Sec.  232.3(f)(2)(iii) and must comply with the provisions set 
forth in the MLA regulation.
    21. Does a creditor qualify for the safe harbor set forth in 32 CFR 
232.5(b)(2)(i)(A) if the creditor uses an Individual Taxpayer 
Identification Number (ITIN) to search the Department's database to 
conclusively determine whether credit is offered or extended to a 
covered borrower, and thus may be subject to 10 U.S.C. 987 and the 
requirements of 32 CFR 232.5(b)?
    Answer: Yes. The Department recognizes that while all members of 
the Armed Forces will have a Social Security Number (SSN), a limited 
population of dependents, who meet the definition of a covered borrower 
in 32 CFR 232.3(g), may not qualify for a SSN due to their citizenship 
status. An ITIN is a tax processing number issued by the Federal 
government in lieu of a SSN. ITINs are only available for certain 
nonresident and resident aliens, their spouses, and dependents who 
cannot obtain a SSN and can be used in searches of the Department's 
database.\7\ Since all covered borrowers will have a SSN or ITIN, the 
Defense Manpower Data Center (DMDC) MLA database contains ITINs for 
covered borrowers who are not eligible to obtain an SSN. Therefore, for 
purposes of 32 CFR 232.5(b)(2)(i)(A), an ITIN is a ``Social Security 
number.''
---------------------------------------------------------------------------

    \7\ Internal Revenue Service, ``Taxpayer Identification Numbers 
(TIN)'' (last updated May 2, 2018).
---------------------------------------------------------------------------

III. Regulatory Impact

Executive Order 12866, ``Regulatory Planning and Review'' and Executive 
Order 13563, ``Improving Regulation and Regulatory Review''

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563

[[Page 11844]]

emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. It has 
been determined that this rule is a significant regulatory action under 
Executive Order 12866, and it has been reviewed by the Office of 
Management and Budget. It is not a major rule under 5 U.S.C. 804.

Executive Order 13771, ``Reducing Regulation and Controlling Regulatory 
Costs''

    This rule is exempt from the requirements of Executive Order 13771 
because it results in no more than de minimis costs.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    This rule does not impose reporting and record keeping requirements 
under the Paperwork Reduction Act of 1995.

    Dated: February 24, 2020.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2020-04041 Filed 2-27-20; 8:45 am]
 BILLING CODE 5001-06-P
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