Association of Military Banks of America

Military Lending Act – DMDC Direct Connection Information

Each week, the Defense Manpower Data Center (DMDC) holds a conference call to review its progress toward implementation of the Military Lending Act “Final Rule” requirement that, with only a few exceptions, any loan extended to any borrower must be preceded by a “covered borrower” check.  Essentially, this check is required to determine whether the borrower is an active duty military member or dependent and therefore “covered” by the MLA’s provisions.  See agenda and Q & A tracking document from the last meeting on 2 Feb 2016.

The “Final Rule” establishes two methods — “safe harbors” — by which such covered borrower checks may be accomplished.  

  1. The financial institution may submit queries, individually or in batch, to the DoD database.  
  2. A query may be submitted, for a fee, to one of the national credit reporting agencies to which DoD will provide covered borrower information.  

During the last few weeks of conference calls, DMDC elaborated on what the DoD database will comprise.  Essentially, there are two different ways financial institutions can submit an inquiry to DMDC about a borrower’s “covered borrower” status.  

  1. FIs may submit the query to the DMDC website:   Both individual and batch queries may be submitted to the website, but the website’s response time can be delayed up to 24 hours.  
  2. The FI may connect directly to the DMDC database.  FIs accorded “direct connect” status may also submit individual and batch queries.  Direct connect differs from web-connect in that the former can handle higher query volumes and provides a much quicker response time.

Given these differences between “direct connect” and “web-connect” to the DMDC database, most financial institutions would most likely prefer the “direct connect” option since it affords much faster response times.  DMDC indicated that any FI that may want to participate in the “direct connect” method must express its intent NO LATER THAN 15 FEBRUARY 2016. (Email address below) The e-mail needs only to indicate that the FI “intends” to participate in the direct connect program.

Currently 2,500 financial institutions have contacted DMDC with their intent for direct connection (as of 2 Feb 2106) and 600 have returned their questionnaires.  Unfortunately, DMDC pointed out that current capacity will limit the “direct connect” program to only a very few FIs.  If your bank is not selected, your only options on 1 October will be to submit your covered borrower queries to the DMDC website or to a CRA (for a fee).

AMBA recommends to its members that if you believe you will ever want to participate in the “direct connect” program, you should send an e-mail to the below address.  Even if your bank isn’t selected now, it may be in the future.  At the very least, your indication that you want to participate in “direct connect” will provide DMDC a better idea of the demand that exists so that it may apply additional resources to the task of building the capacity necessary to offer this service to all FIs.

The DoD address to request direct connection to the DMDC database is: 

DoD hasn’t said what is required in the e-mail, but a suggestion is: 

Subject line:

Request of [X lender] for direct connection to the DMDC database to determine military status

Body of email

[X lender] requests direction connection to the DMDC database in order to determine military status of consumer credit applicants for purposes of complying with the Military Lending Act.  Provide bank name, address, contact information. 

After submission, you should receive a response email from DMDC with a questionnaire for you to return, which must be completed by 19 FEBRUARY 2016.  If you have submitted your intent to opt-in and have not received the questionnaire – please resubmit!  

Meeting Agenda 2 Feb 2016
Q & A Tracking