"These added protections will help end the vicious cycle of high interest rates, high debt, and allow servicemembers to get their finances under control," said Rep. Davis, Ranking Member of the Military Personnel Subcommittee. "This is not just a military family issue. High levels of debt and financial problems impact morale - potentially reducing our nation’s military strength and readiness. Our servicemembers should be focused on their core mission, not worrying about out of control debt."
Hearing of cases where servicemembers were falling victim to loan interest rates as high as 300 percent as well as abusive lending practices, Davis took steps to cap interest rates and stop predatory loan practices. As a member of the House Armed Services Committee, Davis worked with her colleagues to secure such provisions in the John Warner National Defense Authorization Act enacted in 2006.
The law also required straightforward information, verbally and in writing, from lenders to servicemembers about what to expect during the life of a loan, such as interest rates and payments.
“Many of our servicemembers join the military when they are young and have yet to learn sound financial skills such as how to shop for a loan. As a result, they have become the targets of predatory lenders,” said Davis.
In its announcement, the Obama Administration plans to build on the 2006 law to protect military families, including a 36 percent limit that covers all interest and fees associated with the loan and additional disclosures, such as informing the servicemember to seek other options than high-cost credit.
Military families also face unique challenges when it comes to home mortgages. In the 113th Congress, Davis teamed with Rep. Duncan Hunter (R-CA) in sponsoring the Fairness for Military Homeowners Act. The bill allows military homeowners to refinance mortgages on a principle residence while serving at a duty station that prevents them from occupying the home. Currently, active duty military members cannot refinance if the home is not “owner-occupied."
Davis also joined with her colleagues in introducing the Military Family Home Protection Act. The bill, which passed the House, extends the Servicemembers Civil Relief to all servicemembers and their families.