Yesterday, the Consumer Financial Protection Bureau (CFPB) issued three items related to the London Inter-bank Offered Rate (LIBOR) Transition for the sunset of LIBOR, which is expected to be discontinued after 2021.
The CFPB issued a proposed rule to amend Regulation Z generally to address the sunset of LIBOR, and to facilitate creditors’ transition away from using LIBOR as an index for variable-rate consumer products. The bureau is proposing changes to certain open-end and closed-end provisions to provide examples of replacement indices for LIBOR indices that meet certain Regulation Z standards. The bureau is also proposing changes to certain open-end provisions restricting index changes, requiring change-in-terms notices, and addressing how credit card rate reevaluation requirements apply. To assist in understanding the proposed revisions, the Bureau is releasing a Fast Facts high-level summary and an unofficial redline. Comments on the proposed rule are due Aug. 4.
The second topic released by the CFPB included additional companion FAQ guidance to address other LIBOR transition topics and regulatory questions under the existing rule. This guidance deals with issues related to general implementation considerations, and requirements for adjustable-rate mortgage servicing notices, adjustable-rate mortgage and HELOC origination disclosures, and requirements under AMTPA.
The third issue addressed by the bureau includes revised the CHARM Booklet to provide updates based on consumer testing and remove LIBOR-based rate examples.
The proposed rule and guidance materials are here.
The CHARM Booklet and its Federal Register notice are here.