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Many financial institutions make consumer loans, residential mortgage loans, and commercial loans with pricing based on the London Inter-Bank Offered Rate (LIBOR). In 2017 the United Kingdom’s Financial Conduct Authority (the regulator that oversees the LIBOR panel) announced that, by the end of 2021, it will discontinue the index.
All financial institutions that that offer or service variable-rate loans with a LIBOR-based rate must plan a transition to another index. New loans should be originated with a substitute index. Existing loans need to be refinanced or modified with a substitute index. Existing loans should have fallback language that outlines the process of selecting a replacement index when an existing index is discontinued.
The board and senior management need to be informed of the pending discontinuation of the index and the planned process for implementing a replacement index. Policies and procedures should be adopted and impacted staff members need to be trained.
This recording explains LIBOR, why it is expiring, how to select a replacement index and issues related to the transition process.
You’ll receive a detailed manual that serves as a handbook long after the recording is viewed.
Upon completion of this recording you’ll understand:
- What is LIBOR;
- Why LIBOR is expiring;
- How to select a replacement issue;
- Contract issues related to the transition;
- Compliance issues related to the transition;
- The process for managing the index transition including developing timelines, policies and procedures; and
- The Frequently Asked Questions regarding the LIBOR transition recently issued by the CFPB;
This recording is designed for members of the board of directors, managers of all departments that originate variable-rate loans using LIBOR as the index rate, bank counsel, compliance officers, loan officers, auditors and others with responsibilities for originating new LIBOR-based loans, or modifying existing loans that have LIBOR-based rates.