On June 4, 2020 the Consumer Financial Protection Bureau (CFPB) published a 219 page proposal to amend Regulation Z to facilitate creditors’ transition away from using the London Interbank Offered Rate (LIBOR) as an index for variable-rate consumer credit products. The CFPB 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.
- Certain open-end provisions restricting index changes, requiring change-in-terms notices, and addressing how credit card rate reevaluation requirements apply.
The final rule would take effect on March 15, 2021, except for the revised change-in-term disclosure requirements for home equity lines of credit (which include reverse mortgages structured as open-end credit) (HELOCs) and credit cards that would apply as of October 1, 2021.
The comment period ends on August 4, 2020.
In addition to the proposed rule, the Bureau issued a set of Frequently Asked Questions to address other LIBOR transition topics and regulatory questions under the existing rule. The FAQs deal with issues related to general implementation considerations, and restate requirements for adjustable-rate mortgage servicing notices, adjustable-rate mortgage and HELOC origination disclosures, and requirements under the Alternative Mortgage Parity Act.