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    CFPB Amends Regulation Z to Facilitate LIBOR Transition

    December 10, 2021

    The Consumer Financial Protection Bureau (CFPB) is amending Regulation Z, which implements the Truth in Lending Act (TILA), to address the anticipated sunset of LIBOR, which is expected to be discontinued for most USD tenors in June 2023. Certain creditors still use USD LIBOR as an index for calculating rates for open-end and closed-end products. This final rule will become effective on April 01, 2022, with certain exceptions. The mandatory compliance date for revisions to the change-in-terms notice provisions is October 01, 2022. The mandatory compliance date for all other provisions of the final rule is April 01, 2022.

    In the final rule, CFPB is amending:

    • open-end and closed-end provisions to provide examples of replacement indices for LIBOR indices that meet certain Regulation Z standards.
    • Regulation Z to permit creditors for home equity lines of credit and card issuers for credit card accounts to transition existing accounts that use a LIBOR index to a replacement index on or after April 01, 2022, if certain conditions are met. This final rule also addresses change-in-terms notice provisions for home equity lines of credit and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index.
    • Regulation Z to address how the rate reevaluation provisions applicable to credit card accounts apply to the transition from using a LIBOR index to a replacement index. CFPB is reserving judgment about whether to include references to a one-year USD LIBOR index and its replacement index in various comments and will consider whether to finalize comments proposed on that issue in a supplemental final rule once it obtains additional information.

     

    Related Link: Federal Register Notice

    Effective Date: April 01, 2022

    Keywords: Americas, US, Banking, Securities, Regulation Z, LIBOR, LIBOR Transition, Benchmark Reforms, Credit Risk, Lending, Consumer Lending, CFPB

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