Final Rule on Transition to LIBOR Coming in January, Says CFPB

WASHINGTON–The CFPB said it expects to issue a final rule in January 2022 to assist in covered institutions’ transition away from use of the London Interbank Offered Rate (LIBOR) as a reference rate in consumer credit contracts.

The CFPB included a statement related to LIBOR in a report to Congress that was posted on the agency’s website.

The Bureau issued its proposed LIBOR transition rule in June of 2020.

In its new report, the CFPB said that for creditors for home equity lines of credit (HELOCs) (including reverse mortgages) and card issuers for credit card accounts, the rule would facilitate the transition of existing accounts to an alternative index “well in advance” of LIBOR’s anticipated expiration at the end of 2023.

It would also address change-in-terms notice provisions for HELOCs and credit card accounts and how they apply to the transition away from LIBOR, to ensure “consumers are informed of the replacement index and any adjusted margin,” the Bureau said.

Card Compliance

Moreover, the Bureau said to facilitate compliance by card issuers, the rule will address how the rate re-evaluation provisions applicable to credit card accounts apply following the transition from LIBOR to a replacement index.

The CFPB also said it is continuing its work with other federal financial regulators to develop a proposed rule addressing quality control standards for automated valuation models (AVMs) for real estate appraisals.