John Zasada, Compliance Consulting Director, Financial Institutions Group

The London Inter-Bank Offered Rate (LIBOR) is being discontinued sometime after 2021. A financial institution may have adjustable rate mortgage loans, HELOCs, credit cards and other types of consumer loans currently using the LIBOR as their index. Consequently, with the LIBOR being discontinued, impacted financial institutions will have to transition existing loans to another index to leverage for going forward.

In order to assist financial institutions in transitioning away from the LIBOR, the Consumer Financial Protection Bureau (CFPB) has issued a couple of resources.  First, the CFPB issued LIBOR Transition FAQs, to help financial institutions comply with Regulation Z requirements for both existing loans and new originations. Second, the CFPB released Fast Fact: Proposed LIBOR Transition Rule. The document explains the proposed rule being issued by the CFPB to amend certain requirements in Regulation Z related to the LIBOR transition. Comments on the proposed rule are due August 4, 2020.

For more information on how this recent modification will impact your institution, contact Doeren Mayhew’s regulatory compliance specialists.