CFPB issues resources on LIBOR transition
When NCUA issued its 2020 supervisory priorities, one item of note was preparing for the end of London Inter-bank Offered Rate (LIBOR). We blogged about this and briefly covered the topic in an article for our Compliance Monitor(member only). Now there are some new resources and a proposed rule from the CFPB on this issue.
The United Kingdom’s Financial Conduct Authority has announced that it can no longer guarantee the reliability of LIBOR beyond 2021. Currently, LIBOR is used an indicative measure of the average interest rate at which major global banks could borrow from one another and often tied to consumer loan rates. Although not all credit unions rely on LIBOR as an index for variable rate loans, some do and Regulation Z has limitations for changing an underlying index on products. In the FAQ document, the bureau summarized various provisions that may come into play. For closed-end products, this includes:
- Adjustable-rate mortgage origination disclosures under section 1026.19(b)(2);
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