Answer: The sunset of the LIBOR has been delayed from December 31, 2021 to June 30, 2023. In spite of the delay, the OCC, The Federal Reserve Board, and the FDIC issued a joint statement that encouraged institutions to cease entering into new contracts that use the USD LIBOR as a reference rate as soon as practicable, but no later than December 31, 2021.
On December 7, 2021, the CFPB announced and on December 8 published in the Federal Register a Final Rule amending Regulation Z, to address the anticipated sunset of the LIBOR. To summarize the amendment:
- The open-end and closed-end provisions have been amended to provide examples of replacement indices for the LIBOR that meet certain Regulation Z standards.
- For certain Home Equity Lines of Credit and credit card accounts, creditors may transition accounts from the LIBOR index to a replacement index on or after April 1, 2022 (certain conditions apply).
- The final rule addresses change-in-terms notice provisions for HELOCs and credit card accounts. Rate re-evaluation provisions applicable to credit card accounts transitioning from using a LIBOR index are also addressed.
- Key Dates:
- April 1, 2022 – The final rule is generally effective for compliance.
- October 1, 2022 – Mandatory compliance date for the two open-end change-in-terms notice requirements.
- October 1, 2023 – Mandatory compliance date of changes to ARM payment change sample forms in Appendix H.
Additional information from the CFPB are located at LIBOR Index Transition | Consumer Financial Protection Bureau (consumerfinance.gov)