The federal agency charged with consumer financial protection “expects” to issue a final rule in January to facilitate covered institutions’ transition away from use of the London Interbank Offered Rate (LIBOR) as a reference rate in consumer credit contracts, according to a report to Congress released on the agency’s website Friday.
The targeted timetable was noted in the Consumer Financial Protection Bureau’s (CFPB) semiannual report to Congress (which also gives details on the agency’s actions from Oct. 1, 2020, through March 31, 2021).
The bureau issued its proposed LIBOR transition rule in June of last year.
In Friday’s report, the bureau noted 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 that consumers are informed of the replacement index and any adjusted margin, the bureau said.
It also said that to facilitate compliance by card issuers, the rule would address how the rate re-evaluation provisions applicable to credit card accounts apply following the transition from LIBOR to a replacement index.
Also in Friday’s report, the bureau said it continues to work with other federal financial regulators to develop a proposed rule addressing quality control standards for automated valuation models (AVMs) for real estate appraisals. It offered no target date.