The CFPB issued the 2021 LIBOR Transition rule (Rule) amending the Truth in Lending Act (TILA) to address the sunset of LIBOR (which is expected to be discontinued after 2021). Per the Rule, the CFPB identified SOFR-based spread-adjusted indices to replace the 1-month, 3-month, or 6-month USD LIBOR index as an example of a comparable index for the LIBOR indices that they are intended to replace for closed-end credit. This allows lenders to replace LIBOR indices with the respective SOFR-based indices without triggering TILA’s refinancing requirements. The CFPB also updated the interest rate adjustment sample forms applicable to closed-end adjustable rate mortgages. In addition, the CFPB included revisions for changing an index on a HELOC (including an open-end reverse mortgage), and revised disclosure requirements for change-in-terms notices for HELOCs transitioning from LIBOR to a replacement index. The rule adoption is effective April 1, 2022 and has a mandatory compliance date of October 1, 2022.
Click to view the CFPB Executive Summary: https://www.tenaco.com/wp-content/uploads/2021/12/CFPB-Exceutive-Summary.pdf
