On December 8, 2021 the Consumer Financial Protection Bureau (CFPB) amended Regulation Z, which implements the Truth in Lending Act (TILA), generally to address the anticipated sunset of LIBOR, which is expected to be discontinued for most U.S. Dollar (USD) tenors in June 2023. Some creditors currently use USD LIBOR as an index for calculating rates for open-end and closed-end products. The CFPB is amending:

  • The open-end and closed-end provisions to provide examples of replacement indices for LIBOR indices that meet certain Regulation Z standards.
  • Regulation Z to permit creditors for home equity lines of credit (HELOCs) and card issuers for credit card accounts to transition existing accounts that use a LIBOR index to a replacement index on or after April 1, 2022, if certain conditions are met.
  • Change-in-terms notice provisions for HELOCs and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index.
  • Regulation Z to address how the rate reevaluation provisions applicable to credit card accounts apply to the transition from using a LIBOR index to a replacement index.

The final rule is effective on April 1, 2022, except the amendment to appendix H to part 1026 in amendatory instruction 8, which is effective on October 1, 2023. The mandatory compliance date for revisions to the change-in-terms notice requirements in § 1026.9(c)(1)(ii) and (c)(2)(v)(A) is October 1, 2022. The mandatory compliance date for all other provisions of the final rule is April 1, 2022.