Legal Q&A: CFPB Proposes Reg Z Changes Ahead of LIBOR Sunset

Amendments to facilitate transition to new index

Q: Has CFPB Proposed Changes to Facilitate the LIBOR Transition?

A: Yes. CFPB has Proposed Changes to Regulation Z that Generally Become Effective on March 15, 2021.

Sometime after 2021, LIBOR is expected to end. Financial institutions are developing their approach to the LIBOR transition, including how to transition existing accounts from LIBOR to another index and selecting new indices for new originations going forward. This includes documentary and contractual considerations, and for certain consumer financial products and services, statutes and regulations may have requirements that are triggered or impacted by the LIBOR transition and any accompanying index change.

The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule (proposal) to amend Regulation Z to facilitate the LIBOR transition for open-end and closed-end credit. A high-level summary of some select provisions are featured below.

For HELOCs, open-end reverse mortgages, and credit cards the proposal would:

  • Require the change-in-terms notice to include the replacement index and any adjusted margin, regardless of whether the margin is being reduced or increased. 
  • Permit creditors to transition from LIBOR on or after March 15, 2021 (in addition to the option of using the current "no longer available" standard). 
  • Identify December 31, 2020, as the date used for selecting the index values for the LIBOR index and the replacement index to compare the rates, rather than using the index values on the date the original index becomes unavailable.

For closed-end mortgages, student loans, and other closed-end consumer loans the proposal would:

  • Provide an example of an index that is a "comparable index" to LIBOR for closed-end products in order to assist in determining whether a transaction must be completed as a refinance. 

In addition to the proposal, CFPB has published a fact sheet and FAQ to help understand the regulatory effect of the LIBOR transition.

CFPB's proposed rule


CFPB's Fast Facts

Birrenkott is WBA assistant director – legal. For legal questions, please email

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution's attorney for special legal advice or assistance.

By, Amber Seitz