NRMLA applauds the efforts of the Consumer Financial Protection Bureau to proactively address the sunset of LIBOR and the impact it will have on creditors and consumers, but it is essential that the Bureau coordinate with HUD and Ginnie Mae to ensure that the replacement index selected by HUD complies with any changes to Reg Z being considered.
That’s according to comments submitted by NRMLA this week, in coordination with the Risk and Compliance Committee, which has closely monitored the LIBOR transition and its potential impact on reverse mortgage lenders and servicers.
NRMLA’s comments were submitted in response to a proposed rule to amend Regulation Z that the CFPB published on June 5.
In its comments, NRMLA says, “If HUD decides to switch the HECM index to SOFR (Secured Overnight Financing Rate) as of January 1, 2021, then lenders would have to comply with this in order to make FHA-insured HECM loans. However, as the proposed rule is drafted, it is not clear to us how such a required change prior to March 15, 2021 would work. Close coordination with HUD and Ginnie Mae in finalizing the proposed rule will, in our view, reduce the risk of such confusion.”
NRMLA urges the CFPB to also coordinate with the Alternative Rates Reference Committee (ARRC) with respect to drafting and promulgating index replacement language for use in home equity line of credit documents, both forward and reverse.
Finally, NRMLA encourages the Bureau to communicate to consumers about the LIBOR transition – that it is a market-driven change, not a consumer/lender driven change – and how it’s likely to affect them. “In NRMLA’s view, having the CFPB speak authoritatively on this issue to consumers will greatly reduce the potential for confusion, which may occur if the CFPB leaves such education up to a variety of lenders.” To read the comments in their entirety by logging into the Comment Letters section.
NRMLA Submits Comments to CFPB On LIBOR Transition
