LIBOR CFPB FAQ ARMs 7 – What is required if a refinance of the ARM is triggered by the LIBOR transition?

Compliance > Regulation Z - TILA > LIBOR Transition
Q:  What is required if a refinance of the ARM is triggered by the LIBOR transition?
A:   As stated above in LIBOR Adjustable-Rate Mortgage FAQ 4, under Regulation Z, if the creditor does not select a comparable index during the LIBOR transition when replacing the index of a closed-end loan, the creditor will trigger requirements for a refinance of the transaction.
Comment 20(a)-3.ii.B.
If a refinancing occurs, the creditor is required to provide new origination disclosures. Comment 20(a)-1. For example, for ARMs, the creditor must provide typical ARM refinance disclosures, including the ARM loan program origination disclosures, a new CHARM booklet, and new TRID disclosures, as applicable.

Additionally, a refinance also triggers new ability-to-repay and qualified mortgage analysis requirements. Comments 20(a)-1 and 3; 12 CFR § 1026.19(b); (e); (f); and § 1026.43.

For more information about the loan program origination disclosures, see LIBOR Adjustable-Rate Mortgage FAQs 1 and 2. For more information about the CHARM Booklet, see LIBOR Adjustable-Rate Mortgage FAQ 3. For more information about the TRID disclosures, see the TRID Small Entity Compliance Guide. For more information about ability-to-repay and qualified mortgage requirements, see the ATR-QM Small Entity Compliance Guide.
This Q&A was created based on information from the Consumer Financial Protection Bureau’s website (which may be updated from time to time) that provides Answers to Frequently Asked Questions on the Transition Away from LIBOR.  This information may be found here:

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