Q: Are HELOC Application Disclosures impacted by the LIBOR transition?
A: Yes. Regulation Z, 12 CFR § 1026.40 generally requires, among other things, that creditors provide certain disclosures about the plan at the time consumers are provided a HELOC application. Like other loan origination disclosures required by Regulation Z, the requirements include disclosures, as applicable, about the security interest, payment terms, variable rate information, fees, and other key plan terms.
Among those disclosures, a creditor is required to disclose a historical example, based on a $10,000 extension of credit, illustrating how the APRs and payments would have been affected by index value changes over the last 15 years. 12 CFR § 1026.40(d)(12)(xi).
This disclosure may be impacted by the LIBOR transition, depending on which index the creditor selects for new accounts. LIBOR Home Equity Line of Credit FAQ 2, below, provides more detail on the impacts the LIBOR transition may have on this disclosure.