December 13, 2021

PPDocs 2022 Holiday Schedule, PPDocs 2022 Rescission Calendar, CFPB Amending Reg. Z to facilitate LIBOR Transition and more!

Read more below!

December 13, 2021

Happy Holidays!

As we come to the close of what has been another challenging year, we are thankful for you—our clients—who are truly the most talented and kindest people in the business. As we press forward into 2022, we hope for more normalcy, but pledge to be there for you for whatever the year brings. We wish you happy holidays filled with the presence and laughter of family and friends and a happy and prosperous New Year.

With Appreciation,
Mike Patterson and the PPDocs staff

PPDocs 2021 Holiday Schedule

Our office will close at noon Christmas Eve. We will be opened for our usual business hours on New Year’s Eve.

PPDocs 2022 Calendar

In 2022, our offices will be closed on:

  • Memorial Day (Monday, May 30)
  • Independence Day (Monday, July 4)
  • Labor Day (Monday, September 5)
  • Thanksgiving Day (Thursday, November 24)

Clients will be notified in advance if this schedule changes.

PPDocs 2022 Rescission Calendar

Our 2022 Rescission Calendar is now available on our website.

CFPB Amending Reg. Z to facilitate LIBOR Transition

On December 7, 2021, the CFPB issued the LIBOR Transition Rule, which amends Regulation Z to facilitate the transition away from the LIBOR index. 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.

The CFPB also is amending 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. This final rule also addresses change-in-terms notice provisions for HELOCs and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index. Lastly, the Bureau is amending 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 LIBOR Transition Rule is generally effective April 1, 2022, although compliance with some provisions is not required until later dates. Supervised institutions are expected to cease entering new contracts using LIBOR no later than December 31, 2021.

Final rule

Executive Summary

Unofficial Redline of the LIBOR Transition Final Rule

ARM Interest Rate Adjustment Notice Sample Forms (updated 12/07/2021 for LIBOR transition)

CFPB LIBOR Transition FAQs (updated 12/07/2021)

Federal Reserve Issues Additional LIBOR Transition FAQs

Earlier this year, the Federal Reserve issued a letter announcing the initial set of frequently asked questions (FAQs) to assist its supervised firms in the transition away from using the LIBOR as a reference rate. The Federal Reserve revised the letter on November 19, 2021, to provide additional FAQs in response to questions from institutions. The Federal Reserve may periodically update the FAQ document; therefore, institutions are encouraged to check the Board’s public website for new FAQs or revisions to a previously issued FAQs. Here are the attachments to that letter:

The CFPB also is amending 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. This final rule also addresses change-in-terms notice provisions for HELOCs and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index. Lastly, the Bureau is amending 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 LIBOR Transition Rule is generally effective April 1, 2022, although compliance with some provisions is not required until later dates. Supervised institutions are expected to cease entering new contracts using LIBOR no later than December 31, 2021.

Frequently Asked Question

Question: The appraisal for a loan came back lower than expected and the borrowers want to order another appraisal. The second appraisal will be paid outside of closing. If we order a second appraisal, I have two questions: 1) Would we have to notate the fee on a revised LE or on the initial CD even though this is being handled outside closing? 2) Would this be considered a change of circumstance?

Answer: Before answering your questions, we’d like to offer a word of caution about ordering and billing customers for second appraisals: unless the lender—through its internal review process—rejects the first appraisal as deficient, the lender is typically not allowed to order an additional appraisal to determine whether the value of the first appraisal is accurate. Additionally, because the lender ordered the deficient appraisal that necessitated the second appraisal, when the lender rejects the initial appraisal as deficient, charging the borrower for the second appraisal may constitute an unfair practice.

When two appraisals show different valuations, the lender’s internal appraisal policies will require documentation as to the reason one of them was deemed deficient. A lender is not permitted to simply choose the higher or lower valuation appraisal and use it. We advise visiting with your internal appraisal management group prior to proceeding. If you choose to charge the borrower for the second appraisal, you must reflect the fee on a revised TRID disclosure, regardless of how it is paid. The lender must issue the revised disclosure to the borrower within three business days of determining that there was a lender requirement for a second appraisal. Although it is not impossible, it is unusual that getting a second appraisal would qualify as a change of circumstance. A borrower requesting a second appraisal because the first one came in too low does not qualify. Additionally, ordering a new appraisal because the borrower wants it will likely violate the lender’s board approved appraisal and evaluation policy that prohibits the borrower from having any influence on the lender’s appraisal or evaluation processes. If there isn’t a change of circumstance or the lender didn’t provide a revised TRID disclosure within three business days of discovering the change of circumstance, there will be a lender cure if the fee for the second appraisal is paid by the borrower.