The Mortgage Bankers Association (MBA) has published a disclosure template
for residential mortgage lenders to share with consumers seeking an adjustable-rate mortgage (ARM) about the future of the London Interbank Offered Rate (LIBOR).
LIBOR is the leading reference rate for ARMs, but the U.K.’s Financial Conduct Authority, the body responsible for regulating LIBOR, stated the continued publication of LIBOR was not guaranteed beyond 2021. The MBA’s disclosure template explains the circumstances impacting LIBOR and what it could mean if the monthly payments on their loan ends up linked to another index.
“As the industry moves closer to a potential sunset of LIBOR, MBA is taking the lead to help its members communicate to consumers how the switch to a new index would affect them if they choose a LIBOR-indexed adjustable-rate mortgage product,” said Pete Mills, senior vice president of residential policy and member services. “The disclosure template is one of the many ongoing steps that MBA is taking well in advance to ensure a smooth transition away from LIBOR.”