In the preamble, there is discussion on letters of credit on page 207. We create a note with our letters of credit. The note works like a closed-end line of credit and is only advanced if a claim is made on the letter of credit. The preamble letters of credit not being credit under commentary in Reg Z and used preamble justification from the FRB to apply to ECOA. The last statement of the 1071 discussion of letters of credit just says that the “Bureau is not covering letters of credit under the final rule.” I don’t see anything in commentary to 1002.104b specifically about letters of credit. Since we are executing a note in conjunction with the letter of credit, can we still categorically exclude these from our count of covered transactions? Or should we include them? I am concerned that field examiners are not going to be looking at preamble language and cite for missing lines in our reporting.

Letters of Credit are not covered transactions under 1071. However, if an actual credit advance (loan) were to be made as a result of a letter of credit, the loan would be subject to the covered transaction qualifications.