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4000 - Advisory Opinions

Definition of "Loan Commitment"


January 19, 1990

Gerald J. Gervino, Senior Attorney

You have inquired as to our definition of "loan commitment" for the purpose of our reports of examination.

You have stated that a recently enacted statute of frauds in Tennessee requires that a promise to lend money must be in writing. Thus, you suggest that oral commitments to loan money will not be reported on your office's reports of examination. We cannot offer an opinion on the Tennessee statute of frauds, since this is a matter of state law and must be interpreted by local courts or by your office. You have five specific questions which are set forth below and followed by our responses.

1.  How do you define loan commitments for examination report purposes?

Please refer to item No. 1 of the attached schedule RC-L Commitments and Contingencies, a part of the Instructions for the Consolidated Reports of Condition and Income (FFIEC 031), which is issued by the Federal Financial Institutions Examination Council for the guidance of all insured banks. ("Item 1"). That item, with certain exceptions, instructs banks to report only those commitments for which the bank has charged a commitment fee or other consideration, or otherwise has a legally binding commitment.

2.  What guidelines do you use for determining what constitutes a commitment to loan?

The instructions and exclusions of item 1.

3.  Does the definition of loan commitment or the guidelines for listing vary from region to region?

Item 1 applies in all of our regions.

4.  Do you take state law into consideration (such as the new statute of frauds which you have furnished), in determining what must be listed as a commitment?

Our determinations are governed by applicable state law.

5.  Will your position change if the new amendments to 12 CFR Parts 7 and 32 become final?

The above references to the Code of Federal Regulations relate to regulations and interpretations issued by the Office of the Comptroller of the Currency rather than this office. Our examinations are governed by the instructions of the Federal Financial Institutions Examination Council, such as the above Item 1.

If you have any further questions, please write or call me at (202) 898-3723.

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