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October 31, 2008
- The Bank can provide irrevocable stand-by and confirming stand-by letters of credit (LOCs) to
assist members for the following purposes:
- To facilitate residential housing finance or other housing activity;
- To facilitate community lending;
- To assist members with asset/liability management;
- To provide members with liquidity or other funding.
- LOCs must be fully collateralized with eligible collateral for advances under this policy and are
subject to the underwriting requirements for advances noted in this policy.
- Legal fees and significant operational expenses incurred on a LOC may be passed through to the
member as a processing fee.
- Fees upon draws on an LOC made by a beneficiary take into account all direct and indirect costs
in satisfying the draw. Fees reflect the imputed rate of return that would have been earned and
the taxes that would have been paid if the Bank were a private corporation. Fees arc calculated
by applying a cost of capital-adjustment factor to the assets used in satisfying the draw.
- Fixed balance LOC fees are based on the face value of the LOC and are the greater of (1) a
minimum dollar fcc or (2) a fee based on the face value of the LOC multiplied by a basis points
amount per annum determined by the maturity of the LOC. In the case of a confirming LOC
supporting a bond transaction, a one-time processing fee will be added to the fee described in
clause (2) immediately above and minimum dollar fee shall not apply.
- Variable balance LOC fees are based on the quarterly average outstanding balance of deposits
thai are collateralized by the LOC and reported to the Bank by the member multiplied by a basis
points amount per annum determined by the maturity of the LOC plus a processing fee. Deposit
balances must be reported within 15 days following the reporting quarter cnd. Average deposit
balances that exceed the face value of the LOC are not guaranteed by the LOC.
- Members should contact their relationship manager, at 1-888-595-8733, or the Money Desk, at
1-800-357-3452, for information regarding collateral requirements and pricing or refer to the
Bank's web site, www.fhlbboston.com, for current fees.
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