§ 701.20 Suretyship and guaranty.

t creates an authorized loan that complies with the applicable lending regulations, including the limitations on loans to one member or associated members or officials for purposes of §§ 701.21(c)(5), (d); 723.4(c); and (3) The federal credit union obtains a segregated deposit from the member that is sufficient in amount to cover the federal credit union's total potential liability. (d) Collateral. A segregated deposit under this section includes collateral: (1) In which the federal credit union has perfected its security interest (for example, if the collateral is a printed security, the federal credit union must have obtained physical control of the security, and, if the collateral is a book entry security, the federal credit union must have properly recorded its security interest); and (2) That has a market value, at the close of each business day, equal to 100 percent of the federal credit union's total potential liability and is composed of: (i) Cash; (ii) Obligations of the United States or its agencies; (iii) Obligations fully guaranteed by the United States or its agencies as to principal and interest; or (iv) Notes, drafts, or bills of exchange or banker's acceptances that are eligible for rediscount or purchase by a Federal Reserve Bank; or (3) That has a market value equal to 110 percent of the federal credit union's total potential liability and is composed of: (i) Real estate, the value of which is established by a signed appraisal or evaluation in accordance with part 722 of this chapter. In determining the value of the collateral, the federal credit union must factor in the value of any existing senior mortgages, liens or other encumbrances on the property except those held by the principal to the suretyship or guaranty agreement; or (ii) Marketable securities that the federal credit union is authorized to invest in. The federal credit union must ensure that the value of the security is 110 percent of the obligation at all times during the term of the agreement. [69 FR 8547, Feb

existing senior mortgages, liens or other encumbrances on the property except those held by the principal to the suretyship or guaranty agreement; or (ii) Marketable securities that the federal credit union is authorized to invest in. The federal credit union must ensure that the value of the security is 110 percent of the obligation at all times during the term of the agreement. [69 FR 8547, Feb. 25, 2004, as amended at 84 FR 10975, Mar. 25, 2019]