ALEXANDRIA, Va. – NCUA recently reminded credit unions that cash flow may be assigned as collateral for an MBL if its market value can be established and if its value is sufficient to satisfy the MBL rule's loan-to-value (LTV) requirements. The Cypress Group, LLC, a Florida-based MBL CUSO owned by seven credit unions, asked if a borrower may assign cash flow as collateral to satisfy the LTV requirements of the MBL rule. In a Feb. 8 opinion letter, NCUA Associate General Counsel Sheila Albin wrote when cash flow could be used as collateral including the option of a CU requesting a waiver of the LTV requirements if the cash flow cannot be valued or its value is insufficient. "While the MBL rule does not specify the kinds of collateral a borrower may use to satisfy the LTV requirement, collateral must have an ascertainable market value in order to meet the LTV requirements," Albin wrote. "If the market value of proposed collateral cannot be ascertained, then the MBL for which the collateral is offered as security cannot satisfy the LTV requirements." The MBL rule's general LTV requirement is a maximum of 80%, although higher limits are permitted under limited circumstances, according to NCUA. The term "value" in the rule's definition of "loan-to-value ratio" is defined as the market value of collateral used to secure a loan. The MBL rule permits a credit union to seek a waiver of the LTV requirements for a category of loans, Albin wrote. "Seeking a waiver of the LTV requirements is an alternative you may want to consider if you are unable to establish the market value of the cash flow that is proposed as collateral for a loan or group of loans," she said. The MBL rule sets out the information a credit union must provide with a waiver request and how a regional director will process that request."