Questions and Answers

One regulatory provision we can think of that might make you doubt the account’s use as loan collateral is the Regulation D definition of “nonpersonal time deposit.” [12 CFR 204.2(f)] Regulation D formerly imposed a reserve requirement on nonpersonal time deposits and none on personal time deposits. A deposit was considered nonpersonal if it were transferable. That’s why many account agreements and certificates of deposit contained a statement to the effect that the account was “nontransferable.” The Federal Reserve Board had made clear, however, that making an account nontransferable for these purposes did not interfere with using the account as collateral.  

So if your account agreement or certificate of deposit states that the account is nontransferable, that alone does not make the account unavailable as collateral.  

Remember also that if the account is part of an IRA, use of the account as collateral for a loan is treated as a distribution of the portion so used. [26 USC 408(e)(3)]