The FDIC is proposing changes to deposit insurance rules for trust and mortgage servicing accounts.


July 20 FDIC published but proposed rulemaking notice (NPRM), which will amend the deposit insurance rules for trust and mortgage service accounts. The amendments are intended to clarify the rules for insurance of deposits for depositors and bankers, to ensure more timely decision-making on the insurance of trust accounts in the event of bank bankruptcy and to improve the consistency of insurance coverage of deposits in mortgage accounts. According to the FDIC, some highlights include, but are not limited to: (i) the deposit holder’s trust deposits will be insured up to $ 250,000 per beneficiary, but must not exceed five beneficiaries, regardless of whether the trust is revocable or irrevocable, and regardless of unforeseen circumstances or distribution of funds between the beneficiaries; (ii) the maximum deposit insurance coverage will be $ 1.25 million per owner per insured depository institution for trust deposits; and (iii) “advances from mortgage companies for principal and interest on behalf of mortgages to mortgage servicing will be insured for up to $ 250,000 per pledger, which is consistent with payments of principal and interest received directly from mortgages “. In addition, the FDIC has published Newsletter on NPRM, which provides an overview of simplifying deposit insurance rules for trust accounts and improving the uniformity of deposits in mortgage accounts. FDIC Chair Elena McWilliams came out a statement specifying that NPRM “will combine revocable and irrevocable trust categories into one single trust account category with one set of rules; establish a simple formula for calculating deposit insurance based on the number of beneficiaries; and to exclude the possibility of structuring a trust account to receive unlimited insurance of deposits in a bank, which is the case today and, of course, contradicts the spirit of the Federal Law on Deposit Insurance ”. Comments on NPRM will be submitted 60 days after posting in Federal register

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