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Financial Services Law Insights and Observations

FDIC approves final rule for trust, mortgage servicing account insurance

Bank Regulatory Federal Issues FDIC Agency Rule-Making & Guidance Mortgages Mortgage Servicing Deposit Insurance

On May 18, the FDIC published a final rule that amends the deposit insurance regulations for trust accounts and mortgage servicing accounts. According to the FDIC, the final rule is “intended to make the deposit insurance rules easier to understand for depositors and bankers, facilitate more timely insurance determinations for trust accounts in the event of a bank failure, and enhance consistency of insurance coverage for mortgage servicing account deposits.”

The final rule, among other things: (i) establishes updates to the Banker Resources Guide Deposit Insurance Page with the Small Entity Compliance Guide (Community Bank Information) to promote understanding of the regulations; (ii) amends the deposit insurance regulations by merging the revocable and irrevocable trusts categories; (iii) “amends the regulation to expand the current per-borrower coverage of up to $250,000 to include any funds paid into the account to satisfy the principal and interest obligation of the mortgagors to the lender”; and (iv) establishes that certain “depositors within excess of $1.25 million in trusts deposits at a particular IDI may want to make changes given the new coverage limits” effective April 1, 2024.

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