Important Customer Updates

The Federal Deposit Insurance Corporation (FDIC) approved a final rule to amend the deposit insurance regulations for trust accounts and mortgage servicing accounts. The final rule will take effect on April 1, 2024, providing depositors and insured depository institutions more than two years to prepare for the changes in coverage. 

Simplifies Deposit Insurance Rules for Trust Accounts

  • To make the deposit insurance rules easier to understand for depositors and bankers, the rules currently used to determine coverage for deposits of revocable trusts and irrevocable trusts – which are different for the two types of trusts -will be replaced with a simpler common rule. 
  • A deposit owner’s trust deposits will be insured in an amount up to $250,000 for each of the trust beneficiaries, not to exceed five, regard less of whether a trust is revocable or irrevocable, and regardless of contingencies or the allocation of funds among the beneficiaries. 
  • This will provide for a maximum amount of deposit insurance coverage of $1,250,000 per owner, per insured depository institution for trust deposits. 
  • The final rule is also intended to facilitate more timely deposit insurance determinations for trust accounts in the event of a bank failure by streamlining the detailed, time-consuming review of trust agreements that is often required under the current, complicated trust rules. 

Enhances Consistency for Mortgage Servicing Account Deposits

  • The deposit insurance rules for mortgage servicing accounts comprised of principal and interest funds currently provide coverage based on each mortgagor’s payments of principal and interest into the mortgage servicing account, up to $250,000 per mortgagor. 
  • Some servicers advance their own funds to the lenders on behalf of borrowers. Under the current rule, such advances are not provided the same level of deposit insurance coverage as other deposits in a mortgage servicing account comprised of principal and interest payments directly from the mortgagors. 
  • Under the final rule, servicers’ advances of principaI and interest funds on behalf of mortgagors would be insured up to $250,000 per mortgagor, consistent with the coverage for payments of principal and interest collected directly from mortgagors.