FDIC Publishes Final Rule Amending Deposit Insurance

On January 21, 2022, the Federal Deposit Insurance Corporation (“FDIC”) published a final rule amending the deposit insurance regulations for trust accounts and mortgage servicing accounts. The key changes from the final rule are as follows:

• A formula for calculating deposit insurance coverage for both revocable and irrevocable trust accounts that should be applied on a consistent basis has been established;

• A deposit owner’s trust, irrevocable or revocable, deposits can be insured for up to $250,000 per beneficiary, so long as there are five or less beneficiaries;

• The maximum amount of deposit insurance coverage is $1,250,000 per owner, per insured depository for trust deposits;

• The review process for trust agreements will be simplified and streamlined by

  • requiring that the trust documentation that must be reviewed is contained in the institution’s deposit account records;

  • requiring that the institution maintain a system “capable of applying the deposit insurance rules in an automated manner”;

  • providing requirements for timely payment of deposit insurance; and

  • expanding resolution options and mitigation losses.

• Mortgage servicers’ advances of principal and interest funds on behalf of a mortgagor would be insured up to $250,000 per mortgagor.

The final rule is set to take effect on April 1, 2024.