FDIC Approves Final Rule Simplifying Deposit Insurance for Trust, Mortgage Servicing Accounts

The FDIC today approved a final rule to simplify deposit insurance calculations for revocable trusts, irrevocable trusts and mortgage servicing accounts. The rule establishes a “trust accounts” category that governs coverage of deposits of both revocable trusts and irrevocable trusts using a common calculation, the FDIC said.

According to the new rule, each grantor’s trust deposits will be insured up to the standard maximum deposit insurance amount, $250,000, multiplied by the number of trust beneficiaries, but not exceeding five. The FDIC said it expects that the vast majority of trust depositors will experience no change in the coverage for their deposits when the final rule takes effect on April 1, 2024.

The new rule also provides “consistent deposit insurance treatment” for all mortgage servicing account balances held to satisfy principal and interest obligations to a lender. The rule allows principal and interest funds advanced by a mortgage servicer to be included in the deposit insurance calculation.