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4000 - Advisory Opinions

Insurance Coverage of Pooled Accounts


October 22, 1987

J. William Via, Jr., Counsel

This is to advise, in response to your letter of September 29, 1987, that an escrow account that is held by a mortgage service company and that consists of pooled funds advanced (and still owned) by individual mortgagors, for eventual payment when due as taxes and insurance premiums, is insured as if each such mortgagor had made a direct individual deposit in the bank in his or her name, provided that the account is designated on the bank's deposit account records as an escrow (or agency or custodial) account and, provided also that, records maintained in good faith and in the regular course of business by either the mortgage service company or the bank disclose the ownership interest in the account of each mortgagor.

Thus, it is possible for such an account to exceed $100,000 in toto and still qualify for full deposit insurance. In determining insurance coverage, the ownership interest of each mortgagor in the escrow account would be combined with his or her other individually owned deposits, if any, in the same bank and insured to $100,000 in the aggregate.

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