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4000 - Advisory Opinions


Deposit Insurance Coverage of Mortgage Servicing Accounts

FDIC--95--15

August 19, 1995

Dirck A. Hargraves, Attorney

This is in response to your letter dated July 20, 1995 wherein you requested clarification of the FDIC's regulations concerning mortgage servicing accounts. Specifically, you inquire as to whether the "State" Department of Veterans Affairs mortgagor's escrow accounts held at an FDIC-insured depository institution are insured as to each mortgagor's individual interest up to $100,000.

As you may be aware, part 330.6(d) of the FDIC's regulations, 12 C.F.R. § 330.6(d), provides:

Accounts maintained by a mortgage servicer, in a custodial or other fiduciary capacity, which are comprised of payments by mortgagors of principal and interest, shall be added together and insured in the amount of up to $100,000 for the interest of each owner (mortgagee, investor or security holder) in such accounts. Accounts maintained by a mortgage servicer, in a custodial or other fiduciary capacity, which are comprised of payments by mortgagors of taxes and insurance premiums shall be added together and insured in the amount of up to $100,000 for the ownership interest of each mortgagor in such accounts.

Accordingly, the FDIC provides insurance coverage of up to $100,000 for mortgage servicing accounts comprised of principal and interest payments ("P & I payments") on a per owner (mortgagee, investor or security holder) basis. The FDIC also provides insurance coverage of up to $100,000 for mortgage servicing accounts comprised of tax and insurance premium payments ("T & I payments") on a per mortgage borrower (mortgagor) basis. Since these accounts are custodial in nature, part 330.6(a) provides that the principal's interest in these types of accounts will be aggregated with any individually owned (single ownership) account(s) that the principal may have at the same insured depository institution.

Thus, if an owner has interests in more than one P & I account at the Bank, those interests would normally be aggregated and insured for up to $100,000. In addition, if an owner maintains single ownership accounts, or corporate accounts if the owner is a corporation, at the same insured depository institution, the owner's interests in the P & I account(s) would be aggregated with those other accounts for deposit insurance purposes.

With respect to the T & I accounts, the FDIC will provide up to $100,000 insurance coverage for the interest of each mortgagor. However, if an individual mortgagor has interests in more than one T & I account at the same insured depository institution, those interests would be aggregated for insurance purposes. Moreover, to the extent that a mortgagor maintains single-ownership accounts at the same insured depository institution, the mortgagor's interests in the T & I account(s) would be added to those single ownership accounts at the same insured depository institution, prior to applying the $100,000 insurance limit.

In summary, each mortgagee's interest in P & I accounts and each mortgagor's interest in T & I accounts held at the same insured depository institution in mortgage servicing accounts would be separately insured for up to $100,000. Should either the mortgagors or mortgagees have single ownership or corporate accounts at the same insured depository institution, these accounts would be aggregated with the mortgagors' and mortgagees' respective interests in all mortgage servicing accounts held at the same insured depository institution and insured for up to $100,000.

I hope this is fully responsive to your questions. If you have additional questions or comments, feel free to call me at (202) 898-7049.


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