This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

4455 

Vol. 87, No. 19 

Friday, January 28, 2022 

1Trusts include informal revocable trusts 

(commonly referred to as payable-on-death 

accounts, in-trust-for accounts, or Totten trusts), 

formal revocable trusts, and irrevocable trusts that 

do not have an IDI as trustee. 

2See 73 FR 56706 (Sep. 30, 2008). 3 In 2008, the FDIC adopted an insurance 

calculation for revocable trusts that have five or 

fewer beneficiaries. Pursuant to the 2008 

amendments, each trust grantor is insured up to 

$250,000 per beneficiary. 4 12 U.S.C. 1821(f). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 330 

RIN 3064–AF27 

Simplification of Deposit Insurance 

Rules 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Final rule. 

SUMMARY: The Federal Deposit 

Insurance Corporation is amending its 

regulations governing deposit insurance 

coverage. The amendments simplify the 

deposit insurance regulations by 

establishing a ‘‘trust accounts’’ category 

that governs coverage of deposits of both 

revocable trusts and irrevocable trusts 

using a common calculation, and 

provide consistent deposit insurance 

treatment for all mortgage servicing 

account balances held to satisfy 

principal and interest obligations to a 

lender. 

DATES: The rule is effective on April 1, 

2024. 

FOR FURTHER INFORMATION CONTACT: 

James Watts, Counsel, Legal Division, 

(202) 898–6678, jwatts@fdic.gov; 

Kathryn Marks, Counsel, Legal Division, 

(202) 898–3896, kmarks@fdic.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Simplification of Deposit Insurance 

Coverage Rules for Trusts 

A. Policy Objectives 

B. Background 

1. Deposit Insurance and the FDIC’s 

Statutory and Regulatory Authority 

2. Current Rules for Coverage of Trust 

Deposits 

C. Final Rule 

D. Discussion of Comments 

E. Alternatives Considered 

II. Amendments to Mortgage Servicing 

Account Rule 

A. Policy Objectives 

B. Background 

C. Final Rule 

D. Discussion of Comments 

III. Regulatory Analysis 

A. Expected Effects 

1. Simplification of Trust Rules 

2. Amendments to Mortgage Servicing 

Account Rule 

B. Regulatory Flexibility Act 

1. Simplification of Trust Rules 

2. Amendments to Mortgage Servicing 

Account Rule 

C. Congressional Review Act 

D. Paperwork Reduction Act 

E. Riegle Community Development and 

Regulatory Improvement Act 

F. Plain Language 

I. Simplification of Deposit Insurance 

Coverage Rules for Trusts 

A. Policy Objectives 

The Federal Deposit Insurance 

Corporation (FDIC) is amending its 

regulations governing deposit insurance 

coverage for deposits held in connection 

with trusts.1 The amendments merge the 

revocable and irrevocable trust 

categories into one category, ‘‘trust 

accounts.’’ Coverage for deposits in this 

category will be calculated through a 

simple calculation. Each grantor’s trust 

deposits will be insured in an amount 

up to the standard maximum deposit 

insurance amount (currently $250,000) 

multiplied by the number of trust 

beneficiaries, not to exceed five. This, in 

effect, will limit coverage for a grantor’s 

trust deposits at each IDI to a total of 

$1,250,000; in other words, maximum 

coverage of $250,000 per beneficiary for 

up to five beneficiaries. 

The amendments: (1) Provide 

depositors and bankers with a rule for 

trust account coverage that is easy to 

understand; and (2) facilitate the prompt 

payment of deposit insurance in 

accordance with the Federal Deposit 

Insurance Act (FDI Act), among other 

objectives. 

Simplifying Insurance Coverage for 

Trust Deposits 

The amendments simplify for 

depositors, bankers, and other interested 

parties the insurance rules and limits for 

trust accounts. The deposit insurance 

rules for trust deposits, set forth in part 

330 of the FDIC’s regulations, have 

evolved over time and can be difficult 

to apply in some circumstances. The 

amendments reduce the number of rules 

governing coverage for trust accounts 

and establish a straightforward 

calculation to determine coverage. This 

should alleviate some of the confusion 

that depositors and bankers experience 

with respect to insurance coverage and 

limits. 

Under the current regulations, there 

are distinct and separate sets of rules 

applicable to deposits of revocable 

trusts and irrevocable trusts. Each set of 

rules has its own criteria for coverage 

and methods by which coverage is 

calculated. Despite the FDIC’s efforts to 

simplify the revocable trust rules in 

2008,2 FDIC deposit insurance 

specialists have responded to 

approximately 20,000 complex 

insurance inquiries per year on average 

over the last 13 years. More than 50 

percent of inquiries pertain to deposit 

insurance coverage for trust accounts 

(revocable or irrevocable). The 

amendments further simplify insurance 

coverage of trust accounts (revocable 

and irrevocable) by harmonizing the 

coverage criteria for certain types of 

trust accounts and establishing a 

simplified formula for calculating 

coverage that applies to these deposits. 

The calculation is the same calculation 

that the FDIC first adopted in 2008 for 

revocable trust accounts with five or 

fewer beneficiaries. This formula is 

straightforward and is already generally 

familiar to bankers and depositors.3

Prompt Payment of Deposit Insurance 

The FDI Act requires the FDIC to pay 

depositors ‘‘as soon as possible’’ after a 

bank failure.4 However, the insurance 

determination and subsequent payment 

for many trust deposits must await the 

depositor’s submission of complex trust 

agreements, followed by FDIC staff’s 

review of that information and 

application of the rules to determine 

deposit insurance coverage. The final 

rule’s amendments are expected to 

facilitate more timely deposit insurance 

determinations for trust accounts by 

reducing the amount of time needed for 

FDIC staff to review trust agreements 

and determine coverage. These 

amendments promote the FDIC’s ability 

to pay insurance to depositors promptly 


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5See 12 U.S.C. 1821(a)(1)(E). 

6See 12 U.S.C. 1821(a)(1)(C) (deposits 

‘‘maintained by a depositor in the same capacity 

and the same right’’ at the same IDI are aggregated 

for purposes of the deposit insurance limit). 

7 12 U.S.C. 1821(a)(2). 

8See 12 U.S.C. 1817(i), 1821(a). 

9See 12 CFR 330.10, 330.13. 

10 12 CFR 330.10(a). In this document, the term 

‘‘grantor’’ is used to refer to the party that creates 

a trust, though trust agreements also may use terms 

such as ‘‘settlor’’ or ‘‘trustor.’’ 

11 12 CFR 330.10(c). 

12 12 CFR 330.10(d). 

13 12 CFR 330.10(b)(1). 

following the failure of an insured 

depository institution (IDI), enabling 

depositors to meet their financial needs 

and obligations. 

Facilitating Resolutions 

The changes will also facilitate the 

resolution of failed IDIs. The FDIC is 

routinely required to make deposit 

insurance determinations in connection 

with IDI failures. In many of these 

instances, however, deposit insurance 

coverage for trust deposits is based upon 

information that is not maintained in 

the failed IDI’s deposit account records. 

As a result, FDIC staff works with 

depositors, trustees, and other parties to 

obtain trust documentation following an 

IDI’s failure in order to complete deposit 

insurance determinations. The 

difficulties associated with completing 

such a determination have been 

exacerbated by the substantial growth in 

the use of formal trusts in recent 

decades. The amendments are expected 

to reduce the time spent reviewing such 

information and provide greater 

flexibility to automate deposit insurance 

determinations, thereby reducing 

potential delays in the completion of 

deposit insurance determinations and 

payments. Timely payment of deposit 

insurance also helps to avoid reductions 

in the franchise value of failed IDIs, 

expanding resolution options and 

mitigating losses. 

Effects on the Deposit Insurance Fund 

The FDIC is also mindful of the effect 

that changes to the deposit insurance 

regulations have on deposit insurance 

coverage and generally on the Deposit 

Insurance Fund (DIF), which is used to 

pay deposit insurance in the event of an 

IDI’s failure. The FDIC manages the DIF 

according to parameters established by 

Congress and continually evaluates the 

adequacy of the DIF to resolve failed 

banks and protect insured depositors. 

The FDIC’s general intent is that 

amendments to the trust rules are 

neutral with respect to the DIF. 

B. Background 

1. Deposit Insurance and the FDIC’s 

Statutory and Regulatory Authority 

The FDIC is an independent agency 

that maintains stability and public 

confidence in the nation’s financial 

system by: Insuring deposits; examining 

and supervising IDIs for safety and 

soundness and compliance with 

consumer financial protection laws; and 

resolving IDIs and large and complex 

financial institutions, and managing 

receiverships. The FDIC has helped to 

maintain public confidence in times of 

financial turmoil, including the period 

from 2008 to 2013, when the United 

States experienced a severe financial 

crisis, and more recently in 2020 during 

the financial stress associated with the 

COVID–19 pandemic. During the more 

than 88 years since the FDIC was 

established, no depositor has lost a 

penny of FDIC-insured funds. 

The FDI Act establishes the key 

parameters of deposit insurance 

coverage, including the standard 

maximum deposit insurance amount 

(SMDIA), currently $250,000.5 In 

addition to providing deposit insurance 

coverage up to the SMDIA at each IDI 

where a depositor maintains deposits, 

the FDI Act also provides separate 

insurance coverage for deposits that a 

depositor maintains in different rights 

and capacities (also known as insurance 

categories) at the same IDI.6 For 

example, deposits in the single 

ownership category are separately 

insured from deposits in the joint 

ownership category at the same IDI. 

The FDIC’s deposit insurance 

categories have been defined through 

both statute and regulation. Certain 

categories, such as the government 

deposit category, have been expressly 

defined by Congress.7 Other categories, 

such as joint deposits and corporate 

deposits, have been based on statutory 

interpretation and recognized through 

regulations issued in 12 CFR part 330 

pursuant to the FDIC’s rulemaking 

authority. In addition to defining the 

insurance categories, the deposit 

insurance regulations in part 330 

provide the criteria used to determine 

insurance coverage for deposits in each 

category. 

Over the years, deposit insurance 

coverage has evolved to reflect both the 

FDIC’s experience and changes in the 

banking industry. The FDI Act includes 

provisions defining the coverage for 

certain trust deposits,8 while coverage 

for other trust deposits has been defined 

by regulation.9

2. Current Rules for Coverage of Trust 

Deposits 

The FDIC currently recognizes three 

different insurance categories for 

deposits held in connection with trusts: 

(1) Revocable trusts; (2) irrevocable 

trusts; and (3) irrevocable trusts with an 

IDI as trustee. 

Revocable Trust Deposits 

The revocable trust category applies 

to deposits for which the depositor has 

evidenced an intention that the deposit 

will belong to one or more beneficiaries 

upon his or her death. This category 

includes deposits held in connection 

with formal revocable trusts—that is, 

revocable trusts established through a 

written trust agreement. It also includes 

deposits that are not subject to a formal 

trust agreement, where the IDI makes 

payment to the beneficiaries identified 

in the IDI’s records upon the depositor’s 

death based on account titling and 

applicable State law. The FDIC refers to 

these types of deposits, including Totten 

trust accounts, payable-on-death 

accounts, and similar accounts, as 

‘‘informal revocable trusts.’’ Deposits 

associated with formal and informal 

revocable trusts are aggregated for 

purposes of the deposit insurance rules; 

thus, deposits that will pass from the 

same grantor to beneficiaries are 

aggregated and insured up to the 

SMDIA, currently $250,000, per 

beneficiary, regardless of whether the 

transfer would be accomplished through 

a written revocable trust or an informal 

revocable trust.10

Under the current revocable trust 

rules, beneficiaries include natural 

persons, charitable organizations, and 

non-profit entities recognized as such 

under the Internal Revenue Code of 

1986.11 If a named beneficiary does not 

qualify as a beneficiary under the rule, 

funds held in trust for that beneficiary 

are treated as single ownership funds of 

the grantor and aggregated with any 

other single ownership accounts that the 

grantor maintains at the same IDI.12

Certain requirements also must be 

satisfied for a deposit to be insured in 

the revocable trust category. The grantor 

must intend that the funds will belong 

to the beneficiaries upon the depositor’s 

death, and this intention must be 

manifested in the ‘‘title’’ of the account 

using commonly accepted terms such as 

‘‘in trust for,’’ ‘‘as trustee for,’’ ‘‘payableon-death to,’’ or any acronym for these 

terms. For purposes of this requirement, 

‘‘title’’ includes the IDI’s electronic 

deposit account records. For example, 

an IDI’s electronic deposit account 

records could identify the account as a 

revocable trust account through coding 

or a similar mechanism.13


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14 12 CFR 330.10(b)(2). 

15 12 CFR 330.10(a). 

16 12 CFR 330.10(e). 

17 12 CFR 330.10(g). For example, if a revocable 

trust provides a life estate for the depositor’s spouse 

and remainder interests for six other beneficiaries, 

the spouse’s life estate interest would be valued at 

$250,000 for purposes of the deposit insurance 

calculation. 

18 12 CFR 330.10(f)(1). 

19 12 CFR 330.10(f)(2). 

20 12 CFR 330.10(h). 

21The revocable trust rules tend to provide 

greater coverage than the irrevocable trust rules 

because contingencies are not considered for 

revocable trusts. In addition, where five or fewer 

beneficiaries are named by a revocable trust, 

specific allocations to beneficiaries also are not 

considered. 22 12 CFR 330.1(m). For example, a life estate 

interest is generally non-contingent, as it may be 

valued using the life expectancy tables. However, 

where a trustee has discretion to divert funds from 

one beneficiary to another (for example, to provide 

for the second beneficiary’s medical needs), the first 

beneficiary’s interest is contingent upon the 

trustee’s discretion. 

23 12 CFR 330.13(a). 

24 12 CFR 330.13(b). 

25See 12 CFR 330.1(r) (definition of ‘‘trust 

interest’’ does not include any interest retained by 

the settlor). 

26 12 U.S.C. 1817(i). 

27Part 330 defines ‘‘trust funds’’ as ‘‘funds held 

by an insured depository institution as trustee 

pursuant to any irrevocable trust established 

pursuant to any statute or written trust agreement.’’ 

12 CFR 330.1(q). 

28 12 CFR 330.12(a). 

29See 86 FR 41766 (Aug. 3, 2021). 

In addition, the beneficiaries of 

informal trusts (i.e., payable-on-death 

accounts) must be named in the IDI’s 

deposit account records.14 Since 2004, 

the requirement to name beneficiaries in 

the IDI’s deposit account records has not 

applied to formal revocable trusts; the 

FDIC generally obtains information on 

beneficiaries of such trusts from 

depositors following an IDI’s failure. 

Therefore, if a formal revocable trust 

deposit exceeds $250,000, and the 

depositor’s IDI were to fail, it is likely 

that a hold would be placed on the 

deposit until the FDIC can review the 

trust agreement and verify that coverage 

criteria are satisfied. 

The calculation of deposit insurance 

coverage for revocable trust deposits 

depends upon the number of unique 

beneficiaries named by a depositor. If 

five or fewer beneficiaries have been 

named, the depositor is insured in an 

amount up to the total number of named 

beneficiaries multiplied by the SMDIA, 

and the specific allocation of interests 

among the beneficiaries is not 

considered.15 If more than five 

beneficiaries have been named, the 

depositor is insured up to the greater of: 

(1) Five times the SMDIA; or (2) the 

total of the interests of each beneficiary, 

with each such interest limited to the 

SMDIA.16 For purposes of this 

calculation, a life estate interest is 

valued at the SMDIA.17

Where a revocable trust deposit is 

jointly owned by multiple co-owners, 

the interests of each account owner are 

separately insured up to the SMDIA per 

beneficiary.18 However, if the co-owners 

are the only beneficiaries of the trust, 

the account is instead insured under the 

FDIC’s joint account rule.19

The current revocable trust rule also 

contains a provision that was intended 

to reduce confusion and the potential 

for a decrease in deposit insurance 

coverage in the case of the death of a 

grantor. Specifically, if a revocable trust 

becomes irrevocable due to the death of 

the grantor, the trust’s deposit may 

continue to be insured under the 

revocable trust rules.20 Absent this 

provision, the irrevocable trust rules 

would apply following the grantor’s 

death, as the revocable trust becomes 

irrevocable at that time, which could 

result in a reduction in coverage.21

Irrevocable Trust Deposits 

Deposits held by an irrevocable trust 

that has been established either by 

written agreement or by statute are 

insured in the irrevocable trust deposit 

insurance category. Calculating coverage 

for deposits insured in this category 

requires a determination of whether 

beneficiaries’ interests in the trust are 

contingent or non-contingent. Noncontingent interests are interests that 

may be determined without evaluation 

of any contingencies, except for those 

covered by the present worth and life 

expectancy tables and the rules for their 

use set forth in the Internal Revenue 

Service (IRS) Federal Estate Tax 

Regulations.22 Funds held for noncontingent trust interests are insured up 

to the SMDIA for each such 

beneficiary.23 Funds held for contingent 

trust interests are aggregated and 

insured up to the SMDIA in total.24

The irrevocable trust rules do not 

apply to deposits held for a grantor’s 

retained interest in an irrevocable 

trust.25 Such deposits are aggregated 

with the grantor’s other single 

ownership deposits for purposes of 

applying the deposit insurance limit. 

Deposits Held by an IDI as Trustee of an 

Irrevocable Trust 

For deposits held by an IDI in its 

capacity as trustee of an irrevocable 

trust, deposit insurance coverage is 

governed by section 7(i) of the FDI Act, 

a provision rooted in the Banking Act of 

1935. Section 7(i) provides that ‘‘[t]rust 

funds held on deposit by an insured 

depository institution in a fiduciary 

capacity as trustee pursuant to any 

irrevocable trust established pursuant to 

any statute or written trust agreement 

shall be insured in an amount not to 

exceed the standard maximum deposit 

insurance amount . . . for each trust 

estate.’’ 26

The FDIC’s regulations governing 

coverage for deposits held by an IDI in 

its capacity as trustee of an irrevocable 

trust are found in § 330.12. The rule 

provides that ‘‘trust funds’’ held by an 

IDI in its capacity as trustee of an 

irrevocable trust, whether held in the 

IDI’s trust department or another 

department, or deposited by the 

fiduciary institution in another IDI, are 

insured up to the SMDIA for each owner 

or beneficiary represented.27 This 

coverage is separate from the coverage 

provided for other deposits of the 

owners or the beneficiaries,28 and 

deposits held for a grantor’s retained 

interest are not aggregated with the 

grantor’s single ownership deposits. 

C. Final Rule 

In July 2021, the FDIC proposed for 

comment a number of amendments to 

the rules governing deposit insurance 

coverage for trust deposits.29 Generally, 

the FDIC proposed to: Merge the 

revocable and irrevocable trust 

categories into one category; apply a 

simpler, common calculation method to 

determine insurance coverage for 

deposits held by certain revocable and 

irrevocable trusts; and eliminate certain 

requirements found in the current rules 

for revocable and irrevocable trusts. 

The FDIC received seven comments in 

response to the proposed rule. 

Commenters generally supported the 

proposed rule, as discussed below. After 

careful consideration of the comments, 

the FDIC is adopting the rule generally 

as proposed, with only technical, nonsubstantive changes. 

Merger of Revocable and Irrevocable 

Trust Categories 

The final rule amends § 330.10 of the 

FDIC’s regulations, which currently 

applies only to revocable trust deposits, 

to establish a new ‘‘trust accounts’’ 

category that would include both 

revocable and irrevocable trust deposits. 

The rule defines the types of deposits 

that would be included in this category: 

(1) Informal revocable trust deposits, 

such as payable-on-death accounts, intrust-for accounts, and Totten trust 

accounts; (2) formal revocable trust 

deposits, defined to mean deposits held 

pursuant to a written revocable trust 

agreement under which a deposit passes 

to one or more beneficiaries upon the 

grantor’s death; and (3) irrevocable trust 

deposits, meaning deposits held 


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30 12 CFR 330.10(c). 

31See FDIC Financial Institution Employee’s 

Guide to Deposit Insurance at 51 (‘‘Sometimes the 

trust agreement will provide that if a primary 

beneficiary predeceases the owner, the deceased 

beneficiary’s share will pass to an alternative or 

contingent beneficiary. Regardless of such language, 

if the primary beneficiary is alive at the time of an 

IDI’s failure, only the primary beneficiary, and not 

the alternative or contingent beneficiary, is taken 

into account in calculating deposit insurance 

coverage.’’). Including only unique beneficiaries 

means that when an owner names the same 

beneficiary on multiple trust accounts, the 

beneficiary will only be counted once in calculating 

trust coverage. For example, if a grantor has two 

trust deposit accounts and names the same 

beneficiary in both trust documents, the total 

deposit insurance coverage associated with that 

beneficiary is limited to $250,000 in total. 

32See FDIC Financial Institution Employee’s 

Guide to Deposit Insurance at 71. 

33See 12 CFR 330.1(r); see also FDIC Financial 

Institution Employee’s Guide to Deposit Insurance 

at 87. 

34 12 CFR 330.10(d). 

35 In the unlikely event a trust does not name any 

eligible beneficiaries, the FDIC would treat the 

trust’s deposits as single ownership deposits. Such 

deposits would be aggregated with any other single 

ownership deposits that the grantor maintains at the 

same IDI and insured up to the SMDIA of $250,000. 

36See FDIC Financial Institution Employee’s 

Guide to Deposit Insurance at 74. 

37See 12 CFR 330.10(b)(2). 

38See 12 CFR 330.10(f). 

pursuant to an irrevocable trust 

established by written agreement or by 

statute. Because these deposits would be 

considered to be part of the same 

category for deposit insurance purposes, 

they would be aggregated when 

applying the deposit insurance limit. 

As amended, § 330.10 does not apply 

to deposits maintained by an IDI in its 

capacity as trustee of an irrevocable 

trust; these deposits are insured 

separately pursuant to section 7(i) of the 

FDI Act and § 330.12 of the deposit 

insurance regulations. 

Calculation of Coverage 

The FDIC will use one streamlined 

calculation to determine the amount of 

deposit insurance coverage for deposits 

of revocable and irrevocable trusts. This 

method is already utilized by the FDIC 

to calculate coverage for revocable trusts 

that have five or fewer beneficiaries and 

it is an aspect of the current rules that 

is generally well-understood by bankers 

and trust depositors. The rule provides 

that a grantor’s trust deposits will be 

insured in an amount up to the SMDIA 

(currently $250,000) multiplied by the 

number of trust beneficiaries, not to 

exceed five beneficiaries. This, in effect, 

will limit coverage for a grantor’s trust 

deposits at each IDI to a total of 

$1,250,000; in other words, maximum 

coverage of $250,000 per beneficiary for 

up to five beneficiaries. The $1,250,000 

per-grantor, per-IDI limit is intended to 

be more straightforward and balance the 

objectives of simplifying the trust rules, 

promoting timely payment of deposit 

insurance, facilitating resolutions, 

ensuring consistency with the FDI Act, 

and limiting risk to the DIF. 

Eliminating Certain Requirements 

Eligible Beneficiaries 

The current revocable trust rules 

provide that beneficiaries include 

natural persons, charitable 

organizations, and non-profit entities 

recognized as such under the Internal 

Revenue Code of 1986,30 while the 

irrevocable trust rules do not establish 

criteria for beneficiaries. As stated in the 

proposed rule, the FDIC believes that a 

single definition should be used to 

determine whether an entity is an 

‘‘eligible’’ beneficiary. The final rule 

will use the current revocable trust 

rule’s definition. 

The final rule also excludes from the 

calculation of deposit insurance 

coverage beneficiaries that only would 

obtain an interest in a trust if one or 

more beneficiaries are deceased. This 

codifies existing practice to include 

only primary, unique beneficiaries in 

the deposit insurance calculation.31

Consistent with current treatment, 

naming a chain of contingent 

beneficiaries that would obtain trust 

interests only in event of a beneficiary’s 

death will not increase deposit 

insurance coverage. 

Finally, the FDIC is codifying a 

longstanding interpretation of the trust 

rules under which an informal 

revocable trust designates the 

depositor’s formal trust as its 

beneficiary. A formal trust generally 

does not meet the definition of an 

eligible beneficiary for deposit 

insurance purposes, but the FDIC has 

treated such accounts as revocable trust 

accounts under the trust rules, insuring 

the account as if it were titled in the 

name of the formal trust.32

Retained Interests and Ineligible 

Beneficiaries’ Interests 

The current trust rules provide that in 

some instances, funds intended for 

specific beneficiaries are aggregated 

with a grantor’s single ownership 

deposits at the same IDI for purposes of 

the deposit insurance calculation. These 

instances include a grantor’s retained 

interest in an irrevocable trust 33 and 

interests of ineligible beneficiaries that 

do not satisfy the definition of a 

revocable trust ‘‘beneficiary.’’ 34 This 

adds complexity to the deposit 

insurance calculation, as a detailed 

review of a trust agreement may be 

required to value such interests in order 

to aggregate them with a grantor’s single 

ownership funds. In order to implement 

the streamlined calculation for trust 

deposits, the FDIC is eliminating these 

provisions. Under the final rule, the 

grantor and other beneficiaries that do 

not satisfy the definition of ‘‘eligible 

beneficiary’’ are not included in the 

deposit insurance calculation.35

Importantly, this does not in any way 

limit a grantor’s ability to establish such 

trust interests under State law; these 

interests simply do not factor into the 

calculation of deposit insurance 

coverage. 

Future Trusts Named as Beneficiaries 

Trusts often contain provisions for the 

establishment of one or more new trusts 

upon the grantor’s death, and the final 

rule clarifies deposit insurance coverage 

in these situations. Specifically, if a 

trust agreement provides that trust 

funds will pass into one or more new 

trusts upon the death of the grantor (or 

grantors), the future trust (or trusts) will 

not be treated as beneficiaries for 

purposes of the calculation under the 

proposed rule. Rather, the future trust(s) 

will be considered mechanisms for 

distributing trust funds, and the natural 

persons or organizations that receive the 

trust funds through the future trusts will 

be considered the beneficiaries for 

purposes of the deposit insurance 

calculation. This clarification is 

consistent with published guidance and 

does not represent a substantive change 

in deposit insurance coverage.36

Naming of Beneficiaries in Deposit 

Account Records 

Consistent with the current revocable 

trust rules, the final rule continues to 

require the beneficiaries of an informal 

revocable trust to be specifically named 

in the deposit account records of the 

IDI.37

Presumption of Ownership 

Consistent with the current revocable 

trust rules, the final rule provides that, 

unless otherwise specified in an IDI’s 

deposit account records, a deposit of a 

trust established by multiple grantors 

will be presumed to be owned in equal 

shares.38

Bankruptcy Trustee Deposits 

The FDIC will maintain the current 

treatment of deposits placed at an IDI by 

a bankruptcy trustee. Under the final 

rule, if funds of multiple bankruptcy 

estates are commingled in a single 

account at the IDI, each estate will be 

separately insured up to the SMDIA. 


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39See 12 U.S.C. 1821(a)(1)(D); 12 CFR 330.14. 

40Under the current deposit insurance rules, 

deposits maintained by trusts or other business 

arrangements that are subject to certain securities 

laws are insured for up to $250,000 in total, 

regardless of the number of underlying investors. 12 

CFR 330.11(a)(2). 

Deposits Covered Under Other Rules 

The final rule excludes from coverage 

under § 330.10 certain trust deposits 

that are covered by other sections of the 

deposit insurance regulations. For 

example, employee benefit plan 

deposits are insured pursuant to 

§ 330.14, and investment company 

deposits are insured as corporate 

deposits pursuant to § 330.11. Deposits 

held by an insured depository 

institution in its capacity as trustee of 

an irrevocable trust are insured 

pursuant to § 330.12. In addition, if the 

co-owners of an informal or formal 

revocable trust are the trust’s sole 

beneficiaries, deposits held in 

connection with the trust are treated as 

joint deposits under § 330.9. In each of 

these cases, the FDIC will not alter the 

current rules. 

Effective Date 

The effective date of the final rule is 

April 1, 2024. This is intended to 

provide IDIs, depositors, and the FDIC 

time to prepare for the changes in 

deposit insurance coverage. IDIs will 

have an opportunity to review the 

changes in coverage, train employees, 

and update publications if necessary. In 

addition, ‘‘covered institutions’’ under 

the FDIC’s rule entitled ‘‘Recordkeeping 

for timely deposit insurance 

determination,’’ codified at 12 CFR part 

370 will need to prepare to implement 

changes to recordkeeping and 

information technology capabilities. 

Depositors may review insurance 

coverage for their deposits and adjust 

their deposit account arrangements and 

deposit relationships, if desired. In 

addition, the FDIC must reprogram the 

information technology infrastructure 

that it uses to determine deposit 

insurance coverage and to make 

payment to insured depositors and 

update its deposit insurance coverage 

publications, including publications 

that provide guidance to covered 

institutions. 

D. Discussion of Comments 

The FDIC received seven comments 

on the proposed rule, including one 

joint letter from three national trade 

associations and individual letters from 

another national trade association, a 

State banker’s association, a deposit 

solutions provider, and three 

individuals. Several commenters 

expressed appreciation for the FDIC’s 

efforts to simplify the trust rules and 

offered suggestions for modifications to 

the proposed rule. 

Some commenters also offered 

suggestions that relate primarily to other 

parts of the FDIC’s regulations and thus 

are outside the scope of the proposed 

rule. Nonetheless, the FDIC reviewed 

these suggestions as part of the process 

of developing the final rule as discussed 

below. 

Institutional Trusts 

Three trade associations raised a 

concern about the coverage that would 

apply to certain institutional trusts 

under the proposed rule, including 

common trust funds, collective 

investment funds, indenture bonds, and 

securitization trusts. The commenters 

explained that these types of irrevocable 

trusts are sometimes established by 

entities other than insured depository 

institutions—such as uninsured limited 

purpose nationally-chartered banks, 

limited purpose state-chartered banks, 

and state-chartered trust companies—to 

collectively invest funds, issue bonds, 

or form securitized investments. The 

commenters asserted that deposits of 

such trusts potentially fall within the 

scope of the existing irrevocable trust 

category and would experience a 

reduction in coverage under the 

proposed rule because per-beneficiary 

coverage would be provided only for up 

to five eligible beneficiaries. The 

commenters urged the FDIC to amend 

the pass-through deposit insurance rules 

and, in the interim, to clarify through 

guidance that institutional trusts qualify 

for pass-through insurance coverage. 

Pass-through insurance coverage 

applies to deposits of specific types of 

institutional trusts under the current 

rules, and this coverage would not be 

affected by the rule. The commenters 

noted that collective trust funds are 

established for the purpose of investing 

assets of retirement, pension, profit 

sharing, stock bonus or other employee 

benefit trusts. Deposits of employee 

benefit plans are insured on a passthrough basis pursuant to statute and 

regulation.39 Moreover, § 330.10(f)(2) of 

the proposed rule stated that deposits of 

employee benefit plans would be 

covered pursuant to the rules for 

employee benefit plan deposits found in 

§ 330.14, even if such deposits belonged 

to a trust. 

Pass-through insurance coverage 

generally does not apply to deposits of 

other types of investment trusts, such as 

mutual funds or other investment 

company structures.40 While some 

institutional trusts (similarly to some 

individual trusts) may experience a 

reduction in deposit insurance coverage 

under this final rule, the FDIC believes 

that a simplified insurance calculation 

for trust deposits has substantial 

benefits for depositors and IDIs. 

Per-Grantor Coverage Limit 

Two individuals submitted comment 

letters questioning the elimination of 

coverage for a grantor’s trust deposits 

exceeding $1,250,000 at a single IDI. 

The FDIC recognizes that this aspect of 

the proposed rule may result in a 

reduction in deposit insurance coverage 

for a small number of trust depositors 

that hold deposits exceeding $1,250,000 

at a single IDI, and these depositors may 

wish to restructure their trust deposits. 

However, the FDIC believes that a 

simplified insurance calculation for 

trust deposits has substantial benefits 

for depositors and IDIs, as discussed 

above. The $1,250,000 per-grantor, perIDI limit is intended to be more 

straightforward and balance the 

objectives of simplifying the trust rules, 

promoting timely payment of deposit 

insurance, facilitating resolutions, 

ensuring consistency with the FDI Act, 

and limiting risk to the DIF. In addition, 

as discussed below, the FDIC intends to 

update its publications and engage in 

public outreach to promote awareness of 

the changes in coverage. 

Educational Materials 

A trade association suggested that the 

FDIC provide template language for 

bankers to explain trust coverage 

changes to depositors and publish and 

regularly update guidance and 

frequently asked questions on its 

website to address specific scenarios. 

The FDIC appreciates this suggestion 

and recognizes the need for public 

outreach on a variety of fronts. The 

FDIC already has many resources for 

bankers and the public that help explain 

deposit insurance coverage generally, 

and several presentations that are 

specific to trust accounts, including the 

following: 

• Financial Institution Employee’s 

Guide to Deposit Insurance: Describes 

deposit insurance coverage for various 

account categories and provides 

examples of coverage in multiple 

different scenarios. 

• Bankers’ seminars: The FDIC holds 

deposit insurance seminars for bankers 

multiple times each year, during which 

FDIC staff discuss the current rules and 

take questions. 

• Electronic Deposit Insurance 

Estimator (EDIE): A tool on the FDIC’s 

website that can be used to help 

determine deposit insurance coverage 

for particular account arrangements. 


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41 12 U.S.C. 1821(a)(1)(C). 

42 12 CFR 330.10(c) provides that ‘‘[f]or purposes 

of this section, a beneficiary includes a natural 

person as well as a charitable organization and 

other non-profit entity recognized as such under the 

Internal Revenue Code of 1986, as amended.’’ 

• Published guidance and materials 

relating to deposit insurance coverage 

intended to assist the covered 

institutions subject to part 370 

As part of its implementation of the 

final rule by the effective date of April 

1, 2024, the FDIC intends to review all 

relevant resources and publications and 

update or remove those materials, as 

appropriate. Additionally, the FDIC will 

ensure that all materials, including 

brochures and any other documents, are 

updated and available for distribution. 

The FDIC will also consider additional 

ways to inform the public regarding the 

final rule and ways to assist bankers in 

explaining any changes to depositors. 

Comments Focused on Part 370 

Commenters also addressed various 

aspects of the NPR that have 

implications for covered institutions. 

Issues raised by these commenters and 

the FDIC’s responses are discussed 

below. The commenters also raised 

issues with part 370 that are outside the 

scope of this rulemaking effort. While 

the FDIC acknowledges those 

comments, it believes those comments 

are not directly related to the final rule. 

Beneficiaries of Future Trusts 

Several trade associations argued that 

the proposed rule’s treatment of 

beneficiaries of future trusts would add 

considerable burden to compliance with 

part 370 and urged the FDIC to treat 

future trusts as another type of eligible 

beneficiary. The FDIC does not believe 

that looking through future trusts to 

identify potential beneficiaries will add 

any compliance burden for part 370 

covered institutions. Under 

§ 370.4(b)(2), a covered institution is not 

required to maintain the identity of a 

formal trust’s beneficiary(ies) in its 

deposit account records for the trust’s 

account(s) if it does not otherwise 

maintain the information that would be 

needed for its information technology 

system to meet the requirements set 

forth in § 370.3. Thus, to the extent a 

trust’s beneficiaries include a future 

trust, the covered institution would not 

be required to collect information on the 

beneficiaries of a future trust in order to 

comply with part 370. It is important to 

note, however, that regardless of 

whether or not an insured depository 

institution is covered by part 370, if an 

insured depository institution were to 

fail, then the depositor may need to 

provide the identity(ies) of a future 

trust’s beneficiary(ies) in order for the 

FDIC to make a complete and accurate 

deposit insurance determination. In 

addition, the FDIC notes that it is 

required by statute to aggregate each 

depositor’s deposits within each 

insurance category when making an 

insurance determination.41 Recognizing 

a future trust as an eligible beneficiary 

could result in duplicative coverage to 

the extent the beneficiaries of the 

existing trust and the future trust 

overlap. 

Multiple Beneficiaries Across Multiple 

Trust Accounts 

Three trade associations 

recommended that any final rulemaking 

for trust coverage simplification should 

include a specific example to explain 

part 370 recordkeeping requirements 

when there are more than five 

beneficiaries associated with more than 

one trust account established by the 

same grantor. According to the example 

recommended by commenters, when a 

grantor has established both an informal 

trust account (e.g., a payable-on-death 

(POD) account) and a formal trust that 

also has accounts at the same covered 

institution, the covered institution 

would be required to identify the 

beneficiary(ies) only for the informal 

trust account in the deposit account 

records. 

As the commenters note, accounts 

held in connection with a formal trust 

that are insured under § 330.10, as 

amended pursuant to this final rule (or 

§ 330.13 prior to the effective date of 

this final rule), are eligible for 

alternative recordkeeping under 

§ 370.4(b)(2). A covered institution is 

not required to maintain information 

identifying the beneficiaries of a formal 

trust in the deposit account records for 

purposes of part 370 if it does not 

otherwise maintain the information that 

would be needed for its information 

technology system to meet the 

requirements set forth in § 370.3. 

Nevertheless, if a covered institution 

should fail, the depositor (or the trustee 

for the formal trust) may need to submit 

to the FDIC information identifying the 

formal trust’s beneficiary(ies). 

Need To Provide Trust Documentation 

Upon Bank Failure 

A deposit solutions provider 

submitted a comment letter describing 

its operation of a sweep program and 

the method by which it allocates trust 

deposits among several banks. The 

commenter indicated that if the 

depositor’s originating bank does not 

provide information on trust 

beneficiaries, only up to $250,000 of 

that depositor’s funds will be allocated 

to a single bank in the network. The 

commenter requested the FDIC 

recognize that operating the program in 

this way eliminates the need for the 

originating bank to provide trust 

documentation to the FDIC after a bank 

failure or for the purpose of complying 

with part 370’s recordkeeping 

requirements. 

The deposit solutions provider’s 

methodology for allocating the trust 

deposits is intended to ensure that the 

total corpus of trust funds would be 

eligible for deposit insurance (because 

the amount placed at each receiving 

bank would not exceed the SMDIA for 

each beneficial owner of the deposits). 

That methodology, however, would not 

necessarily provide the FDIC with all of 

the requisite information to complete an 

accurate deposit insurance 

determination on a particular 

depositor’s accounts. Several other 

factors must be considered and 

evaluated. 

Although it may be uncommon for an 

individual depositor participating in the 

commenter’s program to maintain other 

deposit accounts at a bank holding the 

swept trust funds, the FDIC is required 

by statute to aggregate all of a beneficial 

owner’s funds placed in one bank in the 

same right and capacity. Consequently, 

the FDIC would have to obtain any 

additional depositor or trust account 

information (or confirm that there is 

none) in order to aggregate all the 

depositor’s accounts in the trust 

category. The requisite information 

would include identification of both the 

grantor(s) and the beneficiaries of the 

trust. For example, in the event that a 

depositor maintained more than one 

trust account with the same beneficiary, 

that particular beneficiary would only 

count once for purposes of deposit 

insurance eligibility. Additionally, it is 

possible that an entity listed as a 

beneficiary would not meet the 

definition of a ‘‘beneficiary’’ as set forth 

in § 330.10(c).42 Finally, if the grantor 

has multiple trust accounts at the same 

bank, it is possible that the FDIC would 

provide deposit insurance for one trust 

account before receiving the necessary 

trust account information for another 

trust account. As stated previously, the 

FDIC would have to ensure that both 

trust accounts are aggregated before 

paying additional deposit insurance for 

the second trust account. The FDIC 

would be unable to perform this 

function without the relevant grantor 

and beneficiary information. 

The part 370 recordkeeping 

requirements for informal revocable 

trust accounts closely track the 

recordkeeping requirements set forth in 


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43See § 330.10(b)(2) which requires ‘‘[f]or 

informal revocable trust accounts, the beneficiaries 

must be specifically named in the deposit account 

records of the insured depository institution.’’ 

44Although § 370.10(d) provides that ‘‘[a] covered 

institution will not be considered to be in violation 

of this part as a result of a change in law that alters 

the availability or calculation of deposit insurance 

for such period as specified by the FDIC following 

the effective date of such change[,]’’ the FDIC is not 

providing an additional period of time pursuant to 

§ 370.10(d) because the delayed effective date of the 

final rule provides covered institutions with at least 

24 months to prepare the changes that will need to 

be operational on April 1, 2024. 45 12 CFR 370.10(a). 

46 84 FR 37020, 37029 (July 30, 2019). 

47 Id. The FDIC explained further that ‘‘[t]his 

capability will facilitate the FDIC’s resolution 

efforts by enabling a successor [insured depository 

institution] to continue payments processing 

uninterrupted, and will also mitigate adverse effects 

of the covered institution’s failure on these account 

holders.’’ 

48 Id., discussing trust deposits insured pursuant 

to 12 CFR 330.13, which coverage is now combined 

under revised 12 CFR 330.10. 

49See 86 FR 41766, 41776 (Aug. 3, 2021). 

12 CFR 330.10, as amended. For 

example, § 370.4(a)(1)(iii) requires the 

covered institution to maintain 

information concerning the beneficiaries 

of a payable-on-death account in the 

covered institution’s records.43

Therefore, this information should be 

immediately available to the FDIC at a 

covered institution’s failure. In contrast, 

for formal trust accounts, § 370.4(b)(2) 

permits alternative recordkeeping 

treatment and requires a covered 

institution to maintain some, but not all, 

of the requisite information the FDIC 

would need to have to complete an 

accurate deposit insurance 

determination. Nevertheless, the FDIC 

would require this information to be 

available after a covered institution’s 

failure for the reasons discussed above. 

Implementation of Part 370 Capabilities 

Three trade associations urged the 

FDIC to postpone part 370 examinations 

on the types of deposit accounts 

impacted. Part 370 requires a covered 

institution to implement information 

technology and recordkeeping 

capabilities to calculate deposit 

insurance as provided under part 330. 

The final rule has a delayed effective 

date and will not go into effect until 

April 1, 2024.44 Accordingly, covered 

institutions will have at least 24 months 

after the FDIC’s adoption of the final 

rule to prepare the updates or changes 

to its information technology system or 

recordkeeping capabilities that will be 

necessary to satisfy part 370 

requirements as of the effective date of 

the final rule. The FDIC is also 

publishing a separate notification 

elsewhere in this issue of the Federal 

Register to part 370 covered institutions 

regarding the final rule’s implications 

regarding compliance with part 370. 

FDIC Testing of Part 370 Capabilities 

Several trade associations suggested 

that the FDIC delay part 370 compliance 

tests for three years after a covered 

institution’s part 370 annual 

certification following the effective date 

of the final rule. The FDIC will continue 

to conduct periodic tests pursuant to 12 

CFR 370.10(b) and evaluate the part 370 

capabilities under the rules effective at 

the time of the compliance test. Ongoing 

compliance testing is necessary because 

a covered institution could fail at any 

time, and the FDIC would need to 

utilize the covered institution’s part 370 

capabilities to effectively conduct a 

timely deposit insurance determination. 

The FDIC relies on compliance testing 

to provide it with insight regarding how 

comprehensive a covered institution’s 

part 370 capabilities are. Further, the 

revisions to deposit insurance coverage 

made by the final rule are expected to 

impact a relatively small volume of a 

covered institution’s deposit balances so 

should not significantly impact 

compliance testing, and would 

nonetheless be useful in assessing a 

covered institution’s part 370 

capabilities. 

Comments Outside the Scope of This 

Rulemaking 

Finally, commenters recommended 

certain changes to part 370 

requirements. Three trade associations 

suggested that the FDIC limit the annual 

certification requirement for testing and 

attestation to material changes only and 

waive certain recordkeeping 

requirements for grantors. The FDIC 

believes that the recommendations to 

change part 370 compliance and 

recordkeeping requirements are outside 

the scope of the current part 330 

rulemaking and would require an 

amendment to part 370 instead. 

Currently, covered institutions are 

required to submit to the FDIC a 

certification of compliance that must, 

among other requirements, ‘‘confirm 

that the covered institution has 

implemented all required capabilities 

and tested its information technology 

system during the proceeding twelve 

months.’’ 45 The purpose of this 

requirement is to guarantee that a 

covered institution perform an end-toend test of its part 370 capabilities at 

least once per year and to confirm that 

those capabilities function properly. In 

the event that a covered institution were 

to fail, the FDIC would rely upon all of 

the covered institution’s part 370 

capabilities to complete the deposit 

insurance calculations. Moreover, the 

FDIC would not limit its testing to only 

the capabilities that the covered 

institution has materially changed 

during the preceding compliance year. 

Rather it would test the covered 

institution’s capabilities to calculate 

deposit insurance should the need arise 

and understand which capabilities 

function properly and which do not. 

Among the comments related solely to 

part 370, a trade association requested 

that the FDIC waive certain 

recordkeeping requirements under 

§ 370.4 that are applicable to formal 

revocable trust and irrevocable trust 

accounts with transactional features, 

namely the requirement that a covered 

institution maintain a unique identifier 

for the trust’s grantor. In the preamble 

to the 2019 part 370 final rule, the FDIC 

stated that having a method to identify 

the grantor at failure (i.e., a unique 

identifier) would enable the FDIC to 

aggregate the deposits of formal 

revocable trusts established by the same 

grantor and insure those accounts up to 

the SMDIA.46 This could enable 

payment instructions presented against 

those accounts to be completed after 

failure.47 The same approach would be 

used for certain irrevocable trust 

accounts that have a common grantor.48

Trade association commenters also 

recommended that the FDIC allow 

covered institutions to amend existing 

exception requests and provide 

extensions for granted relief to account 

for changes to part 330. This request is 

outside the scope of this rulemaking, 

and the FDIC will consider this outside 

the scope of this rulemaking. 

The FDIC reiterates that 

recommendations to amend part 370 are 

beyond the scope of this final rule. 

E. Alternatives Considered 

The FDIC considered a number of 

alternatives to the amendments to the 

trust rules that could meet its objectives, 

as described in the preamble to the 

proposed rule.49 Commenters generally 

did not address these alternatives, and 

for the reasons stated in the preamble to 

the proposed rule, the FDIC concludes 

that the proposed rule was preferable to 

the alternatives. 

II. Amendments to Mortgage Servicing 

Account Rule 

A. Policy Objectives 

The FDIC’s regulations governing 

deposit insurance coverage include 

specific rules on deposits maintained at 

IDIs by mortgage servicers. These rules 

are intended to be easy to understand 

and apply in determining the amount of 


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50Certain funds collected from mortgagors and 

held by a bank may not be ‘‘deposits’’ under the FDI 

Act, and thus fall outside the scope of deposit 

insurance coverage. For example, funds received by 

a bank that are immediately applied to reduce the 

debt owed to that bank are specifically excluded 

from the statutory definition of ‘‘deposit.’’ 12 U.S.C. 

1813(l)(3). 

51See 73 FR 61658, 61658–59 (Oct. 17, 2008). 

52 In order to fulfill their contractual obligations 

with investors, covered institutions maintain 

mortgage principal and interest balances at a pool 

level and remittances, advances, advance 

reimbursement and excess funds applications that 

affect pool-level balances are not allocated back to 

individual borrowers. 

53See 86 FR 41766 (Aug. 3, 2021). 

54Servicers’ advances may have been insured 

under the rule that applied to mortgage servicing 

account deposits prior to 2008. Prior to 2008, 

mortgage servicing deposits were insured on a passthrough basis. Under the pass-through insurance 

rules, the identity of the party that pays funds into 

a deposit account does not generally factor into 

insurance coverage. In this sense, the proposed rule 

can be viewed as restoring coverage to the previous 

level. 

deposit insurance coverage for a 

mortgage servicer’s deposits. The FDIC 

also seeks to avoid uncertainty 

concerning the extent of deposit 

insurance coverage for such deposits, as 

deposits in mortgage servicing accounts 

(MSAs) provide a source of funding for 

IDIs. 

The FDIC is amending its rules 

governing insurance coverage for 

deposits maintained at IDIs by mortgage 

servicers that are comprised of 

mortgagors’ principal and interest 

payments. The amendments are 

intended to address an aspect of 

servicing arrangements that was not 

previously covered by the mortgage 

servicing account rule. Specifically, 

some servicing arrangements may 

permit or require servicers to advance 

their own funds to the lenders when 

mortgagors are delinquent in making 

principal and interest payments, and 

servicers might commingle such 

advances in the MSA with principal and 

interest payments collected directly 

from mortgagors. This may be required, 

for example, under certain mortgage 

securitizations. The FDIC believes that 

the factors that motivated the FDIC to 

establish its current rules for mortgage 

servicing accounts, described below, 

argue for treating funds advanced by a 

mortgage servicer in order to satisfy 

mortgagors’ principal and interest 

obligations to the lender as if such funds 

were collected directly from 

borrowers.50

B. Background 

The FDIC’s rules governing coverage 

for mortgage servicing accounts were 

originally adopted in 1990 following the 

transfer of responsibility for insuring 

deposits of savings associations from the 

Federal Savings and Loan Insurance 

Corporation (FSLIC) to the FDIC. Under 

the rules adopted in 1990, deposits 

comprised of payments of principal and 

interest were insured on a pass-through 

basis to lenders, mortgagees, investors, 

or security holders (lenders). In 

adopting this rule, the FDIC focused on 

the fact that principal and interest funds 

were generally owned by lenders, on 

whose behalf the servicer, as agent, 

accepted principal and interest 

payments. By contrast, payments of 

taxes and insurance were insured to the 

mortgagors or borrowers on a passthrough basis because the borrower 

owns such funds until tax and 

insurance bills are paid by the servicer. 

In 2008, however, the FDIC 

recognized that securitization methods 

and vehicles for mortgages had become 

more complex, exacerbating the 

difficulty of determining the ownership 

of deposits comprised of principal and 

interest payments by mortgagors and 

extending the time required to make a 

deposit insurance determination for 

deposits of a mortgage servicer in the 

event of an IDI’s failure.51 The FDIC 

expressed concern that a lengthy 

insurance determination could lead to 

continuous withdrawal of deposits of 

principal and interest payments from 

IDIs and unnecessarily reduce a funding 

source for such institutions. The FDIC 

therefore amended its rules to provide 

coverage to lenders based on each 

mortgagor’s payments of principal and 

interest into the mortgage servicing 

account, up to the SMDIA (currently 

$250,000) per mortgagor. The FDIC did 

not amend the rule for coverage of tax 

and insurance payments, which 

continued to be insured to each 

mortgagor on a pass-through basis and 

aggregated with any other deposits 

maintained by each mortgagor at the 

same IDI in the same right and capacity. 

The 2008 amendments to the rules for 

mortgage servicing accounts did not 

provide for the fact that servicers may 

be required to advance their own funds 

to make payments of principal and 

interest on behalf of delinquent 

borrowers to the lenders. However, this 

is required of mortgage servicers under 

some mortgage servicing arrangements. 

Covered institutions identified 

challenges to implementing certain 

recordkeeping requirements with 

respect to MSA deposit balances as a 

result of the ways in which servicer 

advances are administered and 

accounted.52

The current rule provides coverage for 

principal and interest funds only to the 

extent ‘‘paid into the account by the 

mortgagors’’; it does not provide 

coverage for funds paid into the account 

from other sources, such as the 

servicer’s own operating funds, even if 

those funds satisfy mortgagors’ principal 

and interest payments. As a result, 

deposits into an MSA by a servicer for 

the purpose of making an advance are 

not provided the same level of coverage 

as other deposits in a mortgage servicing 

account consisting of principal and 

interest payments directly from the 

borrower, which are insured up to the 

SMDIA for each borrower. Instead, the 

advances are aggregated and insured to 

the servicer as corporate funds for a 

total of $250,000. The FDIC is 

concerned that this inconsistent 

treatment of principal and interest 

amounts could result in financial 

instability during times of stress, and 

could further complicate the insurance 

determination process, a result that is 

inconsistent with the FDIC’s policy 

objectives. 

C. Final Rule 

In July 2021, the FDIC proposed to 

amend the rules governing coverage for 

deposits in mortgage servicing accounts 

to provide consistent deposit insurance 

treatment for all MSA deposit balances 

held to satisfy principal and interest 

obligations to a lender, regardless of 

whether those funds are paid into the 

account by borrowers, or paid into the 

account by another party (such as the 

servicer) in order to satisfy a periodic 

obligation to remit principal and 

interest due to the lender.53 Under the 

rule, accounts maintained by a mortgage 

servicer in an agency, custodial, or 

fiduciary capacity, for the purpose of 

payment of a borrower’s principal and 

interest obligations, would be insured 

for the cumulative balance paid into the 

account in order to satisfy principal and 

interest obligations to the lender, 

whether paid directly by the borrower 

or by another party, up to the limit of 

the SMDIA per mortgagor. Mortgage 

servicers’ advances of principal and 

interest funds on behalf of delinquent 

borrowers would therefore be insured 

up to the SMDIA per mortgagor, 

consistent with the coverage rules for 

payments of principal and interest 

collected directly from borrowers.54

The FDIC received one joint comment 

letter responding to the proposed 

change in coverage for mortgage 

servicing accounts, discussed below. 

Under the final rule, the composition 

of an MSA attributable to principal and 

interest payments would also include 

collections by a servicer, such as 

foreclosure proceeds, that are used to 

satisfy a borrower’s principal and 

interest obligations to the lender. These 


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55The count of institutions includes FDICinsured U.S. branches of institutions headquartered 

in foreign countries. 

56FDIC Call Report data, September 30, 2021. 

57 Data on failed banks comes from the FDIC’s 

Claims Administration System, which contains data 

on depositors’ funds from every failed IDI since 

September 2010. 

funds will be insured up to the limit of 

the SMDIA per mortgagor. 

The FDIC did not propose changes to 

the deposit insurance coverage provided 

for mortgage servicing accounts 

comprised of payments from mortgagors 

of taxes and insurance premiums. Such 

aggregate escrow accounts are held 

separately from the principal and 

interest MSAs and the deposits therein 

are held in trust for the mortgagors until 

such time as tax and insurance 

payments are disbursed by the servicer 

on the borrower’s behalf. Such deposits 

continued to be insured based on the 

ownership interest of each mortgagor in 

the account and aggregated with other 

deposits maintained by the mortgagor at 

the same IDI in the same capacity and 

right. 

D. Discussion of Comments 

The proposed rule provided that 

balances in mortgage servicing accounts 

that were paid into the account by either 

the borrower or another party would be 

insurable if they were held to satisfy the 

principal and interest obligations of a 

mortgagor. The comment was 

supportive of this change, noting that 

the allocations provided would allow 

for more stability in these types of 

accounts in periods of turmoil. The 

FDIC is finalizing the rule as proposed. 

Three trade associations, through a 

joint comment letter, specifically 

requested additional clarity on the 

coverage that would be provided for 

three specific types of funds placed into 

mortgage servicing accounts by the 

servicer—interest shortfall payments, 

funds from distressed homeowner 

programs, and funds used to satisfy 

buyout or repurchase obligations. 

Interest shortfall payments are funded 

by the servicer when a loan is 

refinanced or paid off before the end of 

a month. The associations noted that 

servicers are generally required to fund 

the interest that would have accrued 

during the month, just as if the borrower 

had continued the payment stream as 

agreed. Because these payments are 

traceable at the loan level and held to 

satisfy the interest obligation of the 

mortgagor, they are covered under the 

mortgage servicing account rule. 

Federal, state, and local governments 

have created various programs during 

emergencies that provide funds to 

borrowers who are having difficulties 

paying their home mortgages. While the 

most recent iterations of these programs 

were spurred by the COVID–19 

pandemic, these types of programs can 

result from other types of emergencies 

as well (e.g., natural disasters) and can 

vary in duration. While each program 

would need to be evaluated on its 

individual terms, the FDIC expects that 

funds originating from most government 

programs designed to help homeowners 

with mortgage payments would be 

included in the borrower’s insurable 

balance covered by the mortgage 

servicing account rule due to the 

provision of funds to satisfy the 

borrower’s principal and interest 

obligations. 

With respect to servicer-funded 

buyouts and repurchases of loans, it is 

common for the servicer to be requested 

to repurchase or substitute a loan in a 

securitization if the loan is defective or 

in a specific delinquency status. 

Although the amount of unpaid 

principal balance plus the accrued but 

unpaid interest on that loan is the price 

paid to repurchase the loan from the 

pool, the repurchase of the loan from 

the investor pool does not satisfy the 

borrower’s principal and interest 

obligation, and thus, falls outside the 

scope of the rule. 

Alternatively, the associations 

suggested that the FDIC eliminate the 

borrower-level allocation, as most 

mortgage servicers account for the 

deposits in their account on the 

portfolio level as opposed to the loanspecific level. The commenters’ 

suggested removal of the borrower 

allocation would change the insurable 

amount calculation to insure the lesser 

of the balance in the mortgage servicing 

account or the number of borrowers 

multiplied by the SMDIA. The FDIC 

believes that the elimination of the 

borrower-level allocation would 

significantly expand deposit insurance 

coverage in some circumstances and 

declines to adopt the suggested 

alternative. For example, a balance 

representing a large commercial 

mortgage payment could be fully 

insured if the pooled custodial account 

contained funds for a large number of 

other borrowers, even if this large 

payment significantly exceeded the 

$250,000 deposit insurance limit. 

III. Regulatory Analysis 

A. Expected Effects 

1. Simplification of Trust Rules 

Generally, the simplification of the 

trust rules is expected to have benefits 

including clarifying depositors’ and 

bankers’ understanding of the insurance 

rules, promoting the timely payment of 

deposit insurance following an IDI’s 

failure, facilitating the transfer of 

deposit relationships to failed bank 

acquirers (thereby potentially reducing 

the FDIC’s resolution costs), and 

addressing differences in the treatment 

of revocable trust deposits and 

irrevocable trust deposits contained in 

the current rules. The changes to the 

current rules would directly affect the 

level of deposit insurance coverage 

provided to some depositors with trust 

deposits. In some cases, which the FDIC 

expects are rare, the changes could 

reduce deposit insurance coverage; for 

the vast majority of depositors, the FDIC 

expects the coverage level to be 

unchanged. The FDIC has also 

considered the impact of any changes in 

the deposit insurance rules on the DIF 

and on the covered institutions that are 

subject to part 370. Finally, the FDIC 

describes other potential effects of the 

changes, such as the effects on 

information technology (IT) service 

providers to the institutions that could 

be affected by the final rule. These 

effects are discussed in greater detail 

below. 

Effects on Deposit Insurance Coverage 

The final rule would affect deposit 

insurance coverage for deposits held in 

connection with trusts. According to 

September 30, 2021 Call Report data, 

the FDIC insures 4,923 depository 

institutions 55 that report holding 

approximately 812 million deposit 

accounts. Additionally, 1,551 IDIs have 

powers granted by a state or national 

regulatory authority to administer 

accounts in a fiduciary capacity (i.e., 

trust powers) and 1,155 exercise those 

powers, comprising 31.5 percent and 

23.5 percent, respectively, of all IDIs.56

However, individual depositors may 

establish a trust account at an IDI even 

if that IDI does not itself have or 

exercise trust powers, and in fact, as 

discussed below, 99 percent of a sample 

of failed banks had trust accounts. 

Therefore, the FDIC estimates that the 

final rule could affect between 1,155 

and 4,923 IDIs. 

The FDIC does not have detailed data 

on depositors’ trust arrangements that 

would allow it to precisely estimate the 

number of trust accounts that are 

currently held by FDIC-insured 

institutions. However, the FDIC 

estimated the number of trust accounts 

and trust account depositors utilizing 

data from failed banks. Based on data 

from 249 failed banks 57 between 2010 

and 2020, 335,657 deposit accounts— 

owned by 250,139 distinct depositors— 

were trust accounts (revocable or 

irrevocable), out of a total of 3,013,575 

deposit accounts. Thus, about 11.14 


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58There were approximately 812 million deposit 

accounts reported by FDIC-insured institutions as of 

September 30, 2021, based on Call Report data. 

Assuming that 11.14 percent of accounts are trust 

accounts, then there are an estimated 90.5 million 

trust accounts as of September 30, 2021. 

59Using the data from failed banks, 250,139 

distinct depositors held 335,657 revocable or 

irrevocable trust accounts, or there were 0.745 trust 

account depositors per trust account (250,139 

divided by 335,657). The estimated number of trust 

depositors at FDIC-insured institutions (67.4 

million) is obtained by multiplying the estimated 

number of trust accounts by the number of trust 

account depositors per trust account (90.5 million 

multiplied by 0.745). 

60As discussed above, the provisions relating to 

contingent interests may not apply when a trust has 

become irrevocable due to the death of one or more 

grantors. In such instances, the revocable trust rules 

continue to apply. 

61As discussed above, deposits maintained by an 

IDI as trustee of an irrevocable trust would not be 

included in this aggregation, and would remain 

separately insured pursuant to section 7(i) of the 

FDI Act and 12 CFR 330.12. 

62 Data obtained in connection with IDI failures 

during the recent financial crisis suggests that 

irrevocable trust deposits comprise less than one 

percent of trust deposits. However, as discussed 

above, the FDIC does not possess sufficient 

information to enable it to estimate the effects of the 

final rule on trust account depositors at all IDIs. 

63 In the data obtained in connection with IDI 

failures during the recent financial crisis, only 51 

out of 250,139 depositors with trust accounts had 

both revocable and irrevocable types. Of these 51 

depositors, nine had total trust account balances 

greater than $250,000, and only one had a total trust 

balance of more than $1,250,000. 

64To estimate the numbers of trust account 

depositors and trust accounts affected, the FDIC 

performed the following calculation. First, based on 

data from 249 failed banks between 2010 and 2020, 

the FDIC determined that there were 335,657 trust 

accounts out of 3,013,575 deposit accounts (trust 

account share). Second, the FDIC determined the 

number of trust accounts per trust depositor 

(335,657/250,139). The FDIC then estimated the 

number of trust accounts by multiplying the trust 

account share (335,657/3,013,575) by the number of 

deposit accounts across all IDIs (812,414,977) 

according to September 30, 2021, Call Report data. 

This step yielded an estimate of 90,488,133 trust 

accounts. Based on the estimated number of trust 

accounts per trust depositor from the failed bank 

data, the FDIC estimated the total number of trust 

depositors to be 67,433,752. Using failed bank data, 

100 out of 250,139 trust depositors had balances in 

excess of $1,250,000 in their trust accounts. Thus, 

the FDIC estimated that, of the approximately 67.4 

million trust depositors, (100/250,139) of them— 

approximately 26,959—had balances in excess of 

$1,250,000 in their trust accounts, and therefore 

could be directly affected by the final rule. These 

estimated 26,959 trust depositors are associated 

with an estimated 36,175 trust accounts, based on 

the observed number of trust accounts per trust 

depositor from the data from 249 failed banks 

between 2010 and 2020. 

percent of the deposit accounts at the 

249 failed banks were trust accounts. Of 

the 249 institutions, 247 (99 percent) 

reported having trust accounts at time of 

failure. Of the 247 failed banks that 

reported trust accounts, 212 reported 

not having trust powers as of their last 

Call Report. Assuming the percentage of 

trust accounts at failed banks is 

representative of the percentage of trust 

accounts among all FDIC-insured 

institutions, the FDIC estimates, for 

purposes of this analysis, that there are 

approximately 90.5 million trust 

accounts in existence at FDIC-insured 

institutions.58 Additionally, based on 

the observed number of trust account 

depositors per trust account in the 

population of 249 failed banks, the FDIC 

estimates, for purposes of this analysis, 

that there are approximately 67.4 

million trust depositors.59 These 

estimates are subject to considerable 

uncertainty, since the percentage of 

deposit accounts that are trust accounts 

and the number of depositors per trust 

account for all FDIC insured institutions 

may differ from what was observed at 

the 249 failed banks. The FDIC does not 

have information that would shed light 

on whether or how the numbers of trust 

accounts and trust depositors at failed 

banks differs from the corresponding 

numbers for other FDIC-insured 

institutions. 

The FDIC also does not have detailed 

data on depositors’ trust arrangements 

that would allow the FDIC to precisely 

estimate the quantitative effects of the 

final rule on deposit insurance coverage. 

Thus, the effects of the changes to the 

insurance rules are outlined 

qualitatively below. The FDIC expects 

that most depositors would experience 

no change in the coverage for their 

deposits under the final rule. However, 

some depositors that maintain trust 

deposits would experience a change in 

their insurance coverage under the final 

rule. 

The FDIC anticipates that deposit 

insurance coverage for some irrevocable 

trust deposits would increase under the 

final rule. The FDIC’s experience 

suggests that the provisions of the 

current irrevocable trust rules that 

require the identification and 

aggregation of contingent interests often 

apply due to the inclusion of 

contingencies in such trusts.60 Thus, 

even where an irrevocable trust names 

multiple beneficiaries, the current trust 

rules often provide a total of only 

$250,000 in deposit insurance coverage. 

The final rule would not consider such 

contingencies in the calculation of 

coverage, and per-beneficiary coverage 

would apply. 

In limited instances, the merger of the 

revocable trust and irrevocable trust 

categories may decrease coverage for 

depositors. Deposits of revocable trusts 

and deposits of irrevocable trusts are 

currently insured separately. The final 

rule would require aggregation for 

purposes of applying the deposit 

insurance limit, thereby increasing the 

likelihood of the combined trust 

account balances exceeding the 

insurance limit.61 However, the FDIC’s 

experience is that irrevocable trust 

deposits comprise a relatively small 

share of the average IDI’s deposit base,62

and that it is rare for IDIs to hold 

deposits in connection with irrevocable 

and revocable trusts established by the 

same grantor(s).63 Individual grantors’ 

trust deposits held for the benefit of up 

to five different beneficiaries would 

continue to be separately insured. 

With respect to revocable and 

irrevocable trusts, depositors who have 

designated more than five beneficiaries 

and structured their trust accounts in a 

manner that provides for more than 

$1,250,000 in coverage per grantor, per 

IDI under the current rules would 

experience a reduction in coverage. The 

FDIC’s experience suggests that the 

$1,250,000 maximum coverage amount 

per grantor, per IDI would not affect the 

vast majority of trust depositors, as most 

trusts have either five or fewer 

beneficiaries, less than $1,250,000 per 

grantor on deposit at the same IDI, or are 

structured in a manner that results in 

only $1,250,000 in coverage under the 

current rules. The FDIC estimates that 

approximately 26,959 trust account 

depositors and approximately 36,175 

trust accounts could be directly affected 

by this aspect of the final rule, 

representing about 0.04 percent of both 

the estimated number of trust account 

depositors and the estimated number of 

trust accounts.64 The actual number of 

trust depositors and trust accounts 

impacted will likely differ, as the 

estimates rely on data from failed banks, 

and failed banks may differ from other 

institutions in their percentages of trust 

depositors or trust accounts. It is also 

possible depositors may restructure 

their deposits in response to changes to 

the rule, thus mitigating the potential 

effects on deposit insurance coverage. 

Clarification of Insurance Rules 

The merger of certain revocable and 

irrevocable trust categories is intended 

to simplify deposit insurance coverage 

for trust accounts. Specifically, the 

merger of these categories would mostly 

eliminate the need to distinguish 

revocable and irrevocable trusts 

currently required to determine 

coverage for a particular trust deposit. 

The benefit of the common set of rules 

would likely be particularly significant 

for depositors that have established 

arrangements involving multiple trusts, 

as they would no longer need to apply 

two different sets of rules to determine 

the level of deposit insurance coverage 

that would apply to their deposits. For 

example, the final rule would eliminate 

the need to consider the specific 


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allocation of interests among the 

beneficiaries of revocable trusts with six 

or more beneficiaries, as well as 

contingencies established in irrevocable 

trusts. The merger of the categories also 

would eliminate the need for current 

§ 330.10(h) and (i), which allows for the 

continued application of the revocable 

trust rules to the account of a revocable 

trust that becomes irrevocable due to the 

death of the trust’s owner. As previously 

discussed, these provisions of the 

current trust rules have proven 

confusing as illustrated by the 

numerous inquiries that are consistently 

submitted to the FDIC on these topics. 

FDIC-insured depository institutions 

may incur some regulatory costs 

associated with making necessary 

changes to internal processes and 

systems and bank personnel training in 

order to accommodate the final rule’s 

definition of ‘‘trust accounts’’ and 

attendant deposit insurance coverage 

terms. There also may be some initial 

cost for IDIs to become familiar with the 

changes to the trust insurance coverage 

rules in order to be able to explain them 

to potential trust customers, 

counterbalanced to some extent by the 

fact that the rules should be simpler for 

IDIs to understand and explain going 

forward. 

Prompt Payment of Deposit Insurance 

The FDIC also expects that 

simplification of the trust rules would 

promote the timely payment of deposit 

insurance in the event of an IDI’s 

failure. The FDIC’s experience has been 

that the current trust rules often require 

detailed, time-consuming, and resourceintensive review of trust documentation 

to obtain the information that is 

necessary to calculate deposit insurance 

coverage. This information is often not 

found in an IDI’s records and must be 

obtained from depositors after the IDI’s 

failure. The final rule would ameliorate 

the operational challenge of calculating 

deposit insurance coverage, which 

could be particularly acute in the case 

of a failure of a large IDI with a large 

number of trust accounts. The final rule 

would streamline the review of trust 

documents required to make a deposit 

insurance determination, promoting 

more prompt payment of deposit 

insurance. Timely payment of deposit 

insurance also can help to facilitate the 

transfer of depositor relationships to a 

failed bank’s acquirer, potentially 

expand resolution options, potentially 

reduce the FDIC’s resolution costs, and 

support greater confidence in the 

banking system. 

Deposit Insurance Fund Impact 

As discussed above, the final rule is 

expected to have mixed effects on the 

level of insurance coverage provided for 

trust deposits. Coverage for some 

irrevocable trust deposits would be 

expected to increase, but in the FDIC’s 

experience, irrevocable trust deposits 

are not nearly as common as revocable 

trust deposits. The level of coverage for 

some trust deposits would be expected 

to decrease due to the final rule’s 

simplified calculation of coverage and 

its aggregation of revocable and 

irrevocable trust deposits. As noted 

above, the FDIC does not have detailed 

data on depositors’ trust arrangements 

to allow it to precisely project the 

quantitative effects of the final rule on 

deposit insurance coverage. 

Indirect Effects 

A change in the level of deposit 

insurance coverage does not necessarily 

result in a direct economic impact, as 

deposit insurance is only paid to 

depositors in the event of an IDI’s 

failure. However, changes in deposit 

insurance coverage may prompt 

depositors to take actions with respect 

to their deposits. In response to changes 

in the level of coverage under the final 

rule, trust depositors could maximize 

coverage relative to the coverage under 

the current rule by transferring some of 

their trust deposits to other types of 

accounts that provide similar or higher 

amounts of coverage or by amending the 

terms of their trusts. Parties affected 

could include IDIs, depositors, and 

other firms in the financial services 

marketplace (e.g., deposit brokers). Any 

costs borne by the depositor in moving 

a portion of the funds to a different IDI 

to stay under the insurance limit would 

be accompanied by benefits, such as 

more prompt deposit insurance 

determinations, and quicker access to 

insured deposits for depositors during 

the resolution process. The FDIC cannot 

estimate these effects because it does 

not have information on the individual 

costs of each action that confronts each 

depositor, their ability to amend their 

trust structure or move funds, and their 

subjective risk preference with respect 

to holding insured and uninsured 

deposits. 

Part 370 Covered Institutions 

As discussed previously, institutions 

covered by part 370 must maintain 

deposit account records and systems 

capable of applying the deposit 

insurance rules in an automated 

manner. The final rule would change 

certain aspects of how coverage is 

determined for trust deposits. This 

could require covered institutions to 

reprogram certain systems to ensure that 

those systems continue to be capable of 

applying the deposit insurance rules as 

part 370 requires. 

The FDIC expects that the final rule 

would make the deposit insurance 

status of a trust account generally 

clearer. Moreover, since part 370 

requires covered institutions to develop 

and maintain the capabilities to 

calculate deposit insurance for its 

deposits, the final rule could make 

compliance with part 370 relatively less 

burdensome. This is because the 

underlying rules that would be applied 

to most trust deposits would be 

simplified. In particular, the final rule 

requires the aggregation of revocable 

and irrevocable trust deposits, 

categories that are currently separated 

for purposes of the deposit insurance 

calculation capabilities required by part 

370. The FDIC does not expect that the 

final rule would require significant 

changes with respect to covered 

institutions’ treatment of informal 

revocable trust deposits. Moreover, 

many deposits of formal revocable trusts 

and irrevocable trusts currently fall 

within the scope of part 370’s 

alternative recordkeeping provisions, 

meaning that covered institutions are 

not required to maintain all of the 

records necessary to calculate the 

maximum amount of deposit insurance 

coverage available for these deposits. 

These factors may diminish the impact 

of the final rule on the part 370 covered 

institutions, but the FDIC does not have 

sufficient information on covered 

institutions’ systems and records to 

quantify this effect. 

Other Potential Effects 

Although the FDIC expects that 

coverage for most trust depositors will 

be unchanged under the final rule, and 

that the rule’s changes simplify the 

FDIC’s insurance rules for trust 

accounts, the rule may have other 

potential effects. For example, the IDIs 

affected by the rule may rely on thirdparty IT service providers to perform 

insurance coverage estimates for their 

trust depositors. The final rule may lead 

such IT service providers to revise their 

systems to account for the final rule’s 

changes. 

2. Amendments to Mortgage Servicing 

Account Rule 

The final rule would affect the deposit 

insurance coverage for certain principal 

and interest payments within MSA 

deposits maintained at IDIs by mortgage 

servicers. According to the September 

30, 2021 Call Report data, the FDIC 


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65The count of institutions includes FDICinsured U.S. branches of institutions headquartered 

in foreign countries. 66 5 U.S.C. 601 et seq. 

67The SBA defines a small banking organization 

as having $600 million or less in assets, where ‘‘a 

financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 13 

CFR 121.201 (as amended by 84 FR 34261, effective 

August 19, 2019). ‘‘SBA counts the receipts, 

employees, or other measure of size of the concern 

whose size is at issue and all of its domestic and 

foreign affiliates.’’ See 13 CFR 121.103. Following 

these regulations, the FDIC uses a covered entity’s 

affiliated and acquired assets, averaged over the 

preceding four quarters, to determine whether the 

FDIC-supervised institution is ‘‘small’’ for the 

purposes of RFA. 

68See 73 FR 56706 (Sep. 30, 2008). 

insures 4,923 IDIs.65 Of the 4,923 IDIs, 

1,161 IDIs (23.6 percent) report holding 

mortgage servicing assets, which 

indicates that they service mortgage 

loans and could thus be affected by the 

rule. In addition, mortgage servicing 

accounts may be maintained at IDIs that 

do not themselves service mortgage 

loans. The FDIC does not know how 

many IDIs are recipients of mortgage 

servicing account deposits, but believes 

that most IDIs are not. Therefore, the 

FDIC estimates that the number of IDIs 

potentially affected by the final rule is 

greater than 1,161 but substantially less 

than 4,923. 

The FDIC does not have detailed data 

on MSAs that would allow the FDIC to 

reliably estimate the number of MSAs 

maintained at IDIs that would be 

affected by the rule, or any potential 

change in the total amount of insured 

deposits. Thus, the potential effects of 

the amendments regarding governing 

deposit insurance coverage for MSAs 

are outlined qualitatively below. 

The final rule directly affects the level 

of deposit insurance coverage provided 

for some MSAs. Under the rule, the 

composition of an MSA attributable to 

mortgage servicers’ advances of 

principal and interest funds on behalf of 

delinquent borrowers and collections 

such as foreclosure proceeds would be 

insured up to the SMDIA per mortgagor, 

consistent with the coverage for 

payments of principal and interest 

collected directly from borrowers. 

Under the current rules, principal and 

interest funds advanced by a servicer to 

cover delinquencies, and foreclosure 

proceeds collected by servicers, are not 

insured under the rules for MSA 

deposits, but instead are insured to the 

servicer as corporate funds up to the 

SMDIA. Therefore, the final rule 

expands deposit insurance coverage in 

instances where an account maintained 

by a mortgage servicer contains 

principal and interest funds advanced 

by the servicer in order to satisfy the 

obligations of delinquent borrowers to 

the lender, or foreclosure proceeds 

collected by the servicers; and where 

the funds in such instances exceed the 

mortgage servicer’s SMDIA. 

The final rule is likely to benefit a 

servicer compelled by the terms of a 

pooling and servicing agreement to 

advance principal and interest funds to 

note holders when a borrower is 

delinquent, and therefore the servicer 

has not received such funds from the 

borrower. In the event that the IDI 

hosting the MSA for the servicer fails, 

the rule reduces the likelihood that the 

funds advanced by the servicer are 

uninsured, and thereby facilitates access 

to, and helps avoids losses of, those 

funds. As previously discussed, the 

FDIC does not have detailed data on 

MSAs held at IDIs, pooling and 

servicing agreements for outstanding 

mortgage loans, or servicer payments 

into MSAs that would allow the FDIC to 

reliably estimate the number of, and 

volume of funds within, MSAs 

maintained at IDIs that would be 

affected by the final rule. 

Further, the final rule is likely to 

benefit an IDI who is hosting an MSA 

for a servicer that is compelled by the 

terms of a pooling and servicing 

agreement to advance principal and 

interest funds to note holders on behalf 

of delinquent borrowers by increasing 

the volume of insured funds. In the 

event that the IDI enters into a troubled 

condition, the rule could marginally 

increase the stability of MSA deposits 

from such servicers, thereby increasing 

the general stability of funding. 

Finally, the FDIC believes that the 

rule poses general benefits to parties 

that provide or utilize financial services 

related to mortgage products by 

amending an inconsistency in the 

deposit insurance treatment for 

principal and interest payments made 

by the borrower and such payments 

made by the servicer on behalf of the 

borrower. 

Effects on Part 370 Covered Institutions 

Part 370 covered institutions may bear 

some costs in recognizing the expanded 

coverage for servicer advances and 

foreclosure proceeds. However, part 370 

covered institutions already are 

responsible for calculating coverage for 

MSA accounts based on each borrower’s 

payments. Therefore, the FDIC does not 

believe the impact of the rule on part 

370 covered institutions will be 

significant. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

requires that, in connection with a final 

rulemaking, an agency prepare and 

make available for public comment a 

regulatory flexibility analysis that 

describes the impact of the final rule on 

small entities.66 However, a regulatory 

flexibility analysis is not required if the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities 

and publishes its certification and a 

short explanatory statement in the 

Federal Register together with the rule. 

The Small Business Administration 

(SBA) has defined ‘‘small entities’’ to 

include banking organizations with total 

assets of less than or equal to $600 

million.67 Generally, the FDIC considers 

a significant effect to be a quantified 

effect in excess of 5 percent of total 

annual salaries and benefits per 

institution, or 2.5 percent of total 

noninterest expenses. The FDIC believes 

that effects in excess of these thresholds 

typically represent significant effects for 

small entities. The FDIC does not 

believe that the final rule will have a 

significant economic effect on a 

substantial number of small entities. 

However, some expected effects of the 

rule are difficult to assess or accurately 

quantify given current information, 

therefore the FDIC has included a 

Regulatory Flexibility Act Analysis in 

this section. 

1. Simplification of Trust Rules 

Reasons Why This Action Is Being 

Considered 

As previously discussed, the rules 

governing deposit insurance coverage 

for trust deposits have been amended on 

several occasions, but still frequently 

cause confusion for depositors. Under 

the current regulations, there are 

distinct and separate sets of rules 

applicable to deposits of revocable 

trusts and irrevocable trusts. Each set of 

rules has its own criteria for coverage 

and methods by which coverage is 

calculated. Despite the FDIC’s efforts to 

simplify the revocable trust rules in 

2008,68 over the last 10 years, FDIC 

deposit insurance specialists have 

responded to approximately 20,000 

complex insurance inquiries per year on 

average. More than 50 percent pertain to 

deposit insurance coverage for trust 

accounts (revocable or irrevocable). The 

consistently high volume of complex 

inquiries about trust accounts over an 

extended period of time suggests 

continued confusion about insurance 

limits. 

The FDI Act requires the FDIC to pay 

depositors ‘‘as soon as possible’’ after a 

bank failure. However, the insurance 

determination and subsequent payment 


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69 12 U.S.C. 1821(a)(2). 

70The count of institutions includes FDICinsured U.S. branches of institutions headquartered 

in foreign countries. 

71FDIC Call Report data, September 30, 2021. 

72 Id. 

73Whether a failed IDI is considered small is 

based on data from its four quarterly Call Reports 

prior to failure. 

74The FDIC has also considered the impact of any 

changes in the deposit insurance rules on the 

Continued 

for many trust deposits can be delayed 

while FDIC staff reviews complex trust 

agreements and apply the rules for 

determining deposit insurance coverage. 

Moreover, in many of these instances, 

deposit insurance coverage for trust 

deposits is based upon information that 

is not maintained in the failed IDI’s 

deposit account records. This requires 

FDIC staff to work with depositors, 

trustees, and other parties to obtain trust 

documentation following an IDI’s failure 

in order to complete deposit insurance 

determinations. The difficulties 

associated with this are exacerbated by 

the substantial growth in the use of 

formal trusts in recent decades. For 

example, following the 2008 failure of 

IndyMac Federal Bank, FSB (IndyMac), 

FDIC claims personnel contacted more 

than 10,500 IndyMac depositors to 

obtain the trust documentation 

necessary to complete deposit insurance 

determinations for their revocable trust 

and irrevocable trust deposits. As noted 

previously, delays in the payment of 

deposit insurance could be 

consequential, as revocable trust 

deposits in particular can be used by 

depositors to satisfy their daily financial 

obligations. 

Policy Objectives 

As discussed previously, the changes 

adopted by the final rule are intended 

to provide depositors and bankers with 

a rule for trust account coverage that is 

easy to understand, and also to facilitate 

the prompt payment of deposit 

insurance in accordance with the FDI 

Act. The FDIC believes that 

accomplishing these objectives also 

would further the agency’s mission in 

other respects. Specifically, the changes 

would promote depositor confidence 

and further the FDIC’s mission to 

maintain stability and promote public 

confidence in the U.S. financial system 

by assisting depositors to more readily 

and accurately determine their 

insurance limits. The changes will also 

facilitate the resolution of failed IDIs in 

a least costly manner. The changes 

could reduce the FDIC’s reliance on 

trust documentation (which could be 

difficult to obtain in a timely manner 

during resolutions of IDI failures) and 

provide greater flexibility to automate 

deposit insurance determinations, 

thereby reducing potential delays in the 

completion of deposit insurance 

determinations and payments. Finally, 

in amending the trust rules, the FDIC’s 

intent is that the changes would 

generally be neutral with respect to the 

DIF. 

Legal Basis 

The FDIC’s deposit insurance 

categories have been defined through 

both statute and regulation. Certain 

categories, such as the government 

deposit category, have been expressly 

defined by Congress.69 Other categories, 

such as joint deposits and corporate 

deposits, have been based on statutory 

interpretation and recognized through 

regulations issued in 12 CFR part 330 

pursuant to the FDIC’s rulemaking 

authority. In addition to defining the 

insurance categories, the deposit 

insurance regulations in part 330 

provide the criteria used to determine 

insurance coverage for deposits in each 

category. The FDIC is amending 

§ 330.10 of its regulations, which 

currently applies only to revocable trust 

deposits, to establish a new ‘‘trust 

accounts’’ category that would include 

both revocable and irrevocable trust 

deposits. For a more detailed discussion 

of the rule’s legal basis please refer to 

section I.C entitled ‘‘Proposed Rule’’ 

and section I.D entitled ‘‘Discussion of 

Comments and Final Rule.’’ 

The Final Rule 

The FDIC is amending the rules 

governing deposit insurance coverage 

for trust deposits. Generally, the 

amendments would: Merge the 

revocable and irrevocable trust 

categories into one category; apply a 

simpler, common calculation method to 

determine insurance coverage for 

deposits held by revocable and 

irrevocable trusts; eliminate certain 

requirements found in the current rules 

for revocable and irrevocable trusts; and 

amend certain recordkeeping 

requirements for trust accounts. For a 

more detailed discussion of the final 

rule please refer to section I.C entitled 

‘‘Proposed Rule’’ and section I.D 

entitled ‘‘Discussion of Comments and 

Final Rule.’’ 

Small Entities Affected 

Based on the September 30, 2021 Call 

Report data, the FDIC insures 4,923 

depository institutions,70 of which 

3,303 are considered small entities for 

the purposes of RFA.71 Of the 3,303 

small IDIs, 783 have powers granted by 

a state or national regulatory authority 

to administer accounts in a fiduciary 

capacity and 539 exercise those powers, 

comprising 23.7 percent and 16.3 

percent, respectively, of small IDIs.72

However, individuals may establish 

trust accounts at an IDI even if that IDI 

does not itself have or exercise authority 

to administer accounts in a fiduciary 

capacity, and in fact, as noted earlier, 99 

percent of a sample of failed banks had 

trust accounts. Therefore, the FDIC 

estimates that the rule could affect 

between 539 and 3,303 small, FDICinsured institutions. 

As noted above, the FDIC does not 

have detailed data on depositors’ trust 

arrangements for trust accounts held at 

small FDIC-insured institutions. 

Therefore, it is difficult to accurately 

estimate the number of small IDIs that 

would be potentially affected by the 

final rule. However, the FDIC believes 

that the number of small IDIs that will 

be directly affected by the rule is likely 

to be small, given that in the agency’s 

resolution experience only a small 

number of trust accounts have balances 

above the adopted coverage limit of 

$1,250,000 per grantor, per IDI for trust 

deposits. For example, data obtained 

from a sample of 249 IDIs that failed 

between 2010 and 2020 show that only 

100 depositors out of 250,139 (or 0.04 

percent) had trust account balances 

greater than $1,250,000; at small IDIs, 18 

out of 34,304 depositors (or 0.05 

percent) had trust account balances 

greater than $1,250,000.73 The data from 

failed banks suggest small IDIs could be 

affected by the rule roughly in 

proportion to the share of trust 

depositors with account balances greater 

than $1,250,000 at IDIs of all sizes 

which failed between 2010 and 2020. 

Expected Effects 

The simplification of the deposit 

insurance rules for trust deposits is 

expected to have a variety of effects. The 

changes will directly affect the level of 

deposit insurance coverage provided to 

some depositors with trust deposits. In 

addition, simplification of the rules is 

expected to have benefits in terms of 

promoting the timely payment of 

deposit insurance following a small 

IDI’s failure, facilitating the transfer of 

deposit relationships to failed bank 

acquirers with consequent potential 

reductions to the FDIC’s resolution 

costs, and addressing differences in the 

treatment of revocable trust deposits 

and irrevocable trust deposits contained 

in the current rules. The FDIC has also 

considered the impact of any changes in 

the deposit insurance rules on the DIF 

and other potential effects.74 These 


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covered institutions that are subject to part 370. As 

described previously, part 370 affects IDIs with two 

million or more deposit accounts. Based on Call 

Report data as of September 30, 2021, the FDIC 

insures one institution with two million or more 

deposit accounts that is also considered a small 

entity. 

effects are discussed in greater detail in 

section III.A entitled ‘‘Expected Effects.’’ 

Overall, due to the fact that the FDIC 

expects most small IDIs to have only a 

small number of trust accounts with 

balances above the adopted coverage 

limit of $1,250,000 per grantor, per IDI 

for trust deposits, effects on the deposit 

insurance coverage of small entities’ 

customers are likely to be small. There 

also may be some initial cost for small 

entities to become familiar with the 

changes to the trust insurance coverage 

rules in order to be able to explain them 

to potential trust customers, 

counterbalanced to some extent by the 

fact that the rules should be simpler to 

understand and explain going forward. 

Alternatives Considered 

The FDIC has considered a number of 

alternatives to the final rule that could 

meet its objectives in this rulemaking. 

However, for reasons previously stated 

in section I.E ‘‘Alternatives 

Considered,’’ the FDIC considers the 

final rule to be a more appropriate 

alternative. 

The FDIC also considered the status 

quo alternative to not amend the 

existing trust rules. However, for 

reasons previously stated in section I.E 

‘‘Alternatives Considered,’’ the FDIC 

considers the final rule to be a more 

appropriate alternative. 

Other Statutes and Federal Rules 

The FDIC has not identified any likely 

duplication, overlap, and/or potential 

conflict between this final rule and any 

other federal rule. 

2. Amendments to Mortgage Servicing 

Account Rule 

Reasons Why This Action Is Being 

Considered 

As previously discussed, the FDIC 

provides coverage, up to the SMDIA for 

each borrower, for principal and interest 

funds in MSAs only to the extent ‘‘paid 

into the account by the mortgagors,’’ 

and does not provide coverage for funds 

paid into the account from other 

sources, such as the servicer’s own 

operating funds, even if those funds 

satisfy mortgagors’ principal and 

interest payments under the current 

rules. The advances are aggregated and 

insured to the servicer as corporate 

funds for a total of $250,000. Under 

some servicing arrangements, however, 

mortgage servicers may be required to 

advance their own funds to make 

payments of principal and interest on 

behalf of delinquent borrowers to the 

lenders in certain circumstances. Thus, 

under the current rules, such advances 

are not provided the same level of 

coverage as other deposits in a mortgage 

servicing account comprised of 

principal and interest payments directly 

from the borrower. This could result in 

delayed access to certain funds in an 

MSA, or to the extent that aggregated 

advances insured to the servicer exceed 

the insurance limit, loss of such funds, 

in the event of an IDI’s failure. The FDIC 

is therefore amending its rules 

governing coverage for deposits in 

mortgage servicing accounts to address 

this inconsistency. 

Policy Objectives 

As discussed previously, the FDIC’s 

regulations governing deposit insurance 

coverage include specific rules on 

deposits maintained at IDIs by mortgage 

servicers. With the final rule, the FDIC 

seeks to address an inconsistency 

concerning the extent of deposit 

insurance coverage for such deposits, as 

in the event of an IDI’s failure the 

current rules could result in delayed 

access to certain funds in a mortgage 

servicing account (MSA) that have been 

aggregated and insured to a mortgage 

servicer, or to the extent that aggregated 

funds insured to a servicer exceed the 

insurance limit, loss of such funds. 

The final rule also addresses a 

servicing arrangement that is not 

specifically addressed in the current 

rules. Specifically, some servicing 

arrangements may permit or require 

servicers to advance their own funds to 

the lenders when mortgagors are 

delinquent in making principal and 

interest payments, and servicers might 

commingle such advances in the MSA 

with principal and interest payments 

collected directly from mortgagors. This 

may be required, for example, under 

certain mortgage securitizations. The 

FDIC believes that the factors that 

motivated the FDIC to establish its 

current rules for MSAs, described 

previously, argue for treating funds 

advanced by a mortgage servicer in 

order to satisfy mortgagors’ principal 

and interest obligations to the lender as 

if such funds were collected directly 

from borrowers. 

Legal Basis 

The FDIC’s deposit insurance 

categories have been defined through 

both statute and regulation. Certain 

categories, such as the government 

deposit category, have been expressly 

defined by Congress. Other categories, 

such as joint deposits and corporate 

deposits, have been based on statutory 

interpretation and recognized through 

regulations issued in 12 CFR part 330 

pursuant to the FDIC’s rulemaking 

authority. In addition to defining the 

insurance categories, the deposit 

insurance regulations in part 330 

provide the criteria used to determine 

insurance coverage for deposits in each 

category. The FDIC is amending 

§ 330.7(d) of its regulations, which 

currently applies only to cumulative 

balance paid by the mortgagors into an 

MSA maintained by a mortgage servicer, 

to include balances paid in to the 

account to satisfy mortgagors’ principal 

or interest obligations to the lender. For 

a more detailed discussion of the rule’s 

legal basis please refer to section II.C 

entitled ‘‘Proposed Rule’’ and section 

II.D entitled ‘‘Discussion of Comments 

and Final Rule.’’ 

The Final Rule 

The FDIC is amending the rules 

governing deposit insurance coverage 

for deposits maintained at IDIs by 

mortgage servicers. Generally, the 

amendments would provide consistent 

deposit insurance treatment for all MSA 

deposit balances held to satisfy 

principal and interest obligations to a 

lender, regardless of whether those 

funds are paid into the account by 

borrowers, or paid into the account by 

another party (such as the servicer) in 

order to satisfy a periodic obligation to 

remit principal and interest due to the 

lender. The composition of an MSA 

attributable to principal and interest 

payments would include mortgage 

servicers’ advances of principal and 

interest funds on behalf of delinquent 

borrowers, and collections by a servicer 

such as foreclosure proceeds. The final 

rule makes no change to the deposit 

insurance coverage provided for 

mortgage servicing accounts comprised 

of payments from mortgagors of taxes 

and insurance premiums. For a more 

detailed discussion of the rule please 

refer to section II.C entitled ‘‘Proposed 

Rule’’ and section II.D entitled 

‘‘Discussion of Comments and Final 

Rule.’’ 

Small Entities Affected 

Based on the September 30, 2021 Call 

Report data, the FDIC insures 4,923 

depository institutions, of which 3,303 

are considered small entities for the 

purposes of RFA. Of the 3,303 small 

IDIs, 473 IDIs (14.3 percent) report 

holding mortgage servicing assets, 

which indicates that they service 

mortgage loans and could thus be 

affected by the final rule. However, 

mortgage servicing accounts may be 

maintained at small IDIs that do not 


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75According to the U.S. Census Bureau within 

the ‘‘Other Activities Related to Credit 

Intermediation’’ (NAICS 522390) national industry 

where mortgage servicers are captured there were 

3,595 firms in 2018, relative to the 37,627 firms in 

the Credit Intermediation and Related Activities 

subsector (NAICS 522). 

76 12 U.S.C. 4802(a). 

77 12 U.S.C. 4802(b). 

78Public Law 106–102, section 722, 113 Stat. 

1338, 1471 (1999), 12 U.S.C. 4809. 

themselves service mortgage loans. The 

FDIC does not know how many IDIs that 

are small entities are recipients of 

mortgage servicing account deposits, but 

believes that most such entities are not 

because there are relatively few 

mortgage servicers.75 Therefore, the 

FDIC estimates that the number of small 

IDIs potentially affected by the proposed 

rule, if adopted, would be between 473 

and 3,303, but believes that the number 

is close to the lower end of the range. 

As noted in section III.A, titled 

‘‘Expected Effects,’’ the FDIC does not 

have detailed data on MSAs that would 

allow the FDIC to reliably estimate the 

number of MSAs maintained at IDIs that 

would be affected by the final rule, or 

any potential change in the total amount 

of insured deposits. Therefore, it is 

difficult to accurately estimate the 

number of small IDIs that would be 

potentially affected by the final rule. 

Expected Effects 

The final rule would directly affect 

the level of deposit insurance coverage 

for certain funds within MSAs. The rule 

is likely to benefit a servicer compelled 

by the terms of a pooling and servicing 

agreement to advance principal and 

interest funds to note holders when a 

borrower is delinquent, and therefore 

the servicer has not received such funds 

from the borrower. In the event that the 

IDI hosting the MSA for the servicer 

fails, the final rule reduces the 

likelihood that the funds advanced by 

the servicer are uninsured, and thereby 

facilitates access to, and helps avoids 

losses of, those funds. As previously 

discussed, the FDIC does not have 

detailed data on MSAs held at IDIs, 

pooling and servicing agreements for 

outstanding mortgage loans, or servicer 

payments into MSAs that would allow 

the FDIC to reliably estimate the number 

of, and volume of funds within, MSAs 

maintained at IDIs that would be 

affected by the final rule. 

Further, the final rule is likely to 

benefit a small IDI who is hosting an 

MSA for a servicer that is compelled by 

the terms of a pooling and servicing 

agreement to advance principal and 

interest funds to note holders on behalf 

of delinquent borrowers by increasing 

the volume of insured funds. In the 

event that the small IDI enters into a 

troubled condition, the proposed rule 

could marginally increase the stability 

of MSA deposits from such servicers, 

thereby increasing the general stability 

of funding. 

Based on the preceding information 

the FDIC believes that the final rule is 

unlikely to have a significant economic 

effect on a substantial number of small 

entities. 

Alternatives Considered 

The FDIC is adopting revising to the 

deposit insurance rules for MSAs to 

advance the objectives discussed above. 

The FDIC considered the status quo 

alternative to not revise the existing 

rules for MSAs and not propose the 

revisions. However, for reasons 

previously stated in section II.B, entitled 

‘‘Background,’’ the FDIC considers the 

final rule to be a more appropriate 

alternative. Were the FDIC to not adopt 

the rule, then in the event of an IDI’s 

failure the current rules could result in 

delayed access to certain funds in an 

MSA that have been aggregated and 

insured to a mortgage servicer, or to the 

extent that aggregated funds insured to 

a servicer exceed the insurance limit, 

loss of such funds. 

Other Statutes and Federal Rules 

The FDIC has not identified any likely 

duplication, overlap, and/or potential 

conflict between this rule and any other 

federal rule. 

C. Congressional Review Act 

For purposes of the Congressional 

Review Act, the Office of Management 

and Budget (OMB) makes a 

determination as to whether a final rule 

constitutes a ‘‘major’’ rule. If a rule is 

deemed a ‘‘major rule’’ by the OMB, the 

Congressional Review Act generally 

provides that the rule may not take 

effect until at least 60 days following its 

publication. 

The Congressional Review Act defines 

a ‘‘major rule’’ as any rule that the 

Administrator of the Office of 

Information and Regulatory Affairs of 

the OMB finds has resulted in or is 

likely to result in (1) an annual effect on 

the economy of $100,000,000 or more; 

(2) a major increase in costs or prices for 

consumers, individual industries, 

Federal, State, or local government 

agencies or geographic regions, or (3) 

significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets. The FDIC will submit 

the final rule and other appropriate 

reports to Congress and the Government 

Accountability Office for review. 

D. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3521) states that no 

agency may conduct or sponsor, nor is 

the respondent required to respond to, 

an information collection unless it 

displays a currently valid OMB control 

number. The final rule does not create 

any new, or revise any existing, 

collections of information under section 

3504(h) of the Paperwork Reduction 

Act. Consequently, no information 

collection request will be submitted to 

the OMB for review. 

E. Riegle Community Development and 

Regulatory Improvement Act 

Section 302 of the Riegle Community 

Development and Regulatory 

Improvement Act of 1994 (RCDRIA) 

requires that the Federal banking 

agencies, including the FDIC, in 

determining the effective date and 

administrative compliance requirements 

of new regulations that impose 

additional reporting, disclosure, or other 

requirements on insured depository 

institutions, consider, consistent with 

principles of safety and soundness and 

the public interest, any administrative 

burdens that such regulations would 

place on depository institutions, 

including small depository institutions, 

and customers of depository 

institutions, as well as the benefits of 

such regulations.76 Subject to certain 

exceptions, new regulations and 

amendments to regulations prescribed 

by a Federal banking agency which 

impose additional reporting, 

disclosures, or other new requirements 

on insured depository institutions shall 

take effect on the first day of a calendar 

quarter which begins on or after the date 

on which the regulations are published 

in final form.77

The final rule does not impose 

additional reporting or disclosure 

requirements on insured depository 

institutions, including small depository 

institutions, or on the customers of 

depository institutions. However, it may 

require part 370 covered institutions to 

update their reporting or recordkeeping 

to reflect the revised deposit insurance 

rules. Accordingly, the FDIC has 

established the effective date of the final 

rule as the first day of a calendar 

quarter, April 1, 2024. 

F. Plain Language 

Section 722 of the Gramm-LeachBliley Act 78 requires the Federal 


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banking agencies to use plain language 

in all proposed and final rulemakings 

published in the Federal Register after 

January 1, 2000. FDIC staff believes the 

final rule is presented in a simple and 

straightforward manner. The FDIC did 

not receive any comments with respect 

to the use of plain language. 

List of Subjects in 12 CFR Part 330 

Bank deposit insurance, Reporting 

and recordkeeping requirements, 

Savings associations. 

Authority and Issuance 

For the reasons stated above, the 

Board of Directors of the Federal 

Deposit Insurance Corporation amends 

part 330 of title 12 of the Code of 

Federal Regulations as follows: 

PART 330—DEPOSIT INSURANCE 

COVERAGE 

■ 1. The authority citation for part 330 

continues to read as follows: 

Authority: 12 U.S.C. 1813(l), 1813(m), 

1817(i), 1818(q), 1819(a)(Tenth), 1820(f), 

1820(g), 1821(a), 1821(d), 1822(c). 

§ 330.1 [Amended] 

■ 2. Amend § 330.1 by removing and 

reserving paragraphs (m) and (r). 

■ 3. Revise § 330.7(d) to read as follows: 

§ 330.7 Accounts held by an agent, 

nominee, guardian, custodian or 

conservator. 

* * * * * 

(d) Mortgage servicing accounts. 

Accounts maintained by a mortgage 

servicer, in a custodial or other 

fiduciary capacity, which are comprised 

of payments of principal and interest, 

shall be insured for the cumulative 

balance paid into the account by 

mortgagors, or in order to satisfy 

mortgagors’ principal or interest 

obligations to the lender, up to the limit 

of the SMDIA per mortgagor. 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 accordance with paragraph 

(a) of this section for the ownership 

interest of each mortgagor in such 

accounts. 

* * * * * 

■ 4. Revise § 330.10 to read as follows: 

§ 330.10 Trust accounts. 

(a) Scope and definitions. This section 

governs coverage for deposits held in 

connection with informal revocable 

trusts, formal revocable trusts, and 

irrevocable trusts not covered by 

§ 330.12 (‘‘trust accounts’’). For 

purposes of this section: 

(1) Informal revocable trust means a 

trust under which a deposit passes 

directly to one or more beneficiaries 

upon the depositor’s death without a 

written trust agreement, commonly 

referred to as a payable-on-death 

account, in-trust-for account, or Totten 

trust account. 

(2) Formal revocable trust means a 

revocable trust established by a written 

trust agreement under which a deposit 

passes to one or more beneficiaries upon 

the grantor’s death. 

(3) Irrevocable trust means an 

irrevocable trust established by statute 

or a written trust agreement, except as 

described in paragraph (f) of this 

section. 

(b) Calculation of coverage—(1) 

General calculation. Trust deposits are 

insured in an amount up to the SMDIA 

multiplied by the total number of 

beneficiaries identified by each grantor, 

up to a maximum of 5 beneficiaries. 

(2) Aggregation for purposes of 

insurance limit. Trust deposits that pass 

from the same grantor to beneficiaries 

are aggregated for purposes of 

determining coverage under this 

section, regardless of whether those 

deposits are held in connection with an 

informal revocable trust, formal 

revocable trust, or irrevocable trust. 

(3) Separate insurance coverage. The 

deposit insurance coverage provided 

under this section is separate from 

coverage provided for other deposits at 

the same insured depository institution. 

(4) Equal allocation presumed. Unless 

otherwise specified in the deposit 

account records of the insured 

depository institution, a deposit held in 

connection with a trust established by 

multiple grantors is presumed to have 

been owned or funded by the grantors 

in equal shares. 

(c) Number of beneficiaries. The total 

number of beneficiaries for a trust 

deposit under paragraph (b) of this 

section will be determined as follows: 

(1) Eligible beneficiaries. Subject to 

paragraph (c)(2) of this section, 

beneficiaries include natural persons, as 

well as charitable organizations and 

other non-profit entities recognized as 

such under the Internal Revenue Code 

of 1986, as amended. 

(2) Ineligible beneficiaries. 

Beneficiaries do not include: 

(i) The grantor of a trust; or 

(ii) A person or entity that would only 

obtain an interest in the deposit if one 

or more identified beneficiaries are 

deceased. 

(3) Future trust(s) named as 

beneficiaries. If a trust agreement 

provides that trust funds will pass into 

one or more new trusts upon the death 

of the grantor(s) (‘‘future trusts’’), the 

future trust(s) are not treated as 

beneficiaries of the trust; rather, the 

future trust(s) are viewed as 

mechanisms for distributing trust funds, 

and the beneficiaries are the natural 

persons or organizations that shall 

receive the trust funds through the 

future trusts. 

(4) Informal trust account payable to 

depositor’s formal trust. If an informal 

revocable trust designates the 

depositor’s formal trust as its 

beneficiary, the informal revocable trust 

account will be treated as if titled in the 

name of the formal trust. 

(d) Deposit account records—(1) 

Informal revocable trusts. The 

beneficiaries of an informal revocable 

trust must be specifically named in the 

deposit account records of the insured 

depository institution. 

(2) Formal revocable trusts. The title 

of a formal trust account must include 

terminology sufficient to identify the 

account as a trust account, such as 

‘‘family trust’’ or ‘‘living trust,’’ or must 

otherwise be identified as a 

testamentary trust in the account 

records of the insured depository 

institution. If eligible beneficiaries of 

such formal revocable trust are 

specifically named in the deposit 

account records of the insured 

depository institution, the FDIC shall 

presume the continued validity of the 

named beneficiary’s interest in the trust 

consistent with § 330.5(a). 

(e) Commingled deposits of 

bankruptcy trustees. If a bankruptcy 

trustee appointed under title 11 of the 

United States Code commingles the 

funds of various bankruptcy estates in 

the same account at an insured 

depository institution, the funds of each 

title 11 bankruptcy estate will be added 

together and insured up to the SMDIA, 

separately from the funds of any other 

such estate. 

(f) Deposits excluded from coverage 

under this section—(1) Revocable trust 

co-owners that are sole beneficiaries of 

a trust. If the co-owners of an informal 

or formal revocable trust are the trust’s 

sole beneficiaries, deposits held in 

connection with the trust are treated as 

joint ownership deposits under § 330.9. 

(2) Employee benefit plan deposits. 

Deposits of employee benefit plans, 

even if held in connection with a trust, 

are treated as employee benefit plan 

deposits under § 330.14. 

(3) Investment company deposits. 

This section shall not apply to deposits 

of trust funds belonging to a trust 

classified as a corporation under 

§ 330.11(a)(2). 


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Federal Register / Vol. 87, No. 19 / Friday, January 28, 2022 / Rules and Regulations 4471 

(4) Insured depository institution as 

trustee of an irrevocable trust. Deposits 

held by an insured depository 

institution in its capacity as trustee of 

an irrevocable trust are insured as 

provided in § 330.12. 

§ 330.13 [Removed and Reserved] 

■ 5. Remove and reserve § 330.13. 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, this 21st day of 

January, 2022. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2022–01607 Filed 1–27–22; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 370 

Notification to Institutions Covered by 

the FDIC’s Recordkeeping for Timely 

Deposit Insurance Determination Rule 

Regarding Amendments to the Deposit 

Insurance Coverage Rules 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Notification. 

SUMMARY: The FDIC is publishing this 

notification to insured depository 

institutions covered by its 

Recordkeeping for Timely Deposit 

Insurance Determination rule that it has 

amended its deposit insurance coverage 

rules for certain trust accounts and 

mortgage servicing accounts and such 

amendments will take effect on April 1, 

2024. The FDIC is publishing this 

notification to specify for covered 

institutions that they must prepare 

updates or changes to their deposit 

insurance calculation capabilities as a 

result of the amendments, and such 

changes must be implemented and 

operational on April 1, 2024, the 

effective date of the amendments. 

DATES: January 28, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Cassandra Knighton, Section Chief, 

Division of Complex Institution 

Supervision and Resolution, (972) 761– 

2802, cknighton@FDIC.gov; Shane 

Kiernan, Counsel, Legal Division, (202) 

898–8512, skiernan@fdic.gov. 

SUPPLEMENTARY INFORMATION: The FDIC 

is providing notice to insured 

depository institutions covered by its 

rule entitled ‘‘Recordkeeping for Timely 

Deposit Insurance Determination,’’ 12 

CFR part 370 (each a ‘‘covered 

institution’’ under ‘‘part 370’’), that it 

amended its deposit insurance coverage 

rules for certain trust accounts and 

mortgage servicing accounts on January 

21, 2022 (the ‘‘amendments’’). The 

amendments take effect on April 1, 

2024. The FDIC delayed the effective 

date of the amendments until April 1, 

2024, to provide time before the 

amendments take effect to: Insured 

depository institutions and their 

depositors to review deposit insurance 

coverage and adjust their deposit 

account arrangements and deposit 

relationships, if desired; FDIC staff to 

reprogram the information technology 

infrastructure that the FDIC uses to 

determine deposit insurance coverage 

and to make payment to insured 

depositors and update the FDIC’s 

deposit insurance coverage 

publications, including publications 

that provide guidance to covered 

institutions; and covered institutions to 

prepare to implement changes to 

recordkeeping and information 

technology capabilities required under 

part 370. 

Part 370 generally requires each 

covered institution to implement the 

information technology system and 

recordkeeping capabilities needed to 

quickly calculate the amount of deposit 

insurance coverage available for each 

deposit account in the event of failure 

(‘‘part 370 capabilities’’). Pursuant to 

§ 370.10(d), ‘‘[a] covered institution will 

not be considered to be in violation of 

this part as a result of a change in law 

that alters the availability or calculation 

of deposit insurance for such period as 

specified by the FDIC following the 

effective date of such change.’’ 12 CFR 

370.10(d). The FDIC is publishing this 

document pursuant to § 370.10(d) to 

specify for covered institutions that they 

must prepare updates or changes to 

their part 370 capabilities as a result of 

the amendments, and such changes 

must be implemented and operational 

on April 1, 2024, the effective date of 

the amendments. The delayed effective 

date of the amendments provides 

covered institutions with at least 24 

months following adoption to prepare 

the updates or changes to their part 370 

capabilities. Therefore, the FDIC is not 

providing an additional period of time 

pursuant to § 370.10(d) after April 1, 

2024. 

Federal Deposit Insurance Corporation. 

Dated at Washington, DC, on January 21, 

2022. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2022–01608 Filed 1–27–22; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2022–0013; Project 

Identifier MCAI–2021–01371–E; Amendment 

39–21920; AD 2022–03–03] 

RIN 2120–AA64 

Airworthiness Directives; Austro 

Engine GmbH Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is superseding 

Airworthiness Directive (AD) 2021–22– 

20 which applied to certain Austro 

Engine GmbH E4 and E4P model diesel 

piston engines. AD 2021–22–20 

required, for engines with an affected 

cylinder head, inspection of the high 

pressure pump (HPP) driving gear and, 

depending on the results of the 

inspection, replacement of the HPP 

driving gear with a part eligible for 

installation. AD 2021–22–20 also 

required, for engines with an affected 

HPP driving gear, replacement of the 

HPP driving gear before further flight or 

within a certain number of flight hours, 

depending on the engine configuration 

and number of affected engines 

installed. This AD requires, for engines 

equipped with a certain cylinder head 

and HPP driving gear combination, 

removal, inspection, and replacement of 

the HPP driving gear before further 

flight and, depending on the inspection 

findings, replacement of the HPP shaft, 

cylinder head, camshaft gear, or inlet/ 

outlet camshaft bushing. This AD also 

requires, for engines with an affected 

HPP driving gear, replacement of the 

HPP driving gear before further flight or 

within a certain number of flight hours, 

depending on the engine configuration 

and number of affected engines 

installed. This AD was prompted by 

reports of failure of the HPP driving gear 

and a subsequent determination that a 

batch of HPP driving gears may have 

been damaged during assembly. This 

AD was also prompted by an 

investigation which found that certain 

cylinder heads installed in combination 

with certain HPP driving gear on the 

same engine may cause damage to the 

HPP driving gear. The FAA is issuing 

this AD to address the unsafe condition 

on these products. 

DATES: This AD is effective February 14, 

2022. 

The Director of the Federal Register 

approved the incorporation by reference 


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