61658 Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations 

1Public Law 110–343 (October 3, 2008). 2 12 CFR 564.3(b)(2)(1989). 

Federal reserve 

bank Rate Effective 

Boston ................ 2.25 October 8, 2008. 

New York ........... 2.25 October 8, 2008. 

Philadelphia ........ 2.25 October 8, 2008. 

Cleveland ........... 2.25 October 8, 2008. 

Richmond ........... 2.25 October 8, 2008. 

Atlanta ................ 2.25 October 8, 2008. 

Chicago .............. 2.25 October 8, 2008. 

St. Louis ............. 2.25 October 9, 2008. 

Minneapolis ........ 2.25 October 8, 2008. 

Kansas City ........ 2.25 October 8, 2008. 

Dallas ................. 2.25 October 8, 2008. 

San Francisco .... 2.25 October 8, 2008. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, 

Dated: October 9, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E8–24519 Filed 10–16–08; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 330 

RIN 3064–AD36 

Deposit Insurance Regulations; 

Temporary Increase in Standard 

Coverage Amount; Mortgage Servicing 

Accounts 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: The FDIC is adopting an 

interim rule to amend its deposit 

insurance regulations to reflect 

Congress’s recent action to temporarily 

increase the standard deposit insurance 

amount from $100,000 to $250,000 and 

to simplify the deposit insurance rules 

for funds maintained in mortgage 

servicing accounts. 

The FDIC’s main goals in revising its 

insurance rule on mortgage servicing 

accounts are to simplify a rule that has 

become increasingly complex in 

application due to developments in 

securitizations and to provide 

additional certainty with respect to the 

deposit insurance coverage of these 

accounts at a time of turmoil in the 

housing and financial markets. The 

FDIC believes this regulatory change 

will help improve public confidence in 

the banking system. 

DATES: The effective date of the interim 

rule is October 10, 2008. Written 

comments must be received by the FDIC 

not later than December 16, 2008. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• Agency Web Site: http:// 

www.fdic.gov/regulations/laws/federal. 

Follow instructions for submitting 

comments on the Agency Web Site. 

• E-mail: Comments@FDIC.gov. 

Include ‘‘Mortgage Servicing Accounts’’ 

in the subject line of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

• Hand Delivery/Courier: Guard 

station at the rear of the 550 17th Street 

Building (located on F Street) on 

business days between 7 a.m. and 5 p.m. 

(EST). 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Public Inspection: All comments 

received will be posted without change 

to http://www.fdic.gov/regulations/laws/ 

federal including any personal 

information provided. Paper copies of 

public comments may be ordered from 

the Public Information Center by 

telephone at (877) 275–3342 or (703) 

562–2200. 

FOR FURTHER INFORMATION CONTACT: 

Joseph A. DiNuzzo, Counsel, Legal 

Division (202) 898–7349 or Christopher 

Hencke, Counsel, Legal Division (202) 

898–8839, Federal Deposit Insurance 

Corporation, Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Temporary Increase in Insurance 

Coverage 

The Emergency Economic 

Stabilization Act of 2008 temporarily 

increased the standard maximum 

deposit insurance amount (‘‘SMDIA’’) 

from $100,000 to $250,000, effective 

October 3, 2008, and ending December 

31, 2009.1 After that date, the SMDIA 

will, by law, return to $100,000. In the 

interim rule the FDIC is amending its 

deposit insurance regulations to reflect 

the temporary increase in the SMDIA. 

B. Mortgage Servicing Accounts 

The FDIC was established to maintain 

public confidence and stability in the 

United States banking system and 

protect insured depositors. The 

regulations governing deposit insurance 

coverage are codified at 12 CFR part 

330, and they include specific rules on 

deposits of payments collected by 

mortgage servicers and placed into 

accounts at insured depository 

institutions. 12 CFR 330.7(d) (‘‘mortgage 

servicing accounts’’). Accounts 

maintained by a mortgage servicer, in a 

custodial or other fiduciary capacity, 

may include funds paid by mortgagors 

for principal, interest and escrowed 

amounts for taxes and insurance 

premiums. Principal and interest funds 

are insured for the interest of each 

owner (mortgagee, investor or security 

holder) in those accounts. Under section 

330.7(d) funds maintained by a servicer, 

in a custodial or other fiduciary 

capacity, which represent payments by 

mortgagors of taxes and insurance 

premiums are added together and 

insured for the ownership interest of 

each mortgagor in those accounts. 

The FDIC’s rules for mortgage 

servicing accounts were adopted in 

1990, after the Financial Services 

Reform, Recovery, and Enforcement Act 

of 1989, abolished the Federal Savings 

and Loan Insurance Corporation 

(‘‘FSLIC’’) and transferred the insurance 

of savings association deposits to the 

FDIC. Prior to that time, the FDIC did 

not have specific rules for mortgage 

servicing accounts, and the FSLIC’s 

rules provided insurance coverage for 

principal and interest funds based on 

the interest of each mortgagor.2

As described above, under section 

330.7(d), funds representing payments 

of principal and interest are insurable 

on a pass-through basis to each 

mortgagee, investor or security holder. 

In contrast, funds representing 

payments of taxes and insurance are 

insurable on a pass-through basis to 

each mortgagor or borrower. When the 

FDIC adopted these rules in 1990, it 

focused largely on the fact that principal 

and interest funds are owned by the 

investors, on whose behalf the servicer, 

as agent, accepts the principal and 

interest payments, and are not owned by 

the borrowers. By contrast, under the 

current rule, taxes and insurance funds 

are insured to the mortgagors or 

borrowers on the theory that the 

borrower still owns the funds until the 

tax and insurance bills are actually paid 

by the servicer. 

Over the past several years, 

securitization methods and vehicles for 

mortgages have become more layered 

and complex. The FDIC believes that it 

has become much more difficult and 

time-consuming for a servicer to 

identify and determine the share of any 

investor in a securitization and in the 

principal and interest funds on deposit 

at an insured depository institution. 

Under the current regulation, in the 

event of the failure of an FDIC-insured 

depository institution, the FDIC is 

concerned that there could be 

unexpected loss to securitization 

investors of principal and interest 

payments deposited at the institution by 


jlentini on PROD1PC65 with RULES
Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations 61659 

3As noted above, the Emergency Economic 

Stabilization Act of 2008 temporarily increased the 

standard maximum deposit insurance amount from 

$100,000 to $250,000, effective October 3, 2008, and 

ending on December 31, 2009. After that date, the 

insurance coverage limit will, by law, return to 

$100,000. 4 5 U.S.C. 553. 

a securitization servicer. As noted 

above, these accounts may involve 

multi-layered securitization structures, 

and it may prove difficult for the 

servicer holding a deposit account in 

the institution to identify every security 

holder in the securitization and 

determine his or her share. In addition, 

some investor holdings may far exceed 

the current $250,000 per-depositor 

insurance limit.3 Application of the 

current rule under these circumstances 

could result in delays in the servicer 

receiving the insured amounts and in 

losses for amounts that, because of the 

complexity of the securitization 

agreements, cannot be attributed to the 

particular investors to whom the funds 

belong. This outcome could increase 

losses to otherwise insured depositors, 

lead to withdrawal of deposits for 

principal and interest payments from 

depository institutions, and 

unnecessarily reduce liquidity for such 

institutions. 

II. The Interim Rule (for Mortgage 

Servicing Accounts) 

Explanation 

The FDIC’s goals in this rulemaking 

are twofold. First, the FDIC seeks to 

make the coverage rules for mortgage 

servicing accounts easy to understand 

and easy to apply (in determining the 

applicable coverage amount). Second, 

the FDIC recognizes that, at any one 

time, billions of dollars in principal and 

interest funds may be on deposit at 

insured depository institutions, 

providing a significant source of 

liquidity for the institution and credit to 

the institution’s community. The FDIC 

seeks to avoid any uncertainty as to the 

extent of deposit insurance coverage 

that could have inadvertent adverse 

consequences. 

Because it may be difficult for a 

servicer to identify all investors and 

their individual interests in a 

securitization following the failure of an 

insured depository institution, the 

coverage under the interim rule will be 

determined on a per-mortgagor (or 

borrower) basis. Moreover, servicers 

will be able to identify mortgagors more 

quickly than investors, thus permortgagor coverage will enable the FDIC 

to pay deposit insurance more quickly. 

Under the interim rule, the coverage 

afforded in connection with a mortgage 

servicing account will be based on each 

mortgagor’s payments of principal and 

interest into the mortgage servicing 

account, up to standard maximum 

deposit insurance amount (currently, 

through December 31, 2009, $250,000) 

per mortgagor. In effect, coverage will be 

provided to the mortgagees/investors, as 

a collective group, based on the 

cumulative amount of the mortgagors’ 

payments of principal and interest into 

the account. This insurance coverage 

afforded in connection with principal 

and interest payments in mortgage 

servicing accounts will not be 

aggregated with or otherwise affect the 

coverage provided to mortgagors in 

connection with other accounts the 

mortgagors might maintain at the same 

insured depository institution. As under 

the current insurance rules, under the 

interim rule amounts in a mortgage 

servicing account constituting payments 

of taxes and insurance premiums will be 

insured on a pass-through basis as the 

funds of each respective mortgagor. 

Such funds will be added to other 

individually owned funds held by each 

such mortgagor at the same insured 

institution and insured to the applicable 

limit. 

Effective Date of the Interim Rule 

The interim rule applies to all existing 

and future mortgage servicing accounts 

as of October 10, 2008, the date on 

which the FDIC Board of Directors 

approved the interim rule. October 10, 

2008 also is the date the interim rule 

was filed for public inspection with the 

Office of the Federal Register. In this 

regard, the FDIC invokes the good cause 

exception to the requirements in the 

Administrative Procedure Act 4 (‘‘APA’’) 

that, before a rulemaking can be 

finalized, it must first be issued for 

public comment and, once finalized, 

must have a delayed effective date of 

thirty days from the publication date. 

The FDIC believes good cause exists for 

making the interim rule effectively 

immediately. Under the current rules, 

the complexity of determining the 

actual interest of each investor in a 

securitization could delay significantly 

the payment of insurance coverage and, 

potentially, could result in a 

determination of uninsured funds 

because investors and their interests 

cannot be identified. The interim rule 

simplifies the coverage rules for 

mortgage servicing accounts to address 

those issues, while recognizing the 

continued relationship of the principal 

and interest payments and taxes and 

insurance payments to the mortgagor. 

As a result, the interim rule will provide 

greater certainty to depositors, servicers, 

mortgagees, investors, and other 

security holders, depository institutions, 

and other parties involved in the 

securitization of mortgages about the 

extent to which those accounts are 

insured. 

For these reasons, the FDIC has 

determined that the public notice and 

participation that ordinarily are 

required by the APA before a regulation 

may take effect would, in this case, be 

contrary to the public interest and that 

good cause exists for waiving the 

customary 30-day delayed effective 

date. Nevertheless, the FDIC desires to 

have the benefit of public comment 

before adopting a permanent final rule 

and thus invites interested parties to 

submit comments during a 60-day 

comment period. In adopting the final 

regulation, the FDIC will revise the 

interim rule, if appropriate, in light of 

the comments received on the interim 

rule. 

III. Request for Comments 

The FDIC requests comments on all 

aspects of this interim rule. 

IV. Paperwork Reduction Act 

The interim rule will revise the 

FDIC’s deposit insurance regulations. It 

will not involve any new collections of 

information pursuant to the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.). 

Consequently, no information collection 

has been submitted to the Office of 

Management and Budget for review. 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires an agency that is issuing a final 

rule to prepare and make available a 

regulatory flexibility analysis that 

describes the impact of the final rule on 

small entities. 5 U.S.C. 603(a). The 

Regulatory Flexibility Act provides that 

an agency is not required to prepare and 

publish a regulatory flexibility analysis 

if the agency certifies that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act, the FDIC 

certifies that the interim rule will not 

have a significant impact on a 

substantial number of small entities. 

The interim rule implements the 

temporary increase in the SMDIA and 

simplifies the coverage rules for 

mortgage servicing accounts. 

VI. The Treasury and General 

Government Appropriations Act, 

1999—Assessment of Federal 

Regulations and Policies on Families 

The FDIC has determined that the 

interim rule will not affect family wellbeing within the meaning of section 654 


jlentini on PROD1PC65 with RULES
61660 Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations 

of the Treasury and General 

Government Appropriations Act, 

enacted as part of the Omnibus 

Consolidated and Emergency 

Supplemental Appropriations Act of 

1999 (Pub. L. 105–277, 112 Stat. 2681). 

The interim rule should have a 

positive effect on families by clarifying 

the coverage rules for mortgage 

servicing accounts, which contain, for 

some period of time, the mortgage 

payments from borrowers. 

VII. Small Business Regulatory 

Enforcement Fairness Act 

The Office of Management and Budget 

has determined that the interim rule is 

not a ‘‘major rule’’ within the meaning 

of the relevant sections of the Small 

Business Regulatory Enforcement Act of 

l996 (‘‘SBREFA’’) (5 U.S.C. 801 et seq.). 

As required by SBREFA, the FDIC will 

file the appropriate reports with 

Congress and the General Accounting 

Office so that the interim rule may be 

reviewed. 

List of Subjects in 12 CFR Part 330 

Bank deposit insurance, Banks, 

banking, Reporting and recordkeeping 

requirements, Savings and loan 

associations, Trusts and trustees. 

■ For the reasons stated above, the 

Board of Directors of the Federal 

Deposit Insurance Corporation amends 

part 330 of chapter III 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 (Tenth), 1820(f), 

1821(a), 1822(c). 

■ 2. In § 330.1, paragraph (n) is revised 

to read as follows: 

§ 330.1 Definitions. 

* * * * * 

(n) Standard maximum deposit 

insurance amount, referred to as the 

‘‘SMDIA’’ hereafter, means $250,000 

from October 3, 2008, until December 

31, 2009. Effective January 1, 2010, the 

SMDIA means $100,000 adjusted 

pursuant to subparagraph (F) of section 

11(a)(1) of the FDI Act (12 U.S.C. 

1821(a)(1)(F)). All examples in this part 

use $100,000 as the SMDIA. 

* * * * * 

■ 3. In § 330.7, paragraph (d) is revised 

to read as follows: 

§ 330.7 Account 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 by mortgagors of principal 

and interest, shall be insured for the 

cumulative balance paid into the 

account by the mortgagors, up to a 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. This provision is effective as 

of October 10, 2008, for all existing and 

future mortgage servicing account. 

* * * * * 

By order of the Board of Directors. 

Dated at Washington DC., this 10th day of 

October 2008. 

Federal Deposit Insurance Corporation. 

Valerie J. Best, 

Assistant Executive Secretary. 

[FR Doc. E8–24626 Filed 10–16–08; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Part 951 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1291 

RIN 2590–AA04 

Affordable Housing Program 

Amendments: Federal Home Loan 

Bank Mortgage Refinancing Authority 

AGENCY: Federal Housing Finance 

Agency. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: The Federal Housing Finance 

Agency (FHFA) is issuing and seeking 

comment on an interim final rule to 

implement section 1218 of the Housing 

and Economic Recovery Act of 2008 

(Recovery Act), which requires the 

FHFA to allow the Federal Home Loan 

Banks (Banks) until July 30, 2010, to use 

Affordable Housing Program (AHP) 

homeownership set-aside funds to 

refinance low- or moderate-income 

households’ mortgage loans. This 

rulemaking relocates the AHP regulation 

to the FHFA rules, and adds new 

provisions that allow the Banks to use 

AHP set-aside funds to provide direct 

subsidies to low- or moderate-income 

households who qualify for refinancing 

assistance under the HOPE for 

Homeowners Program established by 

the Federal Housing Administration 

(FHA) under Title IV of the Recovery 

Act. 

ADDRESSES: This interim final rule is 

effective October 17, 2008. The FHFA 

will accept written comments on the 

interim final rule on or before December 

16, 2008. 

Comments: Submit comments to the 

FHFA using any one of the following 

methods: 

E-mail: comments@fhfb.gov. Please 

include RIN 2590–AA04 in the subject 

line of the message. 

Fax: 202–408–2580. 

Mail/Hand Delivery: Federal Housing 

Finance Board, 1625 Eye Street, NW., 

Washington, DC 20006, Attention: 

Public Comments/RIN 2590–AA04. 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. If 

you submit your comment to the 

Federal eRulemaking Portal, please also 

send it by e-mail to the FHFA at 

comments@fhfb.gov to ensure timely 

receipt by the agency. Include the 

following information in the subject line 

of your submission: Federal Housing 

Finance Agency. Interim Final Rule: 

Affordable Housing Program 

Amendments: Federal Home Loan Bank 

Mortgage Refinancing Authority. RIN 

2590–AA04. 

We will post all public comments we 

receive without change, including any 

personal information you provide, such 

as your name and address, on the FHFA 

Web site at http://www.fhfb.gov/ 

Default.aspx?Page=93&Top=93. 

FOR FURTHER INFORMATION CONTACT: 

Sylvia Martinez, Senior Policy Analyst, 

202–408–2825, martinezs@fhfb.gov; or 

Amy Bogdon, Senior Advisor, 202–408– 

2546, bogdona@fhfb.gov. For legal 

questions: Sharon B. Like, Senior 

Attorney-Advisor, 202–408–2930, 

likes@fhfb.gov. You can send regular 

mail to the Federal Housing Finance 

Board, 1625 Eye Street, NW., 

Washington, DC 20006. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Federal Housing Finance Regulatory 

Reform Act of 2008 

Effective July 30, 2008, Division A of 

the Housing and Economic Recovery 

Act of 2008, Public Law No. 110–289, 

122 Stat. 2654 (2008), titled the Federal 

Housing Finance Regulatory Reform Act 

of 2008 (Reform Act), created the 

Federal Housing Finance Agency 

(FHFA) as an independent agency of the 

federal government. The Reform Act 


jlentini on PROD1PC65 with RULES