Board Approves Expanded Insurance Coverage on Escrow Accounts

At its final meeting of 2015, the NCUA Board approved:

  • A final rule to provide enhanced pass-through share insurance coverage for real estate agents' escrow accounts, prepaid funeral accounts and other escrow accounts similar to lawyers' trust accounts.
  • A notice to stakeholders of the opportunity to comment on regulations covering rules of procedure and safety and soundness for possible modification, simplification or repeal.

Final Rule Provides Enhanced Share Insurance Coverage for Certain Accounts

The Board approved a final rule (Part 745) amending the agency's regulations to expand share insurance coverage for certain types of accounts.

Specifically, the Credit Union Share Insurance Fund Parity Act of 2014 requires enhanced, pass-through share insurance coverage for lawyers' trust accounts and other similar escrow accounts. Before enactment, NCUA's insurance coverage had been limited only to those clients of the attorney who were also members of the insured credit union where the attorney established the lawyers' trust account.

Under the new law, only the lawyer or person administering the escrow account must be a member of the federally insured credit union in which the account is maintained for share insurance coverage to flow through to each client or principal, regardless of that person's membership status.

The final rule will also provide greater clarity and regulatory certainty around broad categories of other escrow accounts that automatically would receive pass-through share insurance coverage. These accounts include real estate agents' escrow accounts and prepaid funeral accounts.

Under the final rule, NCUA also may provide share insurance coverage for other similar escrow accounts on a case-by-case basis, where a licensed professional or other individual serving in a fiduciary capacity holds funds for the benefit of a client as part of a transaction or business relationship.

"This rule is very nuanced, because we have to walk a fine line between the membership requirements in the Federal Credit Union Act and the exceptions provided in the Share Insurance Parity Act," NCUA Board Chairman Debbie Matz said. "This principles-based approach leaves the door open for other similar escrow accounts to be established in the future."

Matz said some commenters on the proposed rule suggested extending pass-through share insurance coverage to pre-paid cards. But, she said using funds from the National Credit Union Share Insurance Fund to pay non-members holding pre-paid cards from a failed credit union is not permissible and not good policy.

The final rule is effective Jan. 27. Before the rule becomes effective, NCUA will issue guidance to examiners and credit unions.

Board Invites Comments on Safety and Soundness, Procedural Regulations

Credit union stakeholders and the general public will have an opportunity to comment on two categories of NCUA regulations after the Board approved a notice and request for comment.

The Economic Growth and Regulatory Paperwork Reduction Act of 1996 requires the Federal Financial Institutions Examination Council and its federal banking agency members to review regulations every 10 years to identify those that might be outdated, ineffective, unnecessary or unduly burdensome.

The two categories of rules covered in this fourth, and final, review will be rules of procedure and safety and soundness. Stakeholders may comment on matters within these categories covered by 16 existing rules, including subparts. The rules covered include involuntary and voluntary liquidations, lending, investment and deposit activities, examinations and appraisals, among others.

Comments must be received by March 22. For more information or to submit a comment, go to


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