Alert describes enhanced SIF coverage for IOLTAs, others
Feb. 3, 2016 -- A regulatory alert on “enhanced share insurance coverage” for three types of credit union accounts – including “interest on lawyer trust accounts” (IOLTAs) – has been issued by NCUA.
The alert, 16-RA-02, notes that as of Jan. 27, the three types of accounts are IOLTAs, Real Estate Escrow Accounts, and Prepaid Funeral Accounts. “In any of these accounts, if the primary account holder (the lawyer or escrow agent) is a member of a federally insured credit union, then all other depositors who contributed money to the account will likewise be federally insured by NCUA—even if they are not members of that credit union,” the alert advises.
The alert also points out that the new share insurance regulation approved last month by the NCUA Board accommodates “other similar escrow accounts.” The alert includes guidance from the agency’s Office of General Counsel, which describes principles that will determine how NCUA could qualify other similar escrow accounts, on a case-by-case basis, for insurance coverage to pass through from a member to non-members.
NASCUS has prepared and posted a summary and analysis of the alert (available to members only).