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May 24, 2011

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David Whitcomb

Do the non-interest bearing account notices apply to Mortgage Escrow accounts?

Steve Van Beek

David,
The final rule does not mention mortgage escrow accounts. I don't think they fall under the definition as members usually do not full withdrawal rights. NCUA does insure these accounts - under 12 CFR 745.3(a)(3). That provision became effective in late 2008.

Cheryl Hart

does this rule apply to business accounts?

Steve Van Beek

Cheryl,
Yes. Here is from the preamble to the rule: "This definition of noninterest-bearing transaction account encompasses only traditional, noninterest-bearing demand deposit (checking or share draft) accounts that allow for an unlimited number of deposits and withdrawals at any time,4 whether held by a business, an individual, or other type of member. It does not include negotiable order of withdrawal (NOW) accounts, money-market accounts (MMA), or Interest on Lawyers Trust Accounts (IOLTA)."

Sue Fowler

Do you know when or if the NCUA calculators will be updated?

Steve Van Beek

Sue,
We haven't heard any word from NCUA on updating the calculators on their website. I have a feeling they won't as the insurance coverage is temporary (through 12/31/2012) and any funds in these accounts are fully insured.

Steve Settino

Is there any clarification on posting the required notice on the web site? What constitutes "internet deposit services"? If we allow a member to transfer funds from one of their accounts to another one of their accounts via our web site's on line banking product, do we have to posat the notice on the web site?

Steve Van Beek

Steve,
NCUA has not provided any additional guidance on what is considered "internet deposit services." I do think the ability to make deposits or transfer funds between accounts would meet the definition and require the notice.

Michelle

Does anyone have an example of the 2nd notice that they'd be willing to share?

Cheryl

Now with this expiring, will we need to send a notice to our memembers, such as a 'change in terms' notice?

Michael Coleman

Cheryl,

You are correct, the unlimited share insurance coverage for noninterest-bearing transaction accounts expires on December 31, 2012. Starting January 1, 2013, noninterest-bearing transaction accounts will have the standard maximum share insurance amount (SMISA) of $250,000. As a member service you could send a notice to your affected members if they need to restructure their accounts to ensure full share insurance coverage. However, this would not be a required change in terms notice.

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