With the recent news of bank failures dominating the headlines, the Colorado Title & Closing Services team wanted to take this opportunity to remind our customers of how the Federal Deposit Insurance Corporation (FDIC) protects bank deposits, escrow funds and independent customer funds.

The FDIC provides insurance in the event of a bank failure for deposit products, such as checking, savings, money market, CDs, cashier and money orders at FDIC-insured banks. The FDIC doesn’t provide coverage for stocks, bonds and other listed investments. 

The current amount of FDIC insurance for a depositor is $250,000 per account ownership category per insured bank. 

The FDIC has three requirements that must be met to be considered a deposit of the actual owner:

  1. Funds must be owned by the principal and not by the third party who set up the account.
  2. The insured account records must indicate the agency nature of the account, i.e., Trust or Escrow Account.
  3. The records of the institution, the fiduciary and the third party must indicate both the identities of the principals as well as the ownership interest in the deposit.

Colorado Title Services takes serious responsibility to protect our customers’ funds. We follow all our industry Best Practices to ensure compliance with FDIC regulations and guidelines. This includes:

  • Properly identifying each escrow trust account.
  • Making sure funds held in an escrow trust account or other funds we hold under a fiduciary duty to another person or entity are separately maintained and are not commingled with our operating account or any individual’s personal account.
  • Supporting escrow accounts with detailed trial balances, listing all open escrow file balances.
  • Our Underwriters audit our escrow accounts annually to make sure we are in compliance.

If our customers have other deposits at the same bank that handles our escrow account, there may be unexpected aggregation limits. These other deposits may be aggregated with their escrowed fund to determine if their deposits exceed the limits of FDIC insurance. Should a client notify us that they have deposits with the bank that our escrow account is with that could exceed the FDIC limit, we will do our best to provide the option of utilizing a different FDIC-insured bank to hold the escrowed funds to avoid these FDIC limits. The bank being used for the escrowing of their funds is disclosed on the requirement page of the commitment.

You can count on Colorado Title Services to do all we can to work with you, your buyers and sellers to ensure each transaction is protected under the current FDIC insurance. We hope this helps you, but if you have any questions about our policies and procedures, don’t hesitate to reach out to us. We look forward to working with you on your next transaction!