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Credit unions are clear to offer Interest on Lawyer Trust Accounts (IOLTAs) with federal share insurance under NAFCU-sought legislation enacted last month, but the law's impact on other, similar accounts is still being reviewed by NCUA, NAFCU Director of Regulatory Affairs Alicia Nealon says.

"NCUA has spoken on IOLTAs and confirmed that federal credit unions can start offering IOLTAs today with share insurance coverage," Nealon says in a post today in the NAFCU Compliance Blog. "NCUA, however, is waiting to address other parts of the law, such as ‘other similar escrow accounts,' in upcoming regulation."

Nealon reminds members of the association's Regulatory Alert on NCUA's second Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) and encourages comments on what types of escrow accounts should warrant share insurance coverage.

Charter Oak Federal Credit Union, a NAFCU member, was the first credit union to be approved by the Connecticut Bar Foundation to offer IOLTA accounts under the new rules. Credit union CEO Brian Orenstein says the IOLTA authority is a welcome development.

"We are very happy to be finally able to offer IOLTA accounts to our members," Orenstein says. "We have been the number one mortgage lender in Eastern Connecticut for five years in a row, yet we have not been able to obtain any of the IOLTA accounts from the many attorneys we use to close our loans. We also are the only credit union in Connecticut who is actively making member business loans. This approval puts us on equal footing with the banks, and now we can close our mortgages through our own IOLTAs."