National Banks

Updated 2026-05-17

A depository institution is a financial institution that accepts deposits. The term "depository institution" has the same meaning as in 12 U.S.C. § 1813, and includes any credit union (12 U.S.C. § 5102(3)).

Types of Depository Institutions

National Banks

National banks are financial institutions chartered and supervised by the Office of the Comptroller of the Currency (OCC). They operate under uniform federal standards and are subject to federal supervision, which includes preemption over certain state laws.

National banks are authorized to engage in mortgage banking activities under specific statutory and regulatory authorities:

• Statutory Authority: 12 U.S.C. § 371 permits national banks to make, arrange, purchase, or sell loans or extensions of credit secured by liens or interests in real estate.
• Regulatory Authority: 12 CFR Part 34 clarifies the types of collateral that qualify as real estate and sets forth other real estate lending standards for national banks.

These institutions are a primary audience for the OCC's guidance on mortgage banking, which outlines expectations for risk management, compliance, and operational oversight.

Insured Depository Institutions

An insured depository institution is a financial institution that accepts deposits and whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). This term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. § 1813).

Insured Credit Unions

An insured credit union is a cooperative financial institution that accepts deposits from its members and whose deposits are insured by the National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration (NCUA). This term is defined in section 101 of the Federal Credit Union Act (12 U.S.C. § 1752).

Regulatory Significance

Depository institutions, including national banks and insured credit unions, are significant creditors in the mortgage market and are subject to various federal regulations.

Under the SAFE Act

Under the SAFE Act, employees of depository institutions who act as loan originators are classified as registered loan originators, rather than State-licensed loan originators. These employees are registered with the Nationwide Mortgage Licensing System and Registry (NMLS) through a system developed and maintained by the Bureau of Consumer Financial Protection (CFPB) (12 U.S.C. § 5106).

In Mortgage Lending and HPML Escrow Requirements

Insured depository institutions and insured credit unions are subject to federal regulations, including those related to Higher-Priced Mortgage Loans (HPMLs) and escrow accounts under Regulation Z.

HPML Escrow Exemptions

Both insured depository institutions and insured credit unions may qualify for exemptions from the mandatory HPML escrow requirement under specific conditions.

For the purposes of the HPML Escrow Exemptions under Regulation Z:

• An insured depository institution has the meaning given in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
• An insured credit union has the meaning given in Section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

Under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) Section 108, certain insured depository institutions and insured credit unions may qualify for an exemption from the mandatory HPML escrow requirement. This exemption applies if the institution meets specific criteria, including:

• An asset-size threshold of $10 billion or less.
• A loan origination limit of 1,000 or fewer first-lien loans on a principal dwelling in the preceding calendar year.
• Meeting rural or underserved area requirements (for insured depository institutions, as detailed in 12 CFR § 1026.35(a)(4)).

Insured credit unions may also qualify for the insured institution exemption from the TILA HPML Escrow Rule if they meet specific asset size, loan volume, and rural or underserved area requirements (12 CFR § 1026.35(a)(3)).