The Office of the Comptroller of the Currency has issued two final rules affecting national banks and federal savings associations that clarify their authority over real estate lending escrow accounts and confirm that federal law overrides certain state interest-on-escrow requirements. One rule codifies these institutions' longstanding power to establish and maintain escrow accounts and to set the accounts' terms and conditions, including whether to pay interest or other compensation on escrowed funds and whether to charge related fees. The second rule makes a final preemption determination that federal law preempts New York's interest-on-escrow law and substantively equivalent laws in 13 other states and territories. The escrow account rule was adopted without changes to the proposed text. The final preemption determination adds Guam and the U.S. Virgin Islands and otherwise makes no material changes. The OCC also linked the action to a recent U.S. Court of Appeals for the Second Circuit decision that found New York's law preempted and cited the proposed version of these rules.
Office of the Comptroller of the Currency2026-05-15
Office of the Comptroller of the Currency codifies national banks' and federal savings associations' escrow account powers and preempts New York and equivalent interest on escrow laws
The Office of the Comptroller of the Currency issued two final rules clarifying that national banks and federal savings associations may establish and maintain real estate lending escrow accounts and set their terms, including decisions on interest payments and related fees. The second rule determines that federal law preempts New York’s interest-on-escrow law and substantively equivalent laws in 13 other states and territories, aligning with a recent U.S. Court of Appeals for the Second Circuit decision.