Preemption Determination on State Interest-on-Escrow Laws: Notice of Proposed Rulemaking

Summary

The Office of the Comptroller of the Currency (OCC) is proposing to issue a preemption determination concluding that federal law preempts state laws that eliminate OCC-regulated banks’ flexibility to decide whether and to what extent to (1) pay interest or other compensation on funds placed in real estate escrow accounts; or (2) assess fees in connection with such accounts. Comments on all aspects of the proposal are due 30 days after it is published in the Federal Register.

Highlights

This proposed preemption determination would

• conclude that (1) the National Bank Act preempts New York’s Gen. Oblig. Law section 5-601, the state’s interest-on-escrow law; (2) 11 other states have laws with substantively equivalent terms; and (3) these substantively equivalent state laws are also preempted.
• complement the OCC’s notice of proposed rulemaking to codify national banks’ longstanding escrow accounts power, which the agency is concurrently issuing.

Further Information

Please contact Karen McSweeney, Special Counsel; Graham Bannon, Counsel; Priscilla Benner, Counsel; or Harry Naftalowitz, Attorney, Chief Counsel’s Office, at (202) 649-5490.

Adam J. Cohen
Senior Deputy Comptroller and Chief Counsel

Related Link

• Preemption Determination on State Interest-on-Escrow Laws: Notice of Proposed Rulemaking (PDF)