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OCC Bulletin 2026-21 | May 15, 2026

Preemption Determination on State Interest-on-Escrow Laws: Final Rule

To

Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties

Summary

The Office of the Comptroller of the Currency (OCC) is issuing a final preemption determination concluding that federal law preempts state laws that restrict 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.

Note for Community Banks

The preemption determination applies to all community banks.1

Highlights

  • This final preemption determination concludes that (1) the National Bank Act preempts New York’s Gen. Oblig. Law section 5-601, the state’s interest-on-escrow law;2 (2) 13 other states and territories have laws with substantively equivalent terms; and (3) these substantively equivalent state and territory laws are also preempted.
  • This final preemption determination complements the OCC’s final rule codifying 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

1 “Banks” refers collectively to national banks, federal savings associations, and federal branches and agencies of foreign banking organizations. OCC News Release 2025-89 (September 18, 2025) identifies “community banks” as institutions with up to $30 billion in assets.

2 The final preemption determination applies equally to federal savings associations and preemption by the Home Owners’ Loan Act. See 12 USC 1465(a).

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