OCC Finalizes Rule Exempting National Banks From State Escrow-Interest Requirements

Banks collect mortgage borrowers’ funds in escrow accounts to pay property taxes and insurance premiums. Some states also require banks to pay interest on those funds; New York, for example, mandates an annual rate of at least 2%. The dispute centers on whether such state consumer-protection laws interfere with the lending powers granted to national banks and federal savings associations under the National Bank Act, while affecting bank costs and mortgage pricing.

The U.S. Office of the Comptroller of the Currency issued two final rules on May 15, 2026. They were published in the Federal Register on May 19 and took effect on June 18. The rules allow banks to decide whether to pay interest on escrow funds and charge fees, while determining that federal law preempts similar statutes in New York and 13 other states and territories. Guam and the U.S. Virgin Islands were added in the final version.