States Oppose OCC Escrow Interest Preemption Proposals

• A bipartisan coalition of 23 AGs and several state banking regulators submitted a comment letter urging the OCC to withdraw two proposals addressing mortgage escrow accounts—an escrow rule and a related preemption determination that would preempt certain state laws requiring national banks to pay minimum interest on mortgage escrow accounts.
• In the letter, the states argue that state laws requiring lenders to pay interest on mortgage escrow accounts are long-standing consumer protection measures and that Congress has not authorized national banks to operate escrow accounts free from generally applicable state minimum-interest requirements.
• The coalition also contends the OCC's proposals conflict with Dodd-Frank's limits on bank preemption, including the "significant interference" test, and that the OCC has not satisfied the procedural and evidentiary requirements for a preemption determination.
• The states urge the OCC to abandon both proposals, arguing they are contrary to established law and would improperly deprive states of their authority to protect consumers in their interactions with national banks.

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