OCC proposes preempting state laws on escrow interest 

The OCC proposed issuing a preemption determination saying that federal law preempts state laws that eliminate OCC-regulated banks’ flexibility in paying interest or assessing fees on funds placed in real estate escrow accounts.  

Details: The OCC said: 

• The proposed preemption determination would conclude that the National Bank Act preempts New York’s Gen. Oblig. Law section 5-601, the state’s interest-on-escrow law. 

• Eleven other states have laws with substantively equivalent terms, and these laws would also be preempted. 

• The proposed determination would complement the OCC’s notice of proposed rulemaking to codify national banks’ longstanding escrow accounts power, which the agency is concurrently issuing. 

Public Comment Period: Comments on the proposal are due 30 days after it is published in the Federal Register. ICBA will be submitting comments.