Exempting national banks from state laws on real estate escrow accounts and payments is the aim of two final rules issued Friday by the national bank regulator.
The Office of the Comptroller of the Currency (OCC) said the final rules “emphasize federal preemption as a critical tool for reducing unnecessary burden, enabling local and national prosperity, and unleashing economic growth.”
For the first final rule, the comptroller’s office said it codifies banks’ powers to “establish or maintain real estate lending escrow accounts and to exercise flexibility in making business judgments as to the terms and conditions of such accounts, including whether and to what extent to offer any compensation paid to customers or to assess any related fees.”
The agency said its action “provides clarity” and reduces uncertainty over bank escrow accounts. The OCC also said the action may “incentivize increased bank real estate lending.”
The final rule is essentially the same as the proposal, according to the agency.
For the second final rule, the agency said it exempts state laws restricting banks’ powers to decide whether to pay interest or other compensation on funds placed in real estate escrow accounts, or to assess fees in connection with the accounts.
“Specifically, the preemption determination concludes that federal law preempts a New York interest-on-escrow law; 13 other states and territories have laws with substantively equivalent terms; and these substantively equivalent laws are also preempted,” the OCC said.
It noted that the final rule added the interest-on-escrow laws of two U.S. territories—Guam and the U.S. Virgin Islands—but contains no other material changes from the proposal.
OCC Issues Two Final Rules on Preemption of State Interest-on-Escrow Laws
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