Preemption Determination: State Interest-on-Escrow Laws
Summary
The federal government is proposing to determine whether federal banking rules override state laws that require banks to pay interest on customer escrow accounts (money held by banks on behalf of customers). This decision could affect how much interest customers earn on money their banks are holding for things like home repairs or property taxes.
Key Points
- 1The Office of the Comptroller of the Currency (OCC) is deciding whether federal banking rules take priority over state laws requiring banks to pay interest on escrow accounts
- 2Escrow accounts hold customer money for specific purposes like home inspections, property taxes, or insurance, and some states require banks to pay interest on this money
- 3If federal rules preempt state laws, banks would follow federal standards instead of state rules, which could mean less interest paid to customers in some states
- 4The public has until January 30, 2026 to submit comments on this proposal
- 5This affects homeowners, borrowers, and anyone who has money held in escrow by a bank
Key Dates
December 30, 2025
This summary is for informational purposes only. It may not capture all nuances of the regulation. Always refer to the official text for authoritative information.
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