OCC preempts state interest-on-escrow laws for regulated banks
OCC-regulated banks may set escrow interest and fee terms under federal law
Change
OCC issued a final preemption determination concluding that federal law preempts state laws restricting OCC-regulated banks’ flexibility over real-estate escrow-account interest, compensation and fees.
Why it matters
The determination replaces conflicting state interest-on-escrow constraints with a federal boundary for OCC-regulated banks. Legal, compliance, product and operations teams must align escrow-account interest, compensation and fee practices with the OCC preemption rule from the effective date.
Implications
- — National bank legal and compliance teams must treat state interest-on-escrow restrictions as preempted for covered real-estate escrow accounts from June 18, 2026.
- — Federal savings association product and operations teams must align escrow-account interest, compensation and fee practices with the OCC final rule.
- — Bank policy teams must update escrow-account legal references and procedures before relying on state-law restrictions that the OCC has determined are preempted.
Who is affected
- — National bank legal and compliance teams
- — Federal savings association product and operations teams
- — Bank policy teams responsible for real-estate escrow accounts
What to watch
- — Bulletin publication date: May 15, 2026
- — Effective date: June 18, 2026
- — Docket ID: OCC-2025-0735
- — Companion OCC rule codifying escrow-account authority
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