National banks don’t have to comply with New York’s law mandating interest payments on mortgage escrow accounts, a federal appeals court ruled.
New York’s mandate that banks pay 2% on escrow accounts interferes with their ability to efficiently engage in mortgage lending and is preempted by the National Bank Act, a split panel on the US Court of Appeals for the Second Circuit said in a Tuesday opinion.
“New York’s interest-on-escrow law is preempted because it affects a broad federal grant of power to set the terms of mortgage escrow accounts and it impedes national banks’ ability to offer ...