BPI and CBA Letter on OCC’s Preemption Proposals

The Bank Policy Institute^[1] and the Consumer Bankers Association^[2] appreciate the opportunity to provide feedback on the Office of the Comptroller of the Currency's concurrent proposed rules on the Real Estate Lending Escrow Accounts and Preemption Determination: State Interest-on-Escrow Laws.^[3]

I. Executive Summary
BPI and CBA strongly support the OCC's concurrent proposed rules on the Real Estate
Lending Escrow Accounts and Preemption Determination: State Interest-on-Escrow Laws.^[4]
The first proposal would clarify and codify that decisions about whether, and how much, interest or other compensation to pay on escrow accounts are part of a national bank's powers.^[5] The second proposes a preemption determination that federal law preempts state laws restricting the discretion of OCC-regulated banks to "decide whether and to what extent to (1) pay interest or other compensation on funds placed in real estate escrow accounts; or (2) assess fees in connection with such accounts."^[6]

The proposals appropriately reaffirm that decisions regarding the structure, administration,
and pricing of mortgage escrow accounts, including whether and to what extent to pay interest, are core components of national banks' real estate lending powers under the NBA. Although existing Supreme Court precedent already supports preemption of state laws that dictate escrow pricing terms, recent litigation has produced inconsistent outcomes and uncertainty that undermine national uniformity. That inconsistency could lead future courts to uphold state laws that impose other price controls. By clarifying the application of settled preemption principles, the OCC's proposals will reduce unnecessary litigation and preserve national banks' ability to manage risk and price mortgage products effectively. This clarity benefits consumers by preventing state interest-on-escrow laws from reducing mortgage approval rates. Regulatory clarity in this area is particularly critical given the broader risk to the national banking system: if courts were to extend reasoning that upholds state interest-on-escrow mandates to other pricing decisions-such as interest paid on checking and savings accounts, ATM fees, or overdraft charges-national banks' ability to function as national institutions under uniform federal standards would be fundamentally undermined.

We also urge the OCC to ensure that the final rule addresses not only express interest-on escrow mandates but also state laws that impose similar constraints on escrow account administration to prevent circumvention of federal standards and to promote consistent regulation nationwide.

To read the full comment letter, please click here, or click on the download button below.

[1] The Bank Policy Institute ("BPI") is a nonpartisan public policy, research, and advocacy
group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. Collectively, they employ nearly two million Americans, hold approximately 69% of all loans, are responsible for originating more than half of the nation's small business loans, and are an engine for financial innovation and economic growth. BPI regularly produces academic research and policy analysis, comments on proposed regulations, and files amicus briefs in cases raising significant issues under the National Bank Act ("NBA"), underscoring its institutional expertise on questions of federal preemption.

[2] The Consumer Bankers Association ("CBA") is a member-driven trade association, and
the only national financial trade group focused exclusively on retail banking-banking services
geared toward consumers and small businesses. As the recognized voice on retail banking issues, CBA provides leadership, education, research, and federal representation for its members. CBA members operate in all 50 states. They include the nation's largest bank holding companies as well as regional and super-community banks. Eighty-three percent of CBA's members are financial institutions holding more than $10 billion in assets.

[3] Real Estate Lending Escrow Accounts, 90 Fed. Reg. 61,099 (proposed Dec. 30, 2025) (to be codified at 12 C.F.R. pts. 34 & 160); Preemption Determination: State Interest-on-Escrow Laws,
90 Fed. Reg. 61,093 (proposed Dec. 30, 2025) (to be codified at 12 C.F.R. pt. 34).

[4] Id.

[5] Real Estate Lending Escrow Accounts, 90 Fed. Reg. 61,099, 61,099 (proposed Dec. 30, 2025) (to be codified at 12 C.F.R. pts. 34 & 160).

[6] Preemption Determination: State Interest-on-Escrow Laws, 90 Fed. Reg. 61,093, 61,093
(proposed Dec. 30, 2025) (to be codified at 12 C.F.R. pt. 34).