Attorney General Neronha, coalition sue to block Trump Administration effort to take money away from homeowners

Published on Tuesday, August 11, 2026

Attorney General Peter F. Neronha today joined a coalition of 10 attorneys general in filing a lawsuit today to block the Trump Administration's latest effort to favor big business over working families.

In today's lawsuit, the attorneys general challenge a decision by the Office of the Comptroller of the Currency (OCC) to preempt state laws that require mortgage lenders to pay interest on the money they require borrowers to deposit into escrow accounts to cover taxes and insurance. OCC's decision ultimately results in less money being returned to homeowners and more money put into the pockets of big banks.

"Once again, this Administration is putting the interests of big corporations over the hard-working people of Rhode Island," said Attorney General Neronha. "In the midst of a national affordability crisis, those who have scraped together the money to buy their own home and stay in it can't afford to lose money they are entitled to under state law. These state consumer protection laws have been in place for decades to ensure that Rhode Island borrowers receive every penny they are due, and the Administration's attempt to pull a fast one on consumers is uncalled for and unlawful. We will fight to protect Rhode Island consumers every time this Administration tries to short-change them, and I am confident we will succeed."

Since the late 1930s, state and national banks making mortgage loans have typically required consumers to deposit funds into escrow accounts to cover property taxes and home insurance premiums associated with the property, in addition to making monthly principal and interest payments. Because homeowners make escrow payments monthly, but property taxes and insurance premiums are generally paid out of escrow annually or semi-annually, escrow accounts often carry significant positive balances throughout the year. Banks were thus obtaining "interest-free" loans from their own consumers.

In response, states including Rhode Island passed interest-on-escrow laws requiring banks to pay their customers minimum amounts of interest on the money deposited into escrow accounts. Rhode Island enacted an interest-on-escrow law in 1995 and updated it in 2008. Rhode Island's law results in borrowers recouping thousands of dollars in interest payments every year.

In May 2026, responding to a request from banking lobbyists, the OCC issued a rule that claims to preempt state interest-on-escrow laws, including Rhode Island. As detailed in the complaint, the OCC's rule ignores federal court rulings upholding state interest-on-escrow laws and disregards additional safeguards Congress put in place to prevent this kind of bureaucratic overreach. Additionally, because the rule only exempts national banks from Rhode Island's interest-on-escrow law, smaller, state-chartered banks are left at a competitive disadvantage.

The coalition argues that OCC's rule violates the Administrative Procedure Act.

Joining Attorney General Neronha in filing this lawsuit are the attorneys general of California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, and Vermont.

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