Proposal Would Allow Banks to Charge Homeowners Hidden Fees and Override State Laws

January 30, 2026 — Press Release

Bank Regulator Should Abandon Plan to Let Banks Keep Interest on Homeowners’ Escrow Accounts

WASHINGTON – This week, in a filing with the Comptroller of the Currency (OCC), the National Consumer Law Center (NCLC) urged the regulator of national banks to abandon a plan to override state laws that require national banks to pay interest on homeowners’ money held in escrow. NCLC argued that the proposal to eliminate interest payments on homeowner funds that banks hold in escrow to pay taxes and insurance exceeds OCC’s authority and will reduce price transparency, create an unlevel playing field for competition, and make homeownership more expensive for consumers.

“This power grab by the OCC will allow national banks to require home buyers to make their tax and insurance payments into non-interest bearing accounts,” said Carolyn Carter, senior attorney at NCLC. “It will allow national banks to effectively charge a hidden back-end fee by withholding interest on a homeowner’s money.” 

Advocates also argued that the OCC, by declaring that banks can act in their “discretion” regardless of state laws, is attempting to eliminate the role of states in protecting consumers and to override the limits Congress adopted in 2010 on when the OCC could preempt state law.

“President Trump directed agencies to aggressively preempt state laws, but our Founders created a federalist system and gave states important roles, and the OCC cannot simply give banks the discretion to do whatever they want and ignore state laws,” said Lauren Saunders, associate director and director of federal advocacy at NCLC.

California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Utah, Vermont, and Wisconsin have laws requiring payment of interest on escrow, all of which would be overridden under the Comptroller’s proposal.