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ARTICLE · 17 AUGUST 2026

States Sue OCC Over Escrow Interest Preemption Rules

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On August 11, 2026, a coalition of ten state attorneys general filed suit in the U.S. District Court for the District of Oregon challenging two OCC rules that preempt certain state laws...

United StatesFinance and Banking
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
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On August 11, 2026, a coalition of ten state attorneys general filed suit in the U.S. District Court for the District of Oregon challenging two OCC rules that preempt certain state laws requiring national banks and federal savings associations to pay interest on funds held in mortgage escrow accounts. The states allege that the rules violate the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Administrative Procedure Act (APA).

The OCC issued the two final rules on May 15, 2026 (previously discussed here). The first codifies the OCC's position that federally chartered institutions have authority to determine the terms and conditions of mortgage escrow accounts, including whether to pay interest. The second determines that federal law preempts interest-on-escrow laws in 14 states and territories. The states contend that the OCC exceeded the limits Congress placed on national bank preemption under Dodd-Frank. The states seek an order declaring the rules unlawful and

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