On May 15, 2026, the OCC issued two final rules on national banks’ and federal savings associations’ real estate lending powers related to the payment of interest on funds held in escrow accounts. According to the OCC, these emphasize federal preemption as a critical tool for reducing unnecessary burden and driving economic growth.

The first final rule codfies longstanding and recognized powers of national banks and Federal savings associations to establish or maintain real estate lending escrow accounts and to exercise flexibility in making business judgments as to the terms and conditions of such accounts, including whether and to what extent to offer any compensation or to assess any fees related thereto. The OCC stated that this will provide clarity and reduce uncertainty with regards to bank escrow practices.

Through a second final rule, the OCC is issuing a preemption determination concluding that federal law preempts state laws that restrict national banks’ and federal savings associations’ flexibility 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. In particular, the ruling says that federal law preempts a New York law on interest paid on escrow accounts. Similar laws in 13 other states and territories are also considered preempted because they are essentially the same.

Read the OCC’s press release here.