On Friday, May 15, 2026, the Office of the Comptroller of the Currency (OCC) issued two final rules on national banks’ and federal savings associations’ real estate lending powers related to mortgage escrow accounts. The actions codify a rule reflecting longstanding OCC precedent on mortgage escrow account powers and finalize the proposed preemption rule regarding interest-on-escrow laws, both of which the Second Circuit relied upon in its recent decision in Cantero v. Bank of America, N.A. Both the final rules are effective June 18, 2026.

The OCC finalized, without substantive changes, the rule affirming national banks’ and federal savings associations’ flexibility to establish and maintain escrow accounts and to make business judgments regarding their terms—including whether and to what extent to pay interest or other compensation or to assess related fees. 

Concurrently, the OCC issued a preemption determination concluding that the National Bank Act and Home Owners’ Loan Act preempt state laws that restrict this flexibility. The determination specifically addresses New York’s General Obligations Law § 5-601 and substantively equivalent laws in 13 other states and territories (adding Guam and the U.S. Virgin Islands from the proposal). 

The OCC commended the Second Circuit’s May 5, 2026, decision in Cantero (on remand from the Supreme Court), which held that New York’s mortgage interest-on-escrow law is preempted. That opinion cited the OCC’s then-proposed rules and applied the Supreme Court’s Barnett Bank nuanced comparative analysis. 

This development strengthens the federal preemption position for national banks and federal savings associations amid ongoing circuit splits (e.g., with the First Circuit’s Conti decision and Ninth Circuit’s Kivett ruling). It is likely to influence further litigation, potential en banc review, and Supreme Court consideration. 

National banks should consult with counsel regarding the implications for their mortgage escrow practices across jurisdictions as the legal landscape continues to evolve. The final rule and preemption determination rules are available here and here. 

There still remains tremendous uncertainty with respect to the extent that the National Bank Act preempts other state consumer protection laws. We have been counseling many national banks with respect to these matters.