Supreme Court Seeks Trump Administration’s Views In Mortgage-Escrow Fight
By CU Today Staff —
WASHINGTON—The U.S. Supreme Court has asked the Trump Administration to weigh in as the justices consider cases that could determine whether federally chartered banks must comply with state laws requiring lenders to pay interest on homeowners’ mortgage escrow accounts, Law360 reported.
According to the Supreme Court’s Oct. 5 order list, the justices invited the solicitor general to submit the federal government’s views in Cantero v. Bank of America, Flagstar Bank v. Kivett and Citizens Bank v. Conti. The court has not yet agreed to hear the cases.
At issue is a split among federal appeals courts over whether the National Bank Act preempts state interest-on-escrow requirements. The Second Circuit ruled May 5 in Cantero that New York’s requirement is preempted, while the Ninth Circuit has held that national banks remain subject to California’s law requiring at least 2% interest on certain mortgage escrow accounts. The Ninth Circuit’s decision in Kivett left intact the core of a judgment of more than $9 million for borrowers, according to Law360.
The dispute has already reached the Supreme Court once. In its unanimous 2024 Cantero decision, the court rejected the Second Circuit’s earlier preemption analysis and said courts must apply the Dodd-Frank Act standard for determining whether a state consumer-financial law “prevents or significantly interferes with” a national bank’s exercise of its powers. The Second Circuit reconsidered the case and again sided with Bank of America in May, prompting the homeowners to file another Supreme Court petition, according to the court’s Cantero docket.
The cases also come after the Office of the Comptroller of the Currency moved this year to settle the issue administratively in favor of federally chartered institutions. The OCC adopted rules declaring that national banks and federal savings associations may decide whether to pay interest on escrow accounts and determining that state laws restricting that discretion are preempted.
Originally reported by CU Today.