Connecticut has joined a multistate lawsuit filed in Oregon challenging two Office of the Comptroller of the Currency rules that let national banks ignore state laws requiring them to pay homeowners interest on mortgage escrow accounts. States like Connecticut, California, and Minnesota currently mandate that banks return a portion of interest earned on these often-large escrow balances to borrowers. The OCC's new rules argue national banks can set their own escrow terms and that federal law preempts state requirements, listing Connecticut among more than a dozen states and territories affected.
Attorney General William Tong says the rules would 'strip states of their authority' and put 'banks first, families last.' The lawsuit argues the OCC unlawfully grouped many states together for preemption without the individualized analysis Congress required, and that Supreme Court precedent and Dodd-Frank support states' authority here. A related case saw the Second Circuit rule in May that New York's similar law was preempted, so this fight is already headed toward higher courts.
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