New Escrow Rules May Eliminate Interest Payments: What Homeowners Stand To Lose—and Why Your State May Be Suing To Save Your Money

Last Tuesday, 10 states filed a lawsuit suing the Office of the Comptroller of the Currency in order to block new rules regarding escrow payments. The collection of attorneys general, led by Oregon, argue that two newly enacted provisions that would allow banks to sidestep state laws requiring them to pay interest on mortgage escrow balances are unnecessary.By bringing the fight to the OCC, the states aim to preserve their ability to ensure residents receive fair compensation on funds held by financial institutions.But how much money are we really talking about here?Understanding the lawsuitWhen you buy a home with a mortgage, in addition to paying the principal and interest payments each month, your payments also include funds that go into an escrow account.That account is set up to pay your homeowners insurance premiums and property taxes, as well as mortgage insurance if you have it. About 80% of mortgage holders have an escrow account, according to Lereta, and currently, 14 states and U.S. territories have laws requiring interest be paid on those escrow balances.Along with Oregon, New York, California, Connecticut, Maine, Maryland Massachusetts, Minnesota, Rhode Island, and Ver...