California Escrow Law Covers National Banks, Ninth Cir. Says (1)

A California law requiring banks to pay interest on mortgage escrow accounts isn’t preempted by a federal law governing national banks, a federal appeals court determined, citing a ruling the US Supreme Court issued last year.

The state law, which requires banks to pay 2% interest on mortgage escrow accounts, doesn’t run afoul of the 1863 National Bank Act when applied to federally chartered banks, the US Court of Appeals for the Ninth Circuit said in a split ruling Thursday, affirming its previous decision in favor of a class suing Flagstar Bank.

The Supreme Court ruled in May 2024 in ...