OCC Proposes Freedom for Banks in Real Estate Escrows
Published Date: 12/30/2025
Proposed Rule
Summary
The OCC is proposing a new rule to officially confirm that banks can set up and manage real estate lending escrow accounts however they see fit, including deciding on fees or compensation. This affects national banks and federal savings associations, giving them more freedom to use their business smarts. If you want to share your thoughts, make sure to comment by January 29, 2026!
Analyzed Economic Effects
4 provisions identified: 4 benefits, 0 costs, 0 mixed.
Banks can set escrow terms freely
The OCC proposes to formally allow national banks and Federal savings associations to establish and maintain real estate lending escrow accounts and to decide the terms and conditions for those accounts themselves. This includes decisions about investing escrowed funds, assessing fees for escrow accounts, and whether and to what extent to calculate or pay interest or other compensation to customers.
May encourage more mortgage lending
The OCC states that codifying banks' flexibility over escrow accounts could reduce uncertainty and may incentivize increased bank mortgage lending. The proposal notes escrow accounts are used in about 80% of U.S. residential mortgages, indicating the rule touches a large portion of mortgage activity.
No new costs for small institutions
The OCC states the proposed rule would not impose new mandates or direct costs on OCC‑supervised institutions and certifies under the Regulatory Flexibility Act that it would not have a significant economic impact on a substantial number of small entities. The OCC reports it currently supervises 1,005 institutions and estimates about 609 are small entities under the RFA thresholds.
Some states require escrow interest
The document lists states that require their state‑chartered banks to pay specified interest amounts on mortgage escrow accounts: CA, CT, ME, MD, MA, MN, NH, NY, OR, RI, UT, VT, and WI. The OCC notes roughly three quarters of states permit state‑chartered banks flexibility, but these listed states have explicit requirements.
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