In an opinion issued yesterday in Cantero v. Bank of America, the Second Circuit held that New York’s law requiring 2% interest payments on mortgage escrow accounts is preempted under the National Bank Act, because it “significantly interferes” with federal law, which allows federally chartered national banks to offer mortgage-escrow accounts without requiring them to pay interest to customers.
The Second Circuit had reached the same conclusion in a 2022 decision. The Supreme Court vacated that decision in 2024, remanding the case because the Second Circuit had applied the wrong analysis. Yesterday’s 2-1 decision, however, again held that the New York law is preempted.
The First and Ninth Circuits have held that similar state laws are not preempted.
