The Second Circuit Court of Appeals ruled that Bank of America is not required to follow New York state law regarding mortgage escrow accounts.
The judicial panel determined the federal National Bank Act preempts New York’s requirement for banks to pay at least 2% interest on these accounts.
This decision reverses a lower court order and dismisses a class-action lawsuit brought by New York homeowners against the bank.
The ruling effectively limits the application of New York’s interest-on-escrow law for national banks operating within the state.