The Supreme Court recently ruled in favor of homeowners seeking to compel large banks, including Bank of America, to pay interest on mortgage escrow accounts. The unanimous decision overturned an appeals court ruling that favored Bank of America, which had been withholding interest on funds collected for insurance and property tax payments. New York mandates a 2% interest rate on escrowed funds, and 13 other states have similar laws in place.
Initially, a federal judge ruled in favor of the borrowers, but Bank of America successfully petitioned the federal appeals court in New York to dismiss the suits, citing federal law governing national banks as prohibiting state-specific regulations. However, the Supreme Court, through Justice Brett Kavanaugh's opinion, highlighted the need for a more detailed analysis to determine if state laws should yield to federal statutes.
