January 29, 2018
Contact: Richard Loconte, 212-709-1691
DFS ISSUES ORDER REGARDING INTEREST ON ESCROW ACCOUNT TO MAKE STATE-CHARTERED FINANCIAL INSTITUTIONS COMPETITIVE WITH THEIR FEDERAL COUNTERPARTS
Order Adjusts the Minimum Rate of Interest Limit Banks are Required to Pay on Residential Mortgage Escrow Accounts to the Lesser of 2% or the Six-Month Treasury Yield
Superintendent Vullo Continues to Exercise “Wild Card” Authority to Protect NY State-Chartered Institutions
Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has issued an order pursuant to the Wild Card provision of the New York State Banking Law regarding the minimum interest rate that New York State-chartered institutions must pay on escrow accounts related to certain mortgage loans. Under the order, such institutions will now pay the lesser of 2% or the six-month yield on United State Treasury securities on certain mortgage escrow accounts.
“This important action supports New York State-chartered institutions, allowing them to keep pace with their federal counterparts while continuing to offer strong protections for consumers,” said Superintendent Vullo. “DFS remains committed to strengthening our state banking charter, and ensuring that our institutions are strong in this low interest rate environment.”
Prior to today’s action, New York State-charted financial institutions had been required to pay interest of at least 2% on escrow accounts. Federal regulations do not require national banks, federal savings and loan associations and federally chartered credit unions to pay a minimum amount.
The DFS order issued today sets the minimum rate of interest to be paid by New York State-chartered banks, savings and loan associations and credit unions on escrow accounts on loans secured by mortgages on one- to six-family residences that are occupied by the owner or on any property owned by a cooperative apartment corporation to be the lesser of 2% or the six-month yield on United States Treasury securities.
A copy of the order can be found here.
New York currently has 139 state-chartered commercial banks, savings banks and bank holding companies, 16 state-chartered credit unions, 85 foreign branches, and 35 representative offices, with assets totaling $2.6 trillion.