Banks get explicit power to set terms for real estate escrow accounts

The US banking regulator is making it official that banks can decide the terms for real estate escrow accounts. This means they can choose whether to pay interest on the money held or charge fees for managing it.

Banks have long held money in escrow accounts for things like property taxes and insurance, managed alongside mortgages. This rule makes it clear that banks have the final say on whether to pay interest on those funds or charge fees for the service. It removes any legal ambiguity about these practices.