Banks can now decide if they pay interest on real estate escrow accounts

The US Treasury Department is proposing a rule that would let federally regulated banks decide whether to pay interest on real estate escrow accounts. This means banks would no longer be forced by state laws to pay interest or charge fees on these accounts.

For years, state laws have dictated how banks handle interest on money held in escrow for real estate. This proposed rule would remove that power from states for federally regulated banks. It means banks could keep more of the money from these accounts, or charge new fees, without state interference.