Maryland Joins Lawsuit Challenging Federal Rule on Mortgage Escrow Interest

Maryland Attorney General Anthony G. Brown joined 10 other state attorneys general in filing a federal lawsuit challenging a Trump administration rule that would eliminate state requirements for mortgage lenders to pay interest on borrower escrow accounts.

The lawsuit targets a May 2026 decision by the Office of the Comptroller of the Currency that claims to invalidate state laws requiring lenders to pay interest on money borrowers deposit into escrow accounts for taxes and insurance.

What the Rule Does

The OCC rule, issued in response to a request from banking lobbyists, would allow national banks to keep interest earned on escrow funds rather than share it with borrowers as Maryland law currently requires.

The coalition argues the rule would transfer money from homeowners to national banks and create a competitive disadvantage for smaller state-chartered banks that would still be bound by Maryland’s interest-on-escrow law.

What Maryland’s Attorney General Says

“Maryland law says homeowners are entitled to interest on their own escrow money, and the OCC is trying to hand that money to big banks instead,” Brown said in a statement. “We are joining this lawsuit to protect homeowners and stop this rule before it costs them the interest they deserve.”

The Legal Challenge

According to the complaint, the OCC issued the rule without following procedural safeguards established by Congress. The lawsuit also argues the rule contradicts federal court decisions that have upheld state interest-on-escrow laws.

If the lawsuit succeeds, the OCC rule would be blocked and Maryland’s existing requirement would remain in effect.

The case was filed today in U.S. District Court in Portland. In addition to Maryland, the coalition includes the attorneys general of California, Connecticut, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, and Vermont.

The formal case name is States of Oregon & New York, et al., v. Office of the Comptroller of the Currency & Jonathan Gould.

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Full Press Release

Attorney General Brown Sues to Block Trump Administration’s Lawless Handout to Big Banks

Rule lets big banks keep money that should be going back into Maryland homeowners’ pockets

BALTIMORE, MD — Attorney General Anthony G. Brown and a coalition of 10 attorneys general filed a lawsuit today to block the Trump administration’s latest effort to favor big business over working families. The case challenges a decision by a little-known but powerful federal agency, the Office of the Comptroller of the Currency (OCC), to invalidate state laws that require mortgage lenders to pay interest on the money they require borrowers to deposit into escrow accounts to cover taxes and insurance.

The result of the OCC’s decision is to take money away from homeowners and put it right into the pockets of big banks.

“Maryland law says homeowners are entitled to interest on their own escrow money, and the OCC is trying to hand that money to big banks instead,” said Attorney General Brown. “We are joining this lawsuit to protect homeowners and stop this rule before it costs them the interest they deserve.”

In May 2026, responding to a request from banking lobbyists, the OCC issued a rule that claims to invalidate state laws – including Maryland – requiring lenders to share the money they earn on borrowers’ escrowed funds with the borrowers themselves. According to the lawsuit, the OCC’s rule ignores federal court rulings upholding state interest-on-escrow laws and skips the safeguards Congress put in place to prevent exactly this kind of bureaucratic overreach. If successful, the states’ case will wipe the OCC’s rule off the books and level the playing field between lenders and borrowers in Maryland.

It’s not just borrowers who lose out under the OCC’s rule. Because it only exempts national banks from Maryland’s interest-on-escrow law, smaller, state-chartered banks are left at a competitive disadvantage.

The case, States of Oregon & New York, et al., v. Office of the Comptroller of the Currency & Jonathan Gould, will be filed today in the U.S. District Court in Portland.

Joining Attorney General Brown in filing the lawsuit are the attorneys general of California, Connecticut, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, and Vermont.

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