On Monday, September 17th, BPI, along with the ABA, CBA, Chamber of Commerce and MBA, submitted an amici brief in support of Bank of America’s petition for U.S. Supreme Court review of a Ninth Circuit Court of Appeals case regarding the applicability of National Bank Act (NBA) preemption to a California state law mandating payment of at least a 2% interest rate on mortgage escrow accounts.
The brief argues that a Ninth Circuit panel misinterpreted and misapplied longstanding case law precedent as well as provisions of the Dodd-Frank Act (DFA) in holding that [the NBA does not preempt the California law]:(i) Congress removed the NBA’s preemption of state laws mandating the payment of interest on mortgage escrow accounts as part of the DFA, and (ii) in any case, a 2% state-mandated interest rate on mortgage escrow accounts is not high enough to rise to the level of “significant interference” with national bank powers under the applicable preemption standards (the so-called Barnett Bank preemption standard).] BPI and its trade association partners submitted the amicus in view of the belief that if the Ninth Circuit decision is not reversed, it could upset important risk management practices and/or shift the economic model of some bank products making them more costly especially for borrowers with weaker credit and more modest means.
