The National Bank Act does not preempt California Civil Code section 2954.8 which requires lenders to pay 2% interest on funds held in mortgage escrow accounts.  The state statute does not prevent or significantly impair the lender’s exercise of its national bank powers.  Also, 15 USC 1639(g)(3), enacted as part of the Dodd-Frank Act, requires lenders to pay interest on mortgage escrow accounts if prescribed by applicable law, showing that the federal government has allowed state law to govern this issue.

Ninth Circuit Court of Appeal (Nguyen, J.); March 2, 2018; 2018 WL 1122298.