OCC Seeks Dismissal or Transfer in State Lawsuit Over Mortgage Escrow Rules
OCC filed a reply brief urging dismissal or venue transfer in mortgage escrow state lawsuit.
Why it matters: This highlights ongoing federal-state conflicts over mortgage regulatory authority impacting compliance and banking oversight.
- On Nov. 2, 2026, OCC filed a reply supporting dismissal or transfer in lawsuit by Oregon and nine states.
- The lawsuit challenges two OCC rules from May 15, 2026, on preemption of state interest-on-mortgage escrow laws.
- OCC argues states lack concrete injury and that Oregon venue is chosen to avoid unfavorable Second Circuit precedent.
- Court expected to rule on OCC's motions by November 20, 2026, in case 3:26-cv-01672-SI filed in Oregon.
On November 2, 2026, the Office of the Comptroller of the Currency (OCC) doubled down on its legal challenge to a lawsuit filed by Oregon and nine other states. The lawsuit contests two OCC rules issued on May 15, 2026, which assert federal preemption over state interest-on-mortgage escrow laws. The case, Oregon v. Office of the Comptroller of the Currency (No. 3:26-cv-01672-SI), is currently pending in the District of Oregon.
The OCC's reply brief argues that the states have failed to show any concrete or actual injury caused by the OCC's actions, a key element for standing in federal court. The OCC also challenges the propriety of litigating the case in Oregon, suggesting that the states' coalition chose that venue strategically to sidestep unfavorable rulings in the Second Circuit. Instead, the OCC seeks transfer of the case to Washington, D.C.
The contested rules include the Real Estate Lending Escrow Accounts regulation, known as the Powers Rule, and the Preemption Determination regarding state interest-on-mortgage escrow laws. These set the OCC's federal stance on mortgage escrow accounts held by national banks, preempting conflicting state laws.
The states argue the OCC exceeded its authority under the National Bank Act and violated Dodd-Frank Act limitations on agency preemption. However, the OCC asserts the challenge lacks statutory merit and should be dismissed or moved to federal court in D.C.
The court is expected to issue a ruling on the OCC's motions by November 20, 2026. This legal dispute underscores persistent federal-state tensions in regulating mortgage lending, particularly around consumer protections and regulatory preemption.
By the numbers:
- 10 states — challenging OCC mortgage escrow rules
- May 15, 2026 — date OCC issued contested rules
- November 2, 2026 — date OCC filed reply brief
- November 20, 2026 — expected court ruling date
Yes, but: While the OCC argues the states lack standing and venue is improper, the states maintain Oregon is a valid venue and that the OCC exceeded legal authority, meaning court rulings could pivot either way.
What's next: The court is scheduled to rule on the OCC's motions to dismiss or transfer by November 20, 2026, potentially shaping federal-state regulatory boundaries for mortgage escrow practices.