No Preemption on Interest in Impound Accounts
Tuesday, December 18, 2018
JPMorgan Chase Bank is set to face a lawsuit alleging that it did not pay interest on mortgage escrow accounts in violation of California law, according to a report by Reuters.
A federal judge in San Francisco ruled that the bank must face the suit filed by mortgage borrowers in the state. JPMorgan tried to avoid litigation by claiming that the federal Home Owners Loan Act (HOLA) should apply as it preempts California law.
The bank argued that since Washington Mutual, which originally issued the borrowers’ mortgages, is a thrift bank, the HOLA should apply. Under HOLA regulations, mortgage companies are not required to pay interest on mortgage escrow accounts.
However, US District Judge Edward Chen ruled that HOLA does not apply to JPMorgan just because it acquired the loans from Washington Mutual, according to Reuters.