Department of Financial Services (DFS) has issued an order pursuant to the Wild Card provision of the New York State Banking Law regarding the minimum interest rate that New York State-chartered institutions must pay on escrow accounts related to certain mortgage loans.

Under the order, such institutions (including state-chartered private banks that engage in such business) will now pay the lesser of 2% or the six-month yield on United State Treasury securities on certain mortgage escrow accounts.

Before this moment, New York State-charted financial institutions had been required to pay interest of at least 2% on escrow accounts. Federal regulations do not require national banks, federal savings and loan associations and federally chartered credit unions to pay a minimum amount.

The DFS order issued today sets the minimum rate of interest to be paid by New York State-chartered banks, savings and loan associations and credit unions on escrow accounts on loans secured by mortgages on one-to-six-family residences that are occupied by the owner or on any property owned by a co-operative apartment corporation to be the lesser of 2% or the six-month yield on United States Treasury securities.