Q: RI Statute 19-9-2 does not appear to provide an exemption for federally chartered banks.
I know federally chartered banks are not regulated by the RI Department of Business Banking Regulations, but who else may I file a complaint with regarding a denial for payment/credit interest on funds held in escrow. Thank you.
Chasing the prevailing .04% rate will likely cost many times more than it is likely to yield.
Double check to make sure YOUR bank is not EXEMPT.
Community Obligations and Banking Offenses
§ 19-9-2 Escrow accounts – Interest.
(a) Every mortgagee holding funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state shall pay or credit interest on those funds at a rate equal to the rate paid to the mortgagee on its regular savings account, if offered, and otherwise at a rate not less than the prevailing market rate of interest for regular savings accounts offered by local financial institutions as determined by the director, said determination to be made within thirty (30) days of the effective date of this provision and thereafter annually on the first business day of the year. Said credit of interest shall accrue on the daily balance and be made annually on December 31. If the mortgage debt is paid prior to December thirty-first in any year, the interest to the date of payment shall be paid to the mortgagor. The provision of this section shall apply only with respect to mortgages on owner-occupied residential property consisting of not more than four (4) living units. The provisions of this section shall not be waived. No mortgagee holding the mortgagor's funds in escrow for the payment of taxes shall also charge an annual "tax service fee" or other annual fee for ascertaining whether or not the real estate taxes have in fact been paid. Any mortgagee violating the provisions of this section shall be fined not more than one hundred dollars ($100) for each offense.
(b) Mortgages insured or guaranteed by the farmer's home loan administration, federal housing administration, or the veterans' administration, or a private mortgage insurer licensed to do business in the state of Rhode Island or made pursuant to the provisions of chapter 55 of title 42 shall be exempt from the requirements of this section.
(c) The director or the director's designee shall adopt any regulations that are necessary to carry out the provisions of this section.
History of Section.
(P.L. 1995, ch. 82, § 47; P.L. 2008, ch. 238, § 2; P.L. 2008, ch. 309, § 2.)
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