This bill amends the North Dakota Century Code by introducing new definitions and requirements related to escrow accounts for residential mortgages. It defines key terms such as "escrow account," "escrow funds," "interest rate," "lender," and "servicer," while also establishing a lender's obligation to pay interest on escrow accounts that maintain a minimum average balance of $500 and have been active for at least three months. The bill mandates that the interest rate on escrow funds must be based on prevailing market rates, with a minimum set at one-half percent annually, and requires lenders to use a transparent formula for determining interest rates, which must be disclosed in loan agreements.

Additionally, the bill includes provisions for disclosure and borrower opt-out options. Lenders are required to clearly state how escrow funds are managed, including interest rates, in mortgage agreements and periodic statements. Borrowers may opt out of receiving interest payments only if their mortgage agreement explicitly allows it, and they agree to forfeit interest in exchange for a reduced mortgage rate or other benefits. The provisions of this Act will apply to escrow accounts created after its effective date, while existing accounts will begin to accrue interest as mandated starting January 1, 2026.

Statutes affected:
Adopted by the House Industry, Business and Labor Committee: 47-10.2-01
FIRST ENGROSSMENT: 47-10.2-01