This bill amends the North Dakota Century Code to establish new regulations regarding the payment of interest on escrow accounts associated with residential mortgages. It introduces definitions for key terms such as "escrow account," "escrow funds," "interest rate," "lender," and "servicer." A significant provision mandates that lenders must pay interest on escrow accounts that maintain a minimum average balance of $500, provided the account has been active for at least three months. The interest rate must be based on prevailing market rates, with a minimum set at one-half percent annually, and lenders are required to use a transparent formula for determining this rate.

Additionally, the bill includes requirements for lenders to disclose how escrow funds are managed, including the interest rate and crediting process, in mortgage agreements and periodic statements. Borrowers are given the option to opt out of receiving interest payments if explicitly allowed in their mortgage agreement, 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