Maryland Legal Alert for Financial Services
Maryland Minimum Interest Rate for Escrow and Special Purpose Accounts Increases
Maryland law requires depository institutions doing business in Maryland that make first lien residential real property loans and maintain escrow accounts for those loans to pay a minimum rate of interest on those escrow accounts.
Maryland law also requires Maryland-chartered banks that offer certain short-term “special purpose” deposit accounts (for example, Christmas Club accounts) to pay a minimum rate of interest on those deposit accounts.
The minimum rate of interest on these accounts is based on the weekly average yield of U.S. Treasury Securities adjusted to a constant maturity of one year as of the first business day of the calendar year as published in the Federal Reserve Board’s “Selected Interest Rates” table H.15.
Because the Federal Reserve Board’s H.15 table no longer includes a “weekly average yield” for the selected one-year securities, many institutions look to the weekly average yield interest rate data posted by the Federal Reserve Bank of St. Louis (using the H.15 daily rate information).
The Federal Reserve Bank of St. Louis displays a 0.37% weekly average yield for U.S. Treasury Securities adjusted to a constant maturity of one year (reflecting the weekly average yield for the weekly period ending on December 31, 2021, as posted on January 3, 2022). The 2021 weekly average yield was 0.11%.
Please contact Christopher R. Rahl if you have any questions about this topic.
Christopher R. Rahl
410-576-4222 • crahl@gfrlaw.com