A group of Democratic state attorneys general filed a lawsuit Tuesday in federal court in Oregon seeking to block the Trump administration’s effort to nullify state laws that require mortgage lenders to pay homeowners interest on funds held in escrow accounts. The case, brought on behalf of 10 blue states, targets two May rules from the Office of the Comptroller of the Currency, or OCC, which say national banks and federal savings associations can determine mortgage escrow terms, including whether to pay interest or charge fees, and that federal law preempts conflicting state requirements. The rules took effect June 18. The attorneys general argue the OCC exceeded its authority and conflict with legal precedent preserving states’ role in consumer protection. The dispute centers on escrow accounts, where lenders collect monthly deposits for property taxes, homeowners insurance and sometimes mortgage insurance, while those bills are often paid only annually or semiannually. That can leave large balances sitting in the accounts for much of the year. The lawsuit says 14 states and U.S. territories require interest to be paid on those balances, though the required rate varies by jurisdiction. About 80% of mortgage holders have an escrow account, according to Lereta. The stakes for homeowners can vary with state formulas and account balances: Rhode Island ties escrow interest to regular savings rates, while Maryland bases it on one-year U.S. Treasury yields. Lawyers and analysts say the practical impact of the OCC rules remains uncertain because court rulings have conflicted and some banks may not immediately change existing practices. State-chartered banks are not directly covered, though so-called wild card statutes in some states could allow them to follow the federal lead.