OLR Bill Analysis
AN ACT CONCERNING THE ELIMINATION OF THE INTEREST RATE FLOOR FOR TAX AND INSURANCE ESCROW ACCOUNTS.
This bill eliminates the minimum 1. 5% interest rate on tax and insurance escrow accounts.
Current law requires the interest rate to be at least the average savings deposit interest rate paid by insured commercial banks published in the Federal Reserve Board Bulletin in November of the previous year (i. e. , deposit index) but not less than 1. 5%. The bill retains the deposit index method for calculating the interest rate. (The 2012 deposit index is 0. 16%. )
By law, state banks and trust companies, national banking associations, state or federally chartered savings and loan associations, savings banks, insurance companies, and other mortgagee or mortgage servicing companies must pay interest on these accounts.
It is unclear whether the bill's interest rate changes apply retroactively, but presumably they apply beginning October 1, 2012.
EFFECTIVE DATE: October 1, 2012