Proposed escrow legislation worries banks

State-chartered banks are worried that proposed legislation requiring them to pay interest on escrow accounts would unfairly change Alaska's mortgage marketplace, while the legislator who crafted the bill said it would give millions back to Alaska homeowners.

House Bill 33, by Rep. Jay Ramras, a Fairbanks Republican, would require "covered institutions" to pay interest on reserve or escrow accounts created to pay property taxes, insurance and other payments related to mortgage loans.

However only four banks in the state would have to implement the conditions of the bill, because the state cannot regulate the 12 credit unions or the five federally chartered banks with Alaska branches.

That leaves Mt. McKinley Bank and Denali State Bank, based in Fairbanks; Northrim Bank of Anchorage; and First Bank, based in Ketchikan.