Bill > AB1278

This bill modifies existing law regarding how financial institutions handle hazard insurance proceeds for homeowners with mortgages on one- to four-family residences. Previously, financial institutions holding these funds in a "loss draft account" (an account used to manage insurance money for repairs) were required to pay at least 2% simple interest annually on those funds, either by crediting the account or paying the borrower. This bill expands the payment options to include issuing a check directly to the borrower, and specifies that if such a check remains uncashed for 90 days, it will be canceled and the funds returned to the loss draft account. The bill also clarifies that a "check" in this context is a cancellable draft drawn on a bank, excluding cashier's checks or money orders.

Budget and Finance

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260AB1278