Bill > HB1509

This bill requires mortgage servicers, which are companies that collect mortgage payments, to deposit insurance proceeds received for damage to a borrower's home into an interest-bearing account, called a "loss draft account," with a minimum interest rate of 2% per year. Borrowers will have the choice to have the interest earned on these proceeds either added to the loss draft account or paid directly to them. While interest earnings generally start accruing as soon as the insurance proceeds are deposited, there's a specific provision that if proceeds were deposited on or before July 1, 2026, interest will only begin to accrue on that date. The bill also allows mortgage servicers to charge a fee for disbursing interest earnings directly to the borrower via wire transfer, but this fee must be reasonable, not reduce the effective interest rate below 2%, and cannot be charged for direct deposit disbursements or exceed the servicer's actual costs. Finally, the bill mandates specific methods for disbursing both the insurance proceeds and any interest earnings, including options like wire transfer, direct deposit, or mail delivery of checks, and sets a 10-business-day timeframe for servicers to disburse interest earnings directly to the borrower after receiving their election and necessary information, while also requiring servicers to notify borrowers about the insurance proceeds, interest rate, disbursement options, fees, and timelines within 10 business days of receiving the proceeds.

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https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/HB1509?ys=2026RS