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CA AB1278
Bill
Status
Engrossed
1/29/2026
Primary Sponsor
John Harabedian
Click for details
AI Summary
- Requires financial institutions holding hazard insurance proceeds in loss draft accounts for 1-4 family residences to pay at least 2% simple annual interest on those funds during property rebuilding or repair
- Interest must be credited to the loss draft account or paid directly to the borrower via a bank-payable check, annually or when the account terminates
- Checks issued to borrowers that remain uncashed for 90 calendar days after delivery are automatically canceled at no cost, with the amount credited back to the loss draft account
- Prohibits financial institutions from imposing fees or charges on loss draft accounts that would effectively reduce the interest rate below 2% per annum
- Applies to banks, savings and loan associations, credit unions, and any other organizations making loans secured by 1-4 family residential property in California
Legislative Description
Mortgages: hazard insurance proceeds: interest.
Last Action
In Senate. Read first time. To Com. on RLS. for assignment.
1/29/2026
Committee Referrals
Rules1/29/2026
Appropriations1/13/2026
Banking and Finance1/5/2026
Full Bill Text
No bill text available