SB 1142 Summary

• Requires mortgage servicers to disclose upon borrower request the conditions under which insurance proceeds will be disbursed for damaged or destroyed residential real estate.

• Borrowers must create repair or rebuild plans with licensed contractors that include specific milestones triggering disbursements; mortgage servicers must approve or deny plans within 30 days.

• For non-delinquent borrowers, servicers must disburse $40,000 or 33% of proceeds (whichever is greater) initially if proceeds exceed $40,000; for borrowers 31+ days delinquent, only 25% up to $10,000 initially if proceeds exceed $5,000.

• First disbursement must occur within 14 days for federally insured mortgages or within 30 days for other mortgages; remaining proceeds must be held in interest-bearing accounts at 2% simple interest or higher market rates.

• Servicers must promptly disburse any insurance proceeds exceeding the remaining mortgage balance unless the property is an affordable rental subject to income restrictions and funds are needed for restoration.