SB 1366 Summary

• Requires Hawaii financial institutions and licensed mortgage servicers to hold insurance proceeds from residential property damage in interest-bearing accounts when proceeds are not immediately disbursed pending property rebuild.

• Mandates that accrued interest on held insurance proceeds be credited to the borrower's account monthly, with no fees charged to the borrower for maintenance or disbursement of the interest earned.

• Requires servicers to contact borrowers within 30 days of receiving insurance proceeds to determine whether funds should be applied to the mortgage loan balance or placed in escrow, with provisions for immediate payoff if proceeds exceed the loan balance.

• Applies these requirements during declared states of emergency under Hawaii Revised Statutes section 127A-13 and generally to all mortgage servicers handling insurance proceeds for residential mortgages.

• Effective date: July 1, 2050.