HI SB1142

Requires mortgage servicers to disclose to borrowers the conditions under which insurance proceeds will be disbursed when residential property is damaged or destroyed

For borrowers current or less than 31 days delinquent on payments: insurance proceeds up to $40,000 must be disbursed in one payment; amounts over $40,000 require an initial disbursement of $40,000 or 33% (whichever is greater), with remaining funds released based on repair/rebuild milestones

For borrowers 31+ days delinquent: insurance proceeds up to $5,000 must be disbursed in one payment; amounts over $5,000 require initial disbursement of 25% (capped at $10,000), with remaining funds released in 25% increments based on inspections

Mortgage servicers must make first disbursements within 14 days for federally-insured or Fannie Mae/Freddie Mac-backed mortgages, or within 30 days for other mortgages

Undisbursed insurance proceeds must be held in interest-bearing accounts at 2% simple interest or the servicer's money market rate, whichever is greater, with interest credited to the borrower