MD HB1509

Mortgage servicers must deposit insurance proceeds from property damage claims into a loss draft account at a federally insured bank earning at least 2% simple interest per annum.

Borrowers may elect to have interest earnings either credited to the loss draft account or paid directly to them.

Servicers must deposit proceeds within 5 business days and notify borrowers within 10 business days of the amount held, interest rate, disbursement options, fees, and timeframes.

Fees for wire transfer disbursements are permitted but cannot be unreasonable, reduce effective interest below 2%, or exceed actual costs; no fees allowed for direct deposit.

Effective July 1, 2026, with interest accruing from that date for proceeds already held in loss draft accounts.