CaliforniaOnce effective, lenders may pay interest on insurance money held for repairs directly to borrowers with one-to-four-unit California homes
Once effective, lenders holding insurance money for repairs to one-to-four-unit California homes may send borrowers the interest directly each year or when the account closes.
What it does
Once effective, lenders may pay borrowers interest directly on insurance money held for repairs to one-to-four-unit California homes. Money regulators require a nonbank lender to place in a bank trust account that pays no interest is excluded.
Once effective, lenders paying interest directly on insurance money held for repairs to one-to-four-unit California homes must use a check, an electronic transfer, or another method the borrower agrees to.
Once effective, lenders must cancel direct-interest checks left uncashed 90 calendar days after delivery and return the money to the repair account at no cost. This covers only checks the issuer can cancel.
Argument forOnce effective, borrowers repairing one-to-four-unit California homes could use interest sooner if lenders send it directly instead of adding it to the repair account.
Argument againstOnce effective, the law could delay a borrower's direct access to interest if a cancelable check goes uncashed for 90 days and the money returns to the repair account.
More detail
Once the law takes effect, lenders may pay borrowers interest directly or add it to the repair account. This covers lenders and loan buyers holding insurance money for repairs to one-to-four-unit California homes. This does not cover insurance money that regulators require a nonbank lender to place in a bank trust account that pays no interest. Lenders must pay or credit the interest yearly or when the account closes, whichever comes first.
When paying interest directly, lenders must use a check, an electronic transfer, or another method the borrower agrees to. This covers direct interest payments on insurance money held for repairs to one-to-four-unit California homes. The borrower must agree to a method other than a check or electronic transfer.
Lenders must cancel qualifying uncashed interest checks and return the money to the repair account. This covers direct interest payments on insurance money held for repairs to one-to-four-unit California homes. Only checks the issuer can cancel qualify; cashier’s checks, money orders, and similar payments do not. Canceling the check costs the borrower nothing. The check must remain uncashed 90 calendar days after delivery.
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Where it stands
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Sep 30Chaptered by Secretary of State - Chapter 877, Statutes of 2026.Latest
- Sep 30Approved by the Governor Gavin Newsom.Became Law
- Aug 20Enrolled and presented to the Governor at 4 p.m.To Governor
- Aug 13Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 74. Noes 0. Page 6137.).Major
- Vote recorded AB 1278 Harabedian Concurrence in Senate Amendments. Result: pass.Lower
- Aug 11In Assembly. Concurrence in Senate amendments pending.
- Aug 10Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 5321.).Passed Senate
- Vote recorded Consent Calendar 2nd. Result: pass.Upper
- Aug 4Read second time. Ordered to Consent Calendar.Minor
- Aug 3From committee: Be ordered to second reading file pursuant to Senate Rule 28.8 and ordered to Consent Calendar.Minor
- Jul 1From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 13. Noes 0.) (June 30). Re-referred to Com. on APPR.Minor
- Jun 30
- Vote recorded Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar. Result: pass.Upper
- Jun 22Read second time and amended. Re-referred to Com. on JUD.Major
- Jun 18From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 7. Noes 0.) (June 17).Major
- Jun 17
- Vote recorded Do pass as amended, but first amend, and re-refer to the Committee on [Judiciary]. Result: pass.Upper
- May 6Referred to Coms. on B. & F.I. and JUD.Minor
- Jan 29In Senate. Read first time. To Com. on RLS. for assignment.Minor
- Vote recorded AB 1278 Harabedian Consent Calendar Second Day. Result: pass.Lower
- Jan 29Read third time. Passed. Ordered to the Senate. (Ayes 70. Noes 0. Page 3885.)Passed Assembly
- Jan 26Read second time. Ordered to Consent Calendar.Minor
- Jan 22From committee: Do pass. To Consent Calendar. (Ayes 15. Noes 0.) (January 22).Minor
- Vote recorded Do pass. To Consent Calendar. Result: pass.Lower
- Jan 15Re-referred to Com. on APPR.Minor
- Jan 14Read second time and amended.Major
- Jan 13From committee: Amend, and do pass as amended and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 8. Noes 0.) (January 12).Major
- Jan 12
- Vote recorded Do pass as amended, and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar. Result: pass.Lower
- Jan 6Re-referred to Com. on B. & F.Minor
- Jan 5From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.Major
- Jan 5Referred to Com. on B. & F.Minor
- 2025
- Feb 24Read first time.Minor
- Feb 22From printer. May be heard in committee March 24.
- Feb 21Introduced. To print.Introduced
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