AlabamaAlabama mortgage servicers may allow split payment schedules
Starting October 1, 2026, servicers may allow people with qualifying Alabama home loans to split payments or make separate payments toward escrow shortages.
What it does
For covered Alabama home loans, servicers may allow borrowers to pay every two weeks or twice a month without a penalty. A servicer may require borrowers to opt in.
If a servicer allows it, a borrower with a shortage in money set aside for costs like taxes or insurance may pay extra to reduce or clear it. The borrower must notify the servicer as it directs.
Argument forBorrowers who pay more than their scheduled yearly total could lower their loan balance faster because the extra amount goes to principal.
Argument againstBorrowers might find it harder to keep track of what they owe when split payment schedules and separate escrow payments are offered.
More detail
A mortgage servicer may allow a borrower to pay every two weeks or half the monthly amount twice a month without a penalty. This applies only to consumer mortgages secured by Alabama property. It excludes open-end mortgages and home equity products, and servicers that already allow penalty-free biweekly or twice-monthly payments, including through a closed-end mortgage product. A servicer may require borrowers to opt in. For biweekly payments, any amount above the total scheduled payments for the year goes to the loan principal. The law takes effect October 1, 2026, and applies only to covered mortgages originated after that date.
If a mortgage servicer allows it, a borrower may make a separate payment to reduce or clear an escrow shortage. This applies only to consumer mortgages secured by Alabama property. It excludes open-end mortgages and home equity products, and servicers that already allow penalty-free biweekly or twice-monthly payments, including through a closed-end mortgage product. The borrower must tell the servicer in the way it requires. The payment is handled separately from payments toward loan principal. The law takes effect October 1, 2026, and applies only to covered mortgages originated after that date.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Apr 16EnactedBecame Law
- Apr 9Ready to Enroll
- Apr 9EnrolledTo Governor
- Apr 9Signature Requested
- Apr 9Delivered to GovernorMinor
- Apr 8Motion to Read a Third Time and Pass - Adopted Roll Call 1287Passed Senate
- Vote recorded Motion to Read a Third Time and Pass - Adopted Roll Call 1287. Result: pass.Upper
- Mar 17Reported Out of Committee Second House
- Mar 17Read for the Second Time and placed on the Calendar (Banking and Insurance)Minor
- Mar 3Third Reading in House of Origin
- Vote recorded Third Reading in House of Origin. Result: pass.Lower
- Vote recorded Motion to Adopt - Adopted Roll Call 704. Result: pass.Lower
- Vote recorded Motion to Adopt - Adopted Roll Call 705. Result: pass.Lower
- Vote recorded Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 706. Result: pass.Lower
- Mar 3Financial Services 1st Substitute Offered (Financial Services)Minor
- Mar 3Motion to Adopt - Adopted Roll Call 704Major
- Mar 3Bolton 1st Amendment OfferedMinor
- Mar 3Motion to Adopt - Adopted Roll Call 705Major
- Mar 3Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 706Passed House
- Mar 3Engrossed
- Mar 3Read for the first time and referred to the Senate Committee on Banking and InsuranceMinor
- Mar 3Pending Committee Action in Second House (Banking and Insurance)
- Feb 25Financial Services 1st Substitute (Financial Services)
- Feb 25Reported Out of Committee House of Origin
- Feb 25Read for the Second Time and placed on the Calendar (Financial Services)Minor
- Jan 13Read for the first time and referred to the House Committee on Financial ServicesMinor
- Jan 13Pending Committee Action in House of Origin (Financial Services)
- 2025
- Nov 5FiledIntroduced
HousingConsumer Protection