CaliforniaMortgages: hazard insurance proceeds.
What it does
Existing law, the California Residential Mortgage Lending Act, regulates persons engaging in the business of making residential mortgage loans or servicing of residential mortgage loans, as administered by the Commissioner of Financial Protection and Innovation. A willful violation of any provision of the act constitutes a crime, as specified. The act requires a trust account to be placed in a non-interest-bearing account in a federally insured depository institution, a federal home loan bank, or other similar government-sponsored enterprise, except as specified.
More detail
This bill would authorize a financial institution, as defined, to deposit hazard insurance proceeds in an interest-bearing account in a federally insured depository institution, a federal home loan bank, a federal reserve bank, or another similar government-sponsored enterprise.
Existing law requires a financial institution that makes loans upon the security of real property containing only a one- to four-family residence in this state or purchases obligations secured by the property and that receives money in advance for payment of taxes and assessments on the property, for insurance, or for other purposes relating to the property to pay interest on those amounts to the borrower, as specified. Existing law prohibits those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of money received in advance for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid on the moneys received. Existing law defines the term financial institution for purposes of those provisions to include, among other things, savings associations.
This bill would require a financial institution that makes loans or purchases obligations as described above and that holds hazard insurance proceeds in a loss draft account pending property rebuilding or repair to pay interest on those funds at a rate of at least 2% simple interest per annum, except as specified. The bill would require that interest to start accruing on the effective date of the bill, as specified. The bill would prohibit those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of hazard insurance proceeds held in a loss draft account pending rebuilding or repair of the real property that would result in an interest rate of less than 2% per annum being paid on the amounts held. The bill would specify that the above provisions do not apply to hazard insurance proceeds held in a loss draft account that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a non-interest-bearing demand trust fund account of a bank.
This bill would declare that it is to take effect immediately as an urgency statute.
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Where it stands
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2025
- Aug 29Chaptered by Secretary of State - Chapter 103, Statutes of 2025.Latest
- Aug 29Approved by the Governor Gavin Newsom.Became Law
- Aug 25Enrolled and presented to the Governor at 11 a.m.To Governor
- Aug 18Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 77. Noes 0. Page 2652.).Major
- Vote recorded AB 493 Harabedian Concurrence in Senate Amendments. Result: pass.Lower
- Jul 17In Assembly. Concurrence in Senate amendments pending.
- Vote recorded Consent Calendar 2nd AB493 Harabedian et al. Urgency Clause. Result: pass.Upper
- Jul 17Read third time. Urgency clause adopted. Passed. Ordered to the Assembly. (Ayes 35. Noes 0. Page 2137.).Passed Senate
- Jul 15Read second time. Ordered to Consent Calendar.Minor
- Jul 14From committee: Be ordered to second reading file pursuant to Senate Rule 28.8 and ordered to Consent Calendar.Minor
- Jun 26Read second time and amended. Re-referred to Com. on APPR.Major
- Jun 25From committee: Amend, and do pass as amended and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 12. Noes 0.) (June 24).Major
- Jun 24
- Vote recorded Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] with the recommendation: To Consent Calendar. Result: pass.Upper
- Jun 18From committee: Do pass and re-refer to Com. on JUD. (Ayes 7. Noes 0.) (June 18). Re-referred to Com. on JUD.Minor
- Vote recorded Do pass, but first be re-referred to the Committee on [Judiciary]. Result: pass.Upper
- May 7Referred to Coms. on B. & F.I. and JUD.Minor
- Apr 2In Senate. Read first time. To Com. on RLS. for assignment.Minor
- Apr 1Read third time. Urgency clause adopted. Passed. Ordered to the Senate. (Ayes 77. Noes 0. Page 956.).Passed Assembly
- Vote recorded AB 493 Harabedian Third Reading Urgency. Result: pass.Lower
- Mar 24Read second time. Ordered to third reading.Minor
- Mar 20Read second time and amended. Ordered returned to second reading.Major
- Mar 19From committee: Amend, and do pass as amended. (Ayes 15. Noes 0.) (March 19).Major
- Vote recorded Do pass as amended. Result: pass.Lower
- Mar 18From committee: Do pass and re-refer to Com. on APPR. (Ayes 8. Noes 0.) (March 18). Re-referred to Com. on APPR.Minor
- Vote recorded Do pass and be re-referred to the Committee on [Appropriations]. Result: pass.Lower
- Mar 13(Pending re-refer to Com. on APPR.)Minor
- Mar 13Assembly Rule 56 suspended. (Page 616.)
- Mar 11Re-referred to Com. on B.&F.Minor
- Mar 10From committee chair, with author's amendments: Amend, and re-refer to Com. on B.&F. Read second time and amended.Major
- Mar 10Referred to Com. on B.&F.Minor
- Feb 11From printer. May be heard in committee March 13.
- Feb 10Read first time. To print.Introduced