AB 1278: Mortgages: hazard insurance proceeds: interest.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation, and makes the department responsible for administering various laws relating to financial institutions and products, including mortgages. Existing law defines and regulates mortgages. Existing law requires a financial institution that makes loans upon the security of real property containing only a one- to 4-family residence in this state or purchases obligations secured by the property 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, as specified. Existing law requires that interest to be credited to the above-described loss draft account annually or upon termination of the account, whichever is earlier.

This bill would, instead, require that interest to be credited to the above-described loss draft account, or paid directly to the borrower, annually or upon termination of the account, whichever is earlier, as specified. The bill would require payments made directly to the borrower as described above to be made by check, electronic funds transfer, or another payment method agreed to by the borrower, as specified. The bill would make a check issued pursuant to the above-described provision that is uncashed 90 calendar days after delivery canceled, as specified.

Sponsors

Sponsors by party (alphabetical): Democratic 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 30, 2026Chaptered by Secretary of State - Chapter 877, Statutes of 2026.
2. September 30, 2026Approved by the Governor.
3. August 20, 2026Enrolled and presented to the Governor at 4 p.m.
4. August 13, 2026Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 74. Noes 0. Page 6137.).
5. August 11, 2026In Assembly. Concurrence in Senate amendments pending.
6. August 10, 2026Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 5321.).
7. August 4, 2026Read second time. Ordered to Consent Calendar.
8. August 3, 2026From committee: Be ordered to second reading file pursuant to Senate Rule 28.8 and ordered to Consent Calendar.
9. July 1, 2026From 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.
10. June 22, 2026Read second time and amended. Re-referred to Com. on JUD.
11. June 18, 2026From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 7. Noes 0.) (June 17).
12. May 6, 2026Referred to Coms. on B. & F.I. and JUD.