California Assembly Bill AB2291 Latest Draft

 BILL NUMBER: AB 2291INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Fletcher FEBRUARY 18, 2010 An act to amend Section 2954.8 of the Civil Code, relating to mortgages. LEGISLATIVE COUNSEL'S DIGEST AB 2291, as introduced, Fletcher. Mortgages: impound accounts. Under existing law, financial institutions that make specified mortgage loans are required to pay at least 2% interest on amounts received in advance for payment of taxes and assessments on the property, insurance, or other purposes related to the property. This bill would specify that these purposes include insurance proceeds received by the lender for payment for repairs or rebuilding of the property after a catastrophic loss. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 2954.8 of the Civil Code is amended to read: 2954.8. (a) Every financial institution that makes loans upon the security of real property containing only a one- to four-family residence and located in this state or purchases obligations secured by  such   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, shall pay interest on the amount so held to the borrower.  These purposes shall include insurance proceeds received by the financial institution after a   catastrophic loss and held by the instit   ution for payment for repairs or rebuilding of the property.  The interest on  such   the  amounts  held by the financial institution  shall be at the rate of at least 2 percent simple interest per annum.  Such   This  interest shall be credited to the borrower's account annually or upon termination of  such   the  account, whichever is earlier. (b) No financial institution subject to the provisions of this section shall impose 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  such   the  financial institution, or for the payment of insurance, or for other purposes relating to  such   the  real property, that will result in an interest rate of less than 2 percent per annum being paid on the moneys so received. (c) For the purposes of this section, "financial institution" means a bank, savings and loan association  ,  or credit union chartered under the laws of this state or the United States, or any other person or organization making loans upon the security of real property containing only a one- to four-family residence. (d) The provisions of this section do not apply to any of the following: (1) Loans executed prior to the effective date of this section. (2) Moneys which 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   noninterest-bearing  demand trust fund account of a bank. The amendment of this section made by the 1979-80 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.