Amended IN Assembly March 20, 2025 Amended IN Assembly March 10, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 493Introduced by Assembly Member HarabedianFebruary 10, 2025 An act to amend Section 2954.8 of the Civil Code, relating to mortgages. mortgages, and declaring the urgency thereof, to take effect immediately.LEGISLATIVE COUNSEL'S DIGESTAB 493, as amended, Harabedian. Property insurance notice of cancellation.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 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, instead, require a financial institution that makes loans or purchases obligations as described above and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property to pay interest on those amounts to the borrower, as specified. The bill would, instead, prohibit those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of money received for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment or insurance, including insurance proceeds following property damage or loss, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid to the borrower on the moneys received. The bill would specify that these provisions apply only to loans executed on or after January 1, 2026, except as specified.This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.This bill would declare that it is to take effect immediately as an urgency statute.Digest Key Vote: MAJORITY2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) On January 7, 2025, a state of emergency was declared in the Counties of Los Angeles and Ventura due to multiple wildfires, including the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley, and Hughes Fires, driven by severe windstorm conditions. These wildfires devastated communities across the greater Los Angeles area, burning over 47,900 acres and destroying or damaging more than 16,250 structures, including homes, small businesses, schools, childcare facilities, and places of worship. With initial estimates ranking this disaster among the most destructive in California history, entire neighborhoods have been left in ruin, leaving residents and others affected by the wildfires traumatized and uncertain about the fate of their homes, properties, businesses, and community spaces.(b) The amendments made to Section 2954.8 of the Civil Code by this act serve a significant and legitimate public purpose in response to the devastating impacts of the wildfires on affected homeowners.(c) The Legislature affirms the principle of equitable treatment by ensuring that borrowers impacted by the Los Angeles wildfires receive interest on insurance payouts consistent with existing Civil Code provisions for escrow accounts. This amendment does not create new financial burdens for lenders but rather aligns insurance disbursement practices with established escrow interest requirements to protect homeowners from financial hardship in the aftermath of a disaster.(d) To limit any impact on existing contracts, these provisions apply prospectively to loans executed on or after the date of enactment. However, a narrow exception applies to loans secured by properties in federally or state-declared disaster areas subject to the state of emergency declared by the Governor in the Counties of Los Angeles and Ventura on January 7, 2025. In these cases, the amendments made to Section 2954.8 of the Civil Code by this act only applies to escrowed insurance payouts, ensuring borrowers receive the same interest they would have accrued if the funds had been held for tax or other property-related expenses under existing law.(e) The Legislature further finds that this action is reasonable and necessary to support disaster-affected homeowners and does not unreasonably impair existing contractual obligations. Instead, it serves a compelling state interest in fairness, financial recovery, and housing stability following one of the most destructive wildfire events in Californias history.SEC. 2. Section 2954.8 of the Civil Code is amended to read:2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.SEC. 3. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the immediate need to protect those impacted by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura with regard to escrowed insurance payouts, thereby ensuring borrowers receive the same interest they would have accrued if certain funds had been held for tax or other property-related expenses.SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from harmful practices, including the withholding of interest on insurance payouts in the aftermath of wildfires, and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
Amended IN Assembly March 20, 2025 Amended IN Assembly March 10, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 493Introduced by Assembly Member HarabedianFebruary 10, 2025 An act to amend Section 2954.8 of the Civil Code, relating to mortgages. mortgages, and declaring the urgency thereof, to take effect immediately.LEGISLATIVE COUNSEL'S DIGESTAB 493, as amended, Harabedian. Property insurance notice of cancellation.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 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, instead, require a financial institution that makes loans or purchases obligations as described above and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property to pay interest on those amounts to the borrower, as specified. The bill would, instead, prohibit those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of money received for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment or insurance, including insurance proceeds following property damage or loss, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid to the borrower on the moneys received. The bill would specify that these provisions apply only to loans executed on or after January 1, 2026, except as specified.This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.This bill would declare that it is to take effect immediately as an urgency statute.Digest Key Vote: MAJORITY2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO
Amended IN Assembly March 20, 2025 Amended IN Assembly March 10, 2025
Amended IN Assembly March 20, 2025
Amended IN Assembly March 10, 2025
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Assembly Bill
No. 493
Introduced by Assembly Member HarabedianFebruary 10, 2025
Introduced by Assembly Member Harabedian
February 10, 2025
An act to amend Section 2954.8 of the Civil Code, relating to mortgages. mortgages, and declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 493, as amended, Harabedian. Property insurance notice of cancellation.
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 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, instead, require a financial institution that makes loans or purchases obligations as described above and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property to pay interest on those amounts to the borrower, as specified. The bill would, instead, prohibit those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of money received for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment or insurance, including insurance proceeds following property damage or loss, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid to the borrower on the moneys received. The bill would specify that these provisions apply only to loans executed on or after January 1, 2026, except as specified.This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.This bill would declare that it is to take effect immediately as an urgency statute.
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 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, instead, require a financial institution that makes loans or purchases obligations as described above and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property to pay interest on those amounts to the borrower, as specified. The bill would, instead, prohibit those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of money received for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment or insurance, including insurance proceeds following property damage or loss, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid to the borrower on the moneys received. The bill would specify that these provisions apply only to loans executed on or after January 1, 2026, except as specified.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.
This bill would declare that it is to take effect immediately as an urgency statute.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) On January 7, 2025, a state of emergency was declared in the Counties of Los Angeles and Ventura due to multiple wildfires, including the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley, and Hughes Fires, driven by severe windstorm conditions. These wildfires devastated communities across the greater Los Angeles area, burning over 47,900 acres and destroying or damaging more than 16,250 structures, including homes, small businesses, schools, childcare facilities, and places of worship. With initial estimates ranking this disaster among the most destructive in California history, entire neighborhoods have been left in ruin, leaving residents and others affected by the wildfires traumatized and uncertain about the fate of their homes, properties, businesses, and community spaces.(b) The amendments made to Section 2954.8 of the Civil Code by this act serve a significant and legitimate public purpose in response to the devastating impacts of the wildfires on affected homeowners.(c) The Legislature affirms the principle of equitable treatment by ensuring that borrowers impacted by the Los Angeles wildfires receive interest on insurance payouts consistent with existing Civil Code provisions for escrow accounts. This amendment does not create new financial burdens for lenders but rather aligns insurance disbursement practices with established escrow interest requirements to protect homeowners from financial hardship in the aftermath of a disaster.(d) To limit any impact on existing contracts, these provisions apply prospectively to loans executed on or after the date of enactment. However, a narrow exception applies to loans secured by properties in federally or state-declared disaster areas subject to the state of emergency declared by the Governor in the Counties of Los Angeles and Ventura on January 7, 2025. In these cases, the amendments made to Section 2954.8 of the Civil Code by this act only applies to escrowed insurance payouts, ensuring borrowers receive the same interest they would have accrued if the funds had been held for tax or other property-related expenses under existing law.(e) The Legislature further finds that this action is reasonable and necessary to support disaster-affected homeowners and does not unreasonably impair existing contractual obligations. Instead, it serves a compelling state interest in fairness, financial recovery, and housing stability following one of the most destructive wildfire events in Californias history.SEC. 2. Section 2954.8 of the Civil Code is amended to read:2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.SEC. 3. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the immediate need to protect those impacted by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura with regard to escrowed insurance payouts, thereby ensuring borrowers receive the same interest they would have accrued if certain funds had been held for tax or other property-related expenses.SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from harmful practices, including the withholding of interest on insurance payouts in the aftermath of wildfires, and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. The Legislature finds and declares all of the following:(a) On January 7, 2025, a state of emergency was declared in the Counties of Los Angeles and Ventura due to multiple wildfires, including the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley, and Hughes Fires, driven by severe windstorm conditions. These wildfires devastated communities across the greater Los Angeles area, burning over 47,900 acres and destroying or damaging more than 16,250 structures, including homes, small businesses, schools, childcare facilities, and places of worship. With initial estimates ranking this disaster among the most destructive in California history, entire neighborhoods have been left in ruin, leaving residents and others affected by the wildfires traumatized and uncertain about the fate of their homes, properties, businesses, and community spaces.(b) The amendments made to Section 2954.8 of the Civil Code by this act serve a significant and legitimate public purpose in response to the devastating impacts of the wildfires on affected homeowners.(c) The Legislature affirms the principle of equitable treatment by ensuring that borrowers impacted by the Los Angeles wildfires receive interest on insurance payouts consistent with existing Civil Code provisions for escrow accounts. This amendment does not create new financial burdens for lenders but rather aligns insurance disbursement practices with established escrow interest requirements to protect homeowners from financial hardship in the aftermath of a disaster.(d) To limit any impact on existing contracts, these provisions apply prospectively to loans executed on or after the date of enactment. However, a narrow exception applies to loans secured by properties in federally or state-declared disaster areas subject to the state of emergency declared by the Governor in the Counties of Los Angeles and Ventura on January 7, 2025. In these cases, the amendments made to Section 2954.8 of the Civil Code by this act only applies to escrowed insurance payouts, ensuring borrowers receive the same interest they would have accrued if the funds had been held for tax or other property-related expenses under existing law.(e) The Legislature further finds that this action is reasonable and necessary to support disaster-affected homeowners and does not unreasonably impair existing contractual obligations. Instead, it serves a compelling state interest in fairness, financial recovery, and housing stability following one of the most destructive wildfire events in Californias history.
SECTION 1. The Legislature finds and declares all of the following:(a) On January 7, 2025, a state of emergency was declared in the Counties of Los Angeles and Ventura due to multiple wildfires, including the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley, and Hughes Fires, driven by severe windstorm conditions. These wildfires devastated communities across the greater Los Angeles area, burning over 47,900 acres and destroying or damaging more than 16,250 structures, including homes, small businesses, schools, childcare facilities, and places of worship. With initial estimates ranking this disaster among the most destructive in California history, entire neighborhoods have been left in ruin, leaving residents and others affected by the wildfires traumatized and uncertain about the fate of their homes, properties, businesses, and community spaces.(b) The amendments made to Section 2954.8 of the Civil Code by this act serve a significant and legitimate public purpose in response to the devastating impacts of the wildfires on affected homeowners.(c) The Legislature affirms the principle of equitable treatment by ensuring that borrowers impacted by the Los Angeles wildfires receive interest on insurance payouts consistent with existing Civil Code provisions for escrow accounts. This amendment does not create new financial burdens for lenders but rather aligns insurance disbursement practices with established escrow interest requirements to protect homeowners from financial hardship in the aftermath of a disaster.(d) To limit any impact on existing contracts, these provisions apply prospectively to loans executed on or after the date of enactment. However, a narrow exception applies to loans secured by properties in federally or state-declared disaster areas subject to the state of emergency declared by the Governor in the Counties of Los Angeles and Ventura on January 7, 2025. In these cases, the amendments made to Section 2954.8 of the Civil Code by this act only applies to escrowed insurance payouts, ensuring borrowers receive the same interest they would have accrued if the funds had been held for tax or other property-related expenses under existing law.(e) The Legislature further finds that this action is reasonable and necessary to support disaster-affected homeowners and does not unreasonably impair existing contractual obligations. Instead, it serves a compelling state interest in fairness, financial recovery, and housing stability following one of the most destructive wildfire events in Californias history.
SECTION 1. The Legislature finds and declares all of the following:
### SECTION 1.
(a) On January 7, 2025, a state of emergency was declared in the Counties of Los Angeles and Ventura due to multiple wildfires, including the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley, and Hughes Fires, driven by severe windstorm conditions. These wildfires devastated communities across the greater Los Angeles area, burning over 47,900 acres and destroying or damaging more than 16,250 structures, including homes, small businesses, schools, childcare facilities, and places of worship. With initial estimates ranking this disaster among the most destructive in California history, entire neighborhoods have been left in ruin, leaving residents and others affected by the wildfires traumatized and uncertain about the fate of their homes, properties, businesses, and community spaces.
(b) The amendments made to Section 2954.8 of the Civil Code by this act serve a significant and legitimate public purpose in response to the devastating impacts of the wildfires on affected homeowners.
(c) The Legislature affirms the principle of equitable treatment by ensuring that borrowers impacted by the Los Angeles wildfires receive interest on insurance payouts consistent with existing Civil Code provisions for escrow accounts. This amendment does not create new financial burdens for lenders but rather aligns insurance disbursement practices with established escrow interest requirements to protect homeowners from financial hardship in the aftermath of a disaster.
(d) To limit any impact on existing contracts, these provisions apply prospectively to loans executed on or after the date of enactment. However, a narrow exception applies to loans secured by properties in federally or state-declared disaster areas subject to the state of emergency declared by the Governor in the Counties of Los Angeles and Ventura on January 7, 2025. In these cases, the amendments made to Section 2954.8 of the Civil Code by this act only applies to escrowed insurance payouts, ensuring borrowers receive the same interest they would have accrued if the funds had been held for tax or other property-related expenses under existing law.
(e) The Legislature further finds that this action is reasonable and necessary to support disaster-affected homeowners and does not unreasonably impair existing contractual obligations. Instead, it serves a compelling state interest in fairness, financial recovery, and housing stability following one of the most destructive wildfire events in Californias history.
SEC. 2. Section 2954.8 of the Civil Code is amended to read:2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 2. Section 2954.8 of the Civil Code is amended to read:
### SEC. 2.
2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
2954.8. (a) A 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 the property and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on these amounts shall be at the rate of at least 2 percent simple interest per annum. This interest shall be credited to the borrowers account annually or upon termination of 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 for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment of insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid to the borrower 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) This section does not apply to moneys that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a noninterest-bearing demand trust fund account of a bank.
(e) The amendment of this section made by the 197980 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980.
(f) (1) The amendments made to this section by the act that added this subdivision shall apply to loans executed on or after January 1, 2026, except as specified in paragraph (2).
(2) For loans executed before January 1, 2026, the amendments made to this section by the act that added this subparagraph shall apply only if the property securing the loan is located within a federally or state-declared disaster area and directly impacted due to the wildfires in the Counties of Los Angeles and Ventura subject to the state of emergency declared by the Governor on January 7, 2025. This amendment shall not be construed to unreasonably impair the terms of those loans, and its provisions are intended solely to ensure equitable treatment of borrowers whose escrowed funds are held for property-related expenses.
(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 3. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the immediate need to protect those impacted by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura with regard to escrowed insurance payouts, thereby ensuring borrowers receive the same interest they would have accrued if certain funds had been held for tax or other property-related expenses.
SEC. 3. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the immediate need to protect those impacted by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura with regard to escrowed insurance payouts, thereby ensuring borrowers receive the same interest they would have accrued if certain funds had been held for tax or other property-related expenses.
SEC. 3. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the immediate need to protect those impacted by the wildfires that began on January 7, 2025, in the Counties of Los Angeles and Ventura with regard to escrowed insurance payouts, thereby ensuring borrowers receive the same interest they would have accrued if certain funds had been held for tax or other property-related expenses.
### SEC. 3.
SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from harmful practices, including the withholding of interest on insurance payouts in the aftermath of wildfires, and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from harmful practices, including the withholding of interest on insurance payouts in the aftermath of wildfires, and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
### SEC. 4.
In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from harmful practices, including the withholding of interest on insurance payouts in the aftermath of wildfires, and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.