Senate Bill No. 526

Introduced by Senator Calderon

February 21, 2013

An act to amend Section 2954.8 of the Civil Code, relating to banks.

LEGISLATIVE COUNSEL’S DIGEST

SB 526, as introduced, Calderon. Banks: mortgage loans: advance payments.

Existing state and federal law define and regulate banks. Existing state law requires a financial institution that makes loans secured by residential real property, as specified, 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 the amount held to the borrower.

This bill would make nonsubstantive, technical amendments to these provisions.

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 begin insert , end insert or purchases obligations secured
by begin delete such end delete begin insert the end insert property begin insert , end insert 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 begin delete so end delete held to the borrower. The interest on begin delete such end delete begin insert these end insert
amounts shall be at the rate of at least 2 percent simple interest per
annum. begin delete Such end delete begin insert This end insert interest shall be credited to the borrower’s
account annually or upon termination of begin delete such end delete begin insert the end insert 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 begin delete such end delete begin insert the end insert financial institution, or for the payment of
insurance, 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 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 begin delete which end delete begin insert that end insert 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.

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.