BILL NUMBER: AB 2291	INTRODUCED
	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.