California AB1278 mandates interest payments on hazard insurance proceeds held by financial institutions.

California AB1278 amends the Civil Code to require financial institutions to pay interest on hazard insurance proceeds held in a loss draft account. The interest rate must be at least 2 percent per annum. This applies to financial institutions that make loans secured by one- to four-family residences in California. The interest must be credited to the loss draft account or paid directly to the borrower. The bill also allows financial institutions to deposit these proceeds in interest-bearing accounts.

California AB1278 mandates interest payments on hazard insurance proceeds held by financial institutions.

California AB1278 amends the Civil Code to require financial institutions to pay interest on hazard insurance proceeds held in a loss draft account. The interest rate must be at least 2 percent per annum. This applies to financial institutions that make loans secured by one- to four-family residences in California. The interest must be credited to the loss draft account or paid directly to the borrower. The bill also allows financial institutions to deposit these proceeds in interest-bearing accounts.