California AB1278 requires financial institutions to pay interest on hazard insurance proceeds held in loss draft accounts.

California AB1278 amends the Civil Code to mandate that financial institutions pay interest on hazard insurance proceeds held in loss draft accounts. This interest must be at least 2 percent simple interest per annum and can be credited to the loss draft account or paid directly to the borrower. The bill defines "financial institution" broadly to include banks, savings and loan associations, credit unions, and other entities making loans secured by one- to four-family residences.

California AB1278 requires financial institutions to pay interest on hazard insurance proceeds held in loss draft accounts.

California AB1278 amends the Civil Code to mandate that financial institutions pay interest on hazard insurance proceeds held in loss draft accounts. This interest must be at least 2 percent simple interest per annum and can be credited to the loss draft account or paid directly to the borrower. The bill defines "financial institution" broadly to include banks, savings and loan associations, credit unions, and other entities making loans secured by one- to four-family residences.