Hawaii SB1366 regulates handling of insurance proceeds related to mortgage loans, including interest accrual and disbursement.
Hawaii SB1366 mandates that financial institutions and mortgage servicers must contact borrowers within 30 days to determine how to handle insurance proceeds from damaged or destroyed residential properties. If the proceeds cover the mortgage balance, they must be applied to the loan; otherwise, they must be placed in an interest-bearing escrow account. The bill also requires financial institutions to credit interest on escrowed proceeds at a rate not less than the national rate for money market accounts.
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