The bill authorizes mortgage servicers in Alabama to permit mortgagors to make biweekly or semi-monthly mortgage payments, as well as additional payments towards the mortgage principal, without incurring any penalties. The new legal language specifies that a mortgage servicer may allow mortgagors to make these payments, with any excess payments applied to the principal balance. Additionally, mortgagors can opt to make payments to address any escrow shortages, provided they notify the servicer in the prescribed manner. The bill clarifies that these provisions apply only to consumer mortgages secured by real property in Alabama and originated after the act's effective date, while excluding open-end mortgages and home equity products.

The bill also includes a provision that allows mortgage servicers to require mortgagors to opt-in to the new payment structures. It is important to note that the act will take effect on October 1, 2026, and it does not apply to any mortgage servicer that already allows biweekly or semi-monthly payments without penalties or offers closed-end mortgage products with similar provisions. The bill was passed by the House on March 3, 2026, and by the Senate on April 8, 2026.