Existing law defines and regulates mortgages. Existing law requires a financial institution that makes loans upon the security of real property containing only a one- to four-family residence in this state or purchases obligations secured by 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 to pay interest on those amounts to the borrower, as specified. Existing law prohibits those financial institutions from imposing 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 the financial institution, or for the payment of insurance, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid on the moneys received. Existing law defines the term financial institution for purposes of those provisions to include, among other things, savings associations.
This bill would, instead, require a financial institution that makes loans or purchases obligations as described above and that receives money for payment of taxes and assessments on the property, for insurance, including insurance proceeds following property damage or loss, or for other purposes relating to such real property to pay interest on those amounts to the borrower, as specified. The bill would, instead, prohibit those financial institutions from imposing any fee or charge in connection with the maintenance or disbursement of money received for the payment of taxes and assessments on real property securing loans made by the financial institution, or for the payment or insurance, including insurance proceeds following property damage or loss, or for other purposes relating to that real property, which would result in an interest rate of less than 2% per annum being paid to the borrower on the moneys received. The bill would specify that these provisions apply only to loans executed on or after January 1, 2026, except as specified.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of Los Angeles and Ventura.
This bill would declare that it is to take effect immediately as an urgency statute.

Statutes affected:
AB 493: 5093 INS
02/10/25 - Introduced: 5093 INS
03/10/25 - Amended Assembly: 2954.8 CIV, 2954.8 CIV, 5093 INS
03/20/25 - Amended Assembly: 2954.8 CIV