This bill mandates that residential mortgage lenders in New Jersey deposit hazard insurance proceeds into interest-bearing accounts. Specifically, lenders who provide loans secured by real property with one to four family units must pay a minimum interest rate of two percent per year on these proceeds held in a loss draft account while property repairs or rebuilding are pending. The interest will accrue from the effective date of the bill and will be credited to the account either annually or upon its termination. Additionally, lenders are prohibited from charging fees that would result in an interest rate lower than two percent on these proceeds.

The bill also allows lenders to deposit hazard insurance proceeds in interest-bearing accounts at federally insured depository institutions, federal home loan banks, or federal reserve banks, regardless of other laws or regulations. However, it excludes cases where state or federal regulatory authorities require these proceeds to be placed in non-interest-bearing demand trust fund accounts by lenders that are not classified as financial institutions. The definitions of "financial institution" and "hazard insurance proceeds" are also clarified within the bill.