Mortgages; authorize lenders to mortgagors to make additional mortgage payments
Mortgages; authorize lenders to mortgagors to make additional mortgage payments
Taxes
Enacted
This bill passed the Legislature and reached final enactment based on the latest official action.
Sponsor
Hollis
Last action
2026-04-16
Official status
Enacted
Effective date
2026-10-01
Plain English Breakdown
The source states servicers may require borrowers to opt-in, meaning these payment plans might not be automatic for everyone.
HB55: New Rules for Making Extra Mortgage Payments
This law allows mortgage servicers to let borrowers make biweekly or semi-monthly payments without penalty, and pay down escrow shortages after notifying the lender, but only applies to new home loans in Alabama starting October 1, 2026.
What This Bill Does
Allows lenders to accept biweekly mortgage payments where any amount paid over the yearly total goes directly toward the loan principal without penalty.
Permits lenders to let borrowers make semi-monthly payments equal to half of their regular monthly bill.
Enables borrowers, after notifying the lender, to send extra money specifically to reduce or eliminate escrow shortages.
Requires that these new payment options apply only to consumer mortgages created on or after October 1, 2026.
Who It Names or Affects
Mortgage servicers who manage home loans in Alabama
Homeowners with new mortgage loans secured by property in the state
Terms To Know
Biweekly
Happening every two weeks.
Semi-monthly
Happening twice each month.
Principal
The amount of money still owed on the original loan, not including interest.
Escrow shortage
When there is not enough money in a special account to pay for future property taxes or insurance.
Limits and Unknowns
This law does not apply to open-end mortgages like home equity lines of credit.
Lenders are allowed to require borrowers to sign up, or opt-in, before using these payment plans.
The rules do not change how lenders handle loans that already allow penalty-free extra payments.
Amendments
These notes stay tied to the official amendment files and metadata from the legislature.
Plain English: This amendment allows mortgage lenders in Alabama to let borrowers pay their loans twice a month or every two weeks without charging extra fees.
Lenders can offer payment plans where homeowners pay half of their monthly bill twice each month (semi-monthly).
Lenders can offer payment plans where homeowners pay every two weeks, with any extra money going directly to reduce the loan balance.
Homeowners are allowed to make these special payments without being charged a penalty fee by the lender.
This law only applies to new home loans made after October 1, 2026.
It does not apply to credit lines like home equity loans or open-end mortgages.
Lenders are allowed to require borrowers to sign up for these payment plans; they do not have to offer them automatically.
Plain English: This amendment limits a new rule about mortgage payments so it applies only to loans made for personal use, not business or investment properties.
The law will now apply specifically to consumer mortgages.
The text does not define exactly what counts as a 'consumer mortgage' versus other types of loans.
It is unclear which specific rules about making additional payments are being changed because the full original bill text was not provided.
Bill History
2026-04-16House
Enacted
2026-04-09House
Delivered to Governor
2026-04-09Senate
Signature Requested
2026-04-09House
Enrolled
2026-04-09House
Ready to Enroll
2026-04-08Senate
Motion to Read a Third Time and Pass - Adopted Roll Call 1287 (Yeas 30, Nays 0)
2026-03-17Senate
Read for the Second Time and placed on the Calendar
2026-03-17Senate
Reported Out of Committee Second House
2026-03-03House
Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 706 (Yeas 104, Nays 0)
2026-03-03House
Motion to Adopt - Adopted Roll Call 705 (Yeas 105, Nays 0)
2026-03-03House
Motion to Adopt - Adopted Roll Call 704 (Yeas 104, Nays 0)
2026-03-03House
Third Reading in House of Origin (Yeas 102, Nays 0)
2026-03-03Senate
Pending Committee Action in Second House
2026-03-03Senate
Read for the first time and referred to the Senate Committee on Banking and Insurance
2026-03-03House
Engrossed
2026-03-03House
Bolton 1st Amendment Offered
2026-03-03House
Financial Services 1st Substitute Offered
2026-02-25House
Read for the Second Time and placed on the Calendar
2026-02-25House
Reported Out of Committee House of Origin
2026-02-25House
Financial Services 1st Substitute
2026-01-13House
Pending Committee Action in House of Origin
2026-01-13House
Read for the first time and referred to the House Committee on Financial Services
Official Summary Text
This act: (1) authorizes mortgage servicers to allow mortgagors to make biweekly mortgage payments, where any amount paid in excess must be applied to the loan principal; (2) authorizes mortgage servicers to allow mortgagors to make semimonthly payments in the amount of half of the monthly payment; (3) authorizes mortgage servicers to allow mortgagors, after notifying the servicer, to submit payments to reduce escrow shortages; and (4) only applies to consumer mortgages originated after October 1, 2026, that are secured by real property in the state.
Current Bill Text
Read the full stored bill text
HB55 ENROLLED
Page 0
HB55
EJWTT2C-3
By Representative Hollis
RFD: Financial Services
First Read: 13-Jan-26
PFD: 05-Nov-25
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HB55 Enrolled
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PFD: 05-Nov-25
Enrolled, An Act,
Relating to financial institutions; to authorize
mortgage servicers to allow mortgagors to make biweekly or
semi-monthly mortgage payments and additional payments to the
mortgage principal without penalty.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) For purposes of this section, the
following terms have the following meanings:
(1) BIWEEKLY. Occurring every two weeks.
(2) CONTRACTUAL MORTGAGE PAYMENT. The total amount of
the monthly mortgage loan payment, comprised of the principal
payment, interest payment, and any additional amounts being
collected and held in an escrow account.
(3) ESCROW AMOUNT. The amount of any additional funds
that are collected by a mortgage servicer pursuant to a
mortgage loan and set aside in an escrow account to cover
future expenses, including property taxes and homeowners
insurance.
(4) ESCROW ANALYSIS. The accounting that a financial
institution conducts pursuant to 12 C.F.R. § 1024.17 to
determine the appropriate target balances, compute the
borrower's monthly payments or deposits needed for the next
year, and determine whether escrow shortages exist.
(5) MORTGAGE SERVICER. A servicer as defined in 12
U.S.C. § 2605(i)(2).
(6) MORTGAGOR. A person that borrows money by granting
a mortgage or a successor in ownership of the real property
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a mortgage or a successor in ownership of the real property
described in the mortgage.
(7) PRINCIPAL. The outstanding balance of the original
mortgage loan granted by the mortgage servicer, exclusive of
interest.
(8) SEMI-MONTHLY. Occurring twice each month.
(b) A mortgage servicer may allow a mortgagor, without
the imposition of any penalty, to:
(1) Make biweekly mortgage payments, in which any
amount paid in excess of the total annual contractual mortgage
payments due shall be applied to the mortgage loan principal;
or
(2) Make semi-monthly mortgage payments in the amount
of half of the total monthly contractual mortgage payment due.
(c) If allowed by the mortgage servicer, the mortgagor
may elect to submit a payment to the mortgage servicer to
reduce or eliminate any escrow shortage. A mortgagor that
elects to make additional mortgage payments pursuant to this
subsection shall notify the mortgage servicer of his or her
intent to make the payments in a manner prescribed by the
mortgage servicer. The payments shall be treated separately
and independent of payments applied to the mortgage loan
principal pursuant to subsection (b).
(d) A mortgage servicer shall not be precluded from
requiring mortgagors to opt-in to any payment structure
authorized by this section.
(e)(1) This section shall apply only to consumer
mortgages that are secured by real property located in this
state and that are originated after the effective date of this
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state and that are originated after the effective date of this
act.
(2) This section shall not apply to any open-end
mortgage or home equity products.
(3) This section shall not apply to any mortgage
servicer that allows mortgagors to make biweekly or
semi-monthly mortgage payments without penalty or that offer a
closed-end mortgage product that allows a mortgagor to make
biweekly or semi-monthly mortgage payments without penalty.
Section 2. This act shall become effective on October
1, 2026.
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1, 2026.
________________________________________________
Speaker of the House of Representatives
________________________________________________
President and Presiding Officer of the Senate
House of Representatives
I hereby certify that the within Act originated in and
was passed by the House 03-Mar-26.
John Treadwell
Clerk
Senate 08-Apr-26 Passed
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