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A4443
ASSEMBLY, No. 4443
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 24, 2026
Sponsored by:
Assemblyman� VINCENT M. "VINNIE" KEARNEY
District 21 (Middlesex, Morris, Somerset and Union)
Assemblyman� STERLEY S. STANLEY
District 18 (Middlesex)
SYNOPSIS
���� Requires residential mortgage lenders to deposit
hazard insurance proceeds in interest-bearing accounts.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning residential mortgage lenders and
hazard insurance proceeds and supplementing P.L.2009, c.53 (C.17:11C-51 et
seq.).
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� a.� A residential
mortgage lender that makes loans upon the security of real property containing
one to four family units in this State and holds hazard insurance proceeds in a
loss draft account pending property rebuilding or repair shall pay interest on
the proceeds at a rate of at least two percent interest per year.� The interest
shall be credited to the loss draft account annually or upon termination of the
account, whichever is earlier.
���� b.��� A residential mortgage
lender shall not impose a fee or charge in connection with the maintenance or
disbursement of hazard insurance proceeds held in a loss draft account if the
fee or charge will result in an interest rate of less than two percent per year
on the hazard insurance proceeds being held.
���� c.���� This section shall not
apply to hazard insurance proceeds held in a loss draft account that are
required by a State or federal regulatory authority to be placed into a
non-interest-bearing demand trust fund account by a residential mortgage lender
that is not a financial institution.
���� d.��� Notwithstanding any
other law, rule, or regulation, a residential mortgage lender may deposit
hazard insurance proceeds in an interest-bearing account in a federally insured
depository institution, a federal home loan bank, a federal reserve bank, or
another similar financial institution.
���� e.���� For funds held in a
loss draft account, the interest described pursuant to subsection a. of this
section shall begin to accrue on the effective date of this act.
���� f.���� The provisions of this
section are severable.� If any provision of this section is held invalid by a
court of competent jurisdiction, that invalidity shall not affect other
provisions that can be given effect without the invalid provision.
���� g.��� As used in this section:
���� �Financial institution� means
a bank, savings institution, or credit union chartered under the laws of this
State or the United States.
���� �Hazard insurance proceeds�
means payments made by an� insurance company, authorized to write homeowner�s
insurance policies in this State, to a borrower, after an event covered by the
insurance company causes damage to the borrower�s property.
���� 2.��� This act shall take
effect immediately.
STATEMENT
���� This bill requires residential
mortgage lenders to deposit hazard insurance proceeds in interest-bearing
accounts.
���� Under the bill, a residential
mortgage lender that makes loans upon the security of real property containing
one to four family units in this State and holds hazard insurance proceeds in a
loss draft account pending property rebuilding or repair will be required to
pay interest on the insurance proceeds at a rate of at least two percent
interest per year. �The interest will begin to accrue upon the effective date
of this bill and be credited to the loss draft account annually or upon
termination of the account, whichever is earlier.
���� The bill will also prohibit a residential
mortgage lender from imposing a fee or charge in connection to the maintenance
or disbursement of hazard insurance proceeds held in a loss draft account, if
the fee or charge will result in an interest rate of less than two percent per
year on the hazard insurance proceeds being held.� The bill additionally
provides that, notwithstanding any other law, rule, or regulation, a
residential mortgage lender may deposit hazard insurance proceeds in an
interest-bearing account in a federally insured depository institution, a
federal home loan bank, a federal reserve bank, or another similar financial
institution.
���� Finally, the bill provides an
exception to hazard insurance proceeds held in a loss draft account that are
required by a State or federal regulatory authority to be placed into a
non-interest-bearing demand trust fund account by a residential mortgage lender
that is not a financial institution.
���� For the purpose of this bill,
�financial institution� means a bank, savings institution, or credit union
chartered under the laws of this State or the United States.� �Hazard insurance
proceeds� means payments made by an� insurance company, authorized to write
homeowner�s insurance policies in this State, to a borrower, after an event
covered by the insurance company causes damage to the borrower�s property.