California AB1278: Mortgages: hazard insurance proceeds: interest.

What the bill says

An act to amend Section 2954.85 of the Civil Code, relating to mortgages. mortgages Mortgages: hazard insurance proceeds: interest. Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation, and makes the department responsible for administering various laws relating to financial institutions and products, including mortgages. Existing law defines and regulates mortgages…

From the chaptered text, September 30, 2026:

An act to amend Section 2954.85 of the Civil Code, relating to mortgages. mortgages Mortgages: hazard insurance proceeds: interest. Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation, and makes the department responsible for administering various laws relating to financial institutions and products, including mortgages. 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 4-family residence in this state or purchases obligations secured by the property and that holds hazard insurance proceeds in a loss draft account pending property rebuilding or repair to pay interest on those funds at a rate of at least 2% simple interest per annum, as specified. Existing law requires that interest to be credited to the above-described loss draft account annually or upon termination of the account, whichever is earlier. This bill would, instead, require that interest to be credited to the above-described loss draft account, or paid directly to the borrower, annually or upon termination of the account, whichever is earlier, as specified. The bill would require payments made directly to the borrower as described above to be made by check, electronic funds transfer, or another payment method agreed to by the borrower, …

Read the full official text

Sponsors

• John Harabedian (D, AD41) · primary sponsor

Latest actions

1. September 30, 2026: Chaptered by Secretary of State - Chapter 877, Statutes of 2026.
2. September 30, 2026: Approved by the Governor.
3. August 20, 2026: Enrolled and presented to the Governor at 4 p.m.
4. August 13, 2026: Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 74. Noes 0.).
5. August 13, 2026: Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 74. Noes 0. Page 6137.).
6. August 11, 2026: In Assembly. Concurrence in Senate amendments pending.
7. August 10, 2026: Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 5321.).
8. August 10, 2026: Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0.).
9. August 4, 2026: Read second time. Ordered to Consent Calendar.
10. August 3, 2026: From committee: Be ordered to second reading file pursuant to Senate Rule 28.8 and ordered to Consent Calendar.

Votes

• AB 1278 Harabedian Concurrence in Senate Amendments (August 13, 2026): 74 yea, 0 nay, passed
• Consent Calendar 2nd AB1278 Harabedian (August 10, 2026): 39 yea, 0 nay, passed
• Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar (June 30, 2026): 13 yea, 0 nay, passed
• Do pass as amended, but first amend, and re-refer to the Committee on [Judiciary] (June 17, 2026): 7 yea, 0 nay, passed
• AB 1278 Harabedian Consent Calendar Second Day Regular Session (January 29, 2026): 70 yea, 0 nay, passed
• Do pass. To Consent Calendar. (January 22, 2026): 15 yea, 0 nay, passed

Common questions

What is AB1278?

AB1278 is a bill in the California Legislature (2025-2026 Regular Session): Mortgages: hazard insurance proceeds: interest.

What does AB1278 do?

In its own words: An act to amend Section 2954.85 of the Civil Code, relating to mortgages. mortgages Mortgages: hazard insurance proceeds: interest. Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation, and makes the department responsible for administering various laws relating to financial institutions and products, including mortgages. Existing law defines and regulates mortgages…

What is the status of AB1278?

Chaptered as of September 30, 2026. Latest action: Chaptered by Secretary of State - Chapter 877, Statutes of 2026. (September 30, 2026).

Who sponsored AB1278?

John Harabedian (D, AD41).

Where is the official record for AB1278?

On the California Legislature website: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB1278