ASSEMBLY FINANCIAL INSTITUTIONS AND INSURANCE COMMITTEE

STATEMENT TO

ASSEMBLY, No. 4443

STATE OF NEW JERSEY

DATED:  JUNE 4, 2026

      The Assembly Financial Institutions and Insurance Committee reports favorably Assembly Bill No. 4443.

      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.