California: Governor Newsom signs new law to provide fair interest for disaster-affected homeowners

~ LOS ANGELES - In a move to support homeowners affected by disasters, Governor Gavin Newsom signed Assembly Bill 493 into law today. The legislation, introduced by Assemblymember Harabedian, aims to ensure that homeowners receive the interest accrued on insurance payouts rather than lenders.

This new law addresses an existing inequity where lenders are allowed to keep the interest earned on insurance payouts held in escrow after a disaster. Governor Newsom stated, "Homeowners rebuilding after a disaster need all the support they can get, including the interest earned on their insurance funds. I am proud to deliver this commonsense solution to ensure survivors receive every resource available to help them recover and rebuild."

Under current California law, lenders are required to pay homeowners interest on escrowed funds for property taxes and insurance premiums. However, this requirement did not extend to hazard insurance payouts held in escrow. With the signing of AB 493, lenders will now be required to pay homeowners the interest earned on post-loss insurance payouts, aligning it with other escrowed property expenses.

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This legislation is especially significant for those impacted by California's most destructive wildfires as insurance payouts are often held in escrow while construction is ongoing, which can take months or even years. By ensuring that homeowners receive the interest generated by their insurance funds, this law provides much-needed financial support for those rebuilding their homes and communities.

Governor Newsom also highlighted that this new law does not place any additional burdens on lenders but simply aligns with California's existing interest on impound account law. It also protects homeowners' rights by ensuring that their insurance funds are treated the same as other escrowed property expenses.

This move towards fairness and supporting disaster recovery efforts is just one of many actions taken by Governor Newsom's administration. Recently, he announced multiple clemency actions and awarded $80 million through the Regional Investment Initiative to drive economic growth and spur job creation across the state.

In addition, Governor Newsom and the Legislature have also announced their support for landmark legislation in partnership with SEIU California, Uber, and Lyft to provide a pathway to unionization for over 800,000 rideshare workers.

As California continues to rebuild and recover from disasters such as the Los Angeles firestorm, these efforts by Governor Newsom's administration aim to provide much-needed support and resources for those affected.

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