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SD 2479

An Act ensuring timely insurance loss-draft payouts for homeowners

194th Legislature (2025-2026) Introduced by Paul Mark

Requires lenders to quickly disburse loss-draft insurance funds to homeowners (within 30 days); delays earn interest, and a zero-interest loan fund up to $15,000 helps with repairs.

House concurred
0
WeVote Research Nonpartisan
Bill Summary · SD 2479

Summary: SD 2479 — An Act ensuring timely insurance loss-draft payouts for homeowners

Purpose and intent

This bill aims to protect Massachusetts homeowners by regulating how mortgage lenders handle insurance loss drafts (insurance payouts after property damage). It requires timely disbursement of loss-draft funds, increases transparency for borrowers, and creates a credit-access mechanism (a zero-interest loan fund) to support repairs when payouts are delayed.

Key provisions

  • Section 70 — Timeliness of Loss Draft Payments

    • Defines “loss draft” and “mortgage” for the purposes of this section.
    • (a) A lender cannot transfer a mortgage to another lender while there are undisbursed loss-draft funds after a homeowner initiates a loss draft.
    • (b) Homeowners may choose how to receive funds (direct deposit, paper check, or another mutually agreed method). Lenders must provide an anticipated disbursement timeline after funds are received.
    • (c) If the lender holds funds for more than 30 days after receipt, the homeowner earns interest on the held funds. Interest is calculated at a fixed APR in effect on day 30. A closing summary of accrued interest must be provided to the homeowner; if funds are not disbursed, accrued interest may be applied to the loan at the end of the current tax year.

  • Section 71 — Disclosure of Loss Draft Processes

    • (a) All new mortgage documents must include a dedicated section detailing the lender’s loss-draft process and the provisions of this act.
    • (b) If the homeowner’s mortgage is sold within Massachusetts, the new lender must provide written notification of the pending sale and, after acquisition, disclose its loss-draft processes and policies.

  • Section 72 — Zero-Interest Loan Fund and Penalties for Non-Compliance

    • (a) Establishes a zero-interest loan fund to provide up to $15,000 per resident for necessary home repairs when loss-draft claims are delayed.
    • (b) Non-compliance with Sections 70–72 can result in penalties up to 5% of the total loan value per violation; each instance constitutes a separate violation.
    • (c) Penalties collected are deposited into the zero-interest loan fund to bolster funding for homeowner repairs.

  • Section 2 — Effective Date

    • The act takes effect immediately upon passage.

Who would be affected

  • Homeowners with damage covered by insurance and a mortgage, who would gain protections around timely receipt of loss-draft funds and disclosure of processes.
  • Mortgage lenders and servicers (including entities to whom loans are transferred) would face requirements for timely disbursement, borrower communications, and compliance penalties, plus potential funding obligations to the zero-interest loan fund.
  • Home repair and contracting ecosystem could benefit from clearer timelines and access to repair funds, including the optional zero-interest loans.

Procedural history and timeline

  • Introduced and filed in January 2025; subsequently referred to the Senate Financial Services committee.
  • Status shows House concurrence on the date noted, indicating legislative movement toward final passage.

This summary focuses on the substantive changes: timing requirements for loss-draft disbursement, borrower protections and disclosures, a new funding mechanism to assist repairs, and penalties for non-compliance.

Compiled from official sources — confirm details with the bill’s official record.

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