§ 49-2a — Interest on funds held in escrow for payment of taxes and insurance.

Connecticut § 49-2a

• Jurisdiction: Connecticut
• Title 49: Mortgages and Liens
• Ch. 846: Mortgages

Text

On and after July 1, 1993, each state bank and trust company, national banking association, state or federally-chartered savings and loan association, savings bank, insurance company and other mortgagee or mortgage servicer holding funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state shall pay interest on such funds, except as provided in section 49-2c, at a rate of not less than the average rate paid, as of December 30, 1992, on savings deposits by insured commercial banks as published in the Federal Reserve Board Bulletin and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 1994, until September 30, 2012, the rate for each calendar year shall be not less than the deposit index, as determined under this section as it was in effect during such year. On and after October 1, 2012, the rate for each calendar year shall be not less than the deposit index, as determined under section 36a-26, for such year and rounded to the nearest one-tenth of one percentage point. Interest payments shall be credited on the thirty-first day of December annually toward the payment of taxes or insurance premiums as the case may be, on such mortgaged property in the ensuing year. If the mortgage debt is paid prior to December thirty-first in any year, the interest to the date of payment shall be paid to the mortgagor. The provisions of this section shall apply only with respect to mortgages on owner-occupied residential property consisting of not more than four living units and housing cooperatives occupied solely by the shareholders thereof. Any mortgagee or mortgage servicer violating the provisions of this section shall be fined not more than one hundred dollars for each offense.

Legislative History

(P.A. 73-607, S. 1; P.A. 75-385, S. 1; P.A. 77-355, S. 1; P.A. 85-368, S. 4; P.A. 92-4, S. 2; P.A. 93-198, S. 1, 2; P.A. 12-106, S. 1; P.A. 14-89, S. 23; P.A. 16-65, S. 42.) History: P.A. 75-385 applied provisions to mortgage serving companies, changed date for initial credit of interest payment from September 30, 1974, to December 31, 1975, and correspondingly changed following date reference; P.A. 77-355 increased interest rate to 4% on and after January 1, 1978, and rephrased provisions to delete obsolete reference to December 31, 1975, and to specify applicability of provisions to housing cooperatives occupied solely by their shareholders; P.A. 85-368 increased the rate of interest paid on funds held in escrow from 4% to 5.25% as of October 1, 1985; P.A. 92-4 required interest paid on funds held in escrow at the rate of 4% on and after October 1, 1992, and at the rate of 5.25% on and after October 1, 1994; P.A. 93-198 required that the interest rate paid on funds held in escrow be based on the rate paid on savings deposits by insured commercial banks as published in the Federal Reserve Board Bulletin and rounded to the nearest 0.1%, added Subsec. (b) re mortgagee or mortgage servicing companies' contacting the department of banking to ascertain the published deposit index to determine the minimum rate paid on funds of a mortgagor held in escrow for the payment of taxes and insurance premiums and added Subsec. (c) re calculation and application of the deposit index, effective July 1, 1993; P.A. 12-106 amended Subsec. (a) by adding “until September 30, 2012” re rate requirement applicable on and after January 1, 1994, and adding provision re rate not to be less than deposit index, rounded to nearest one-tenth of 1 percentage point, on and after October 1, 2012; P.A. 14-89 amended Subsecs. (a) and (b) to replace “servicing company” with “servicer” and made a technical change in Subsec. (a); P.A. 16-65 replaced provision re deposit index as defined in Subsec. (c) with provision re deposit index as determined under Sec. 36a-26, deleted former Subsecs. (b) and (c) re deposit index, and made technical and conforming changes, effective July 1, 2016.