State Codes and Statutes

Statutes > Connecticut > Title49 > Chap846 > Sec49-2a

      Sec. 49-2a. Interest on funds held in escrow for payment of taxes and insurance. (a) 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 servicing company 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, the rate for each calendar year shall be not less than the deposit index as defined in subsection (c) of this section for that year 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. 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 servicing company violating the provisions of this section shall be fined not more than one hundred dollars for each offense.

      (b) Each mortgagee or mortgage servicing company subject to the provisions of this section may contact 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.

      (c) The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board Bulletin in November of the prior year. The commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. For purposes of this section, "Federal Reserve Board Bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H.6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.

      (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.)

      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.

      See Sec. 49-2b re Banking Commissioner's adoption of regulations concerning interest on escrow accounts and re commissioner's duty to furnish mortgagees with forms to report interest due to mortgagors.