HB55 Alabama 2026 Session

Summary

Primary Sponsor

Rolanda HollisRepresentative

Democrat

Session

2026 Regular Session

Title

Mortgages; require lenders to all mortgagors to make additional mortgage payments

Summary

HB55 would require Alabama financial institutions to let mortgagors pay mortgages biweekly or semi-monthly and to make extra payments toward principal, with escrow adjustments as needed.

What This Bill Does

If passed, the bill would require banks, savings associations, and credit unions in Alabama to permit good-standing mortgagors to pay their mortgage every two weeks (biweekly) or twice a month (semi-monthly). It also allows mortgagors to make additional payments toward the mortgage principal without penalties. When escrow analyses show a shortage or any increase in the escrow amount, the lender must notify the borrower, adjust the recurring payment amount accordingly, and apply any extra payments first to the escrow shortage and then to the loan principal. Borrowers may choose to make escrow payments to cover shortages, and those payments are separate from principal payments. The act takes effect October 1, 2026.

Who It Affects

• Mortgagors (borrowers) with Alabama mortgages who would be eligible to choose biweekly or semi-monthly payment schedules and to make extra principal payments without penalties.
• Financial institutions operating in Alabama (banks, savings and loan associations, and credit unions) that must offer these options and manage escrow analyses and payment applications.

Key Provisions

• Provision 1: Requires financial institutions to allow mortgagors in good standing to make biweekly mortgage payments, with any amount paid in excess of the annual contractual payments applied to the loan principal, or to make semi-monthly payments equal to half of the monthly payment.
• Provision 2: Allows mortgagors to pay additional amounts toward the mortgage principal without penalty; if escrow analysis shows a shortage or increase, the lender must notify the mortgagor, adjust recurring payments, and apply extra payments first to escrow shortages, then to principal; mortgagors may elect to pay escrow funds to cover shortages, with those payments treated separately from principal payments.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Businesses & Financial Institutions