Alabama § 35-10-110

§ 35-10-110.

(a) For purposes of this section, the following terms have the following meanings:

(1) BIWEEKLY. Occurring every two weeks.

(2) CONTRACTUAL MORTGAGE PAYMENT. The total amount of the monthly mortgage loan payment, comprised of the principal payment, interest payment, and any additional amounts being collected and held in an escrow account.

(3) ESCROW AMOUNT. The amount of any additional funds that are collected by a mortgage servicer pursuant to a mortgage loan and set aside in an escrow account to cover future expenses, including property taxes and homeowners insurance.

(4) ESCROW ANALYSIS. The accounting that a financial institution conducts pursuant to 12 C.F.R. § 1024.17 to determine the appropriate target balances, compute the borrower’s monthly payments or deposits needed for the next year, and determine whether escrow shortages exist.

(5) MORTGAGE SERVICER. A servicer as defined in 12 U.S.C. § 2605(i)(2).

(6) MORTGAGOR. A person that borrows money by granting a mortgage or a successor in ownership of the real property described in the mortgage.

(7) PRINCIPAL. The outstanding balance of the original mortgage loan granted by the mortgage servicer, exclusive of interest.

(8) SEMI-MONTHLY. Occurring twice each month.

(b) A mortgage servicer may allow a mortgagor, without the imposition of any penalty, to:

(1) Make biweekly mortgage payments, in which any amount paid in excess of the total annual contractual mortgage payments due shall be applied to the mortgage loan principal; or

(2) Make semi-monthly mortgage payments in the amount of half of the total monthly contractual mortgage payment due.

(c) If allowed by the mortgage servicer, the mortgagor may elect to submit a payment to the mortgage servicer to reduce or eliminate any escrow shortage. A mortgagor that elects to make additional mortgage payments pursuant to this subsection shall notify the mortgage servicer of his or her intent to make the payments in a manner prescribed by the mortgage servicer. The payments shall be treated separately and independent of payments applied to the mortgage loan principal pursuant to subsection (b).

(d) A mortgage servicer shall not be precluded from requiring mortgagors to opt-in to any payment structure authorized by this section.

(e)(1) This section shall apply only to consumer mortgages that are secured by real property located in this state and that are originated after October 1, 2026.

(2) This section shall not apply to any open-end mortgage or home equity products.

(3) This section shall not apply to any mortgage servicer that allows mortgagors to make biweekly or semi-monthly mortgage payments without penalty or that offer a closed-end mortgage product that allows a mortgagor to make biweekly or semi-monthly mortgage payments without penalty.