Relating to Alabama Housing Trust Fund; mortgage recording fee increase
SB244 amends Alabama’s mortgage record tax statute to increase the fee charged when certain mortgages, deeds of trust, conditional sale contracts, and similar security instruments are recorded. The bill raises the tax rate from 15 cents to 30 cents per $100 of indebtedness, including provisions for open-end or revolving indebtedness, extensions, renewals, and related recording situations. It also retains and updates the existing rules governing how the tax is calculated, when exemptions apply, how the Department of Revenue may determine taxable amounts, and the penalties for noncompliance by probate judges or financial institutions.
A major policy change in the bill is the redistribution of mortgage record tax revenue. Under the new formula, 25% of collections would be dedicated to the Alabama Housing Trust Fund, while 5% would go to probate judges as compensation, 33% to county treasuries, and 37% to the State Treasury. The bill also makes technical and stylistic revisions to the code and sets an effective date of October 1, 2026.
SB244 would amend Section 40-22-2 of the Code of Alabama 1975, changing both the amount of the mortgage recording privilege tax and the statutory distribution of those revenues. The bill would directly affect borrowers, lenders, title companies, probate judges, county governments, the State Treasury, and the Alabama Housing Trust Fund by increasing recording costs and earmarking a dedicated share of collections for housing-related purposes. It preserves the existing administrative framework for collection, certification, audits, refunds, and penalties, while updating the statute to reflect the new tax rate and revenue split.
The available context shows no recorded committee debate or votes, so there is no documented opposition or support from floor action. Based on the bill’s caption and structure, the measure appears to be a revenue-raising and housing-funding proposal, which typically draws support from housing advocates and local revenue recipients, while potentially raising concerns among lenders, real estate stakeholders, and property purchasers about higher closing and recording costs. Because the bill is still pending committee action, its overall sentiment in the legislative process appears unresolved rather than clearly favorable or unfavorable.
The most likely point of contention is the increase in the mortgage recording fee, since it raises transaction costs for real estate financing and property transfers. A second likely issue is the dedication of 25% of the revenue to the Alabama Housing Trust Fund, which benefits housing programs but reduces the share available for the State Treasury and counties compared with a purely general revenue approach. Probate judges and county governments may also scrutinize the revised distribution formula and administrative responsibilities, while lenders and other financial institutions may be concerned about compliance, reporting, and audit provisions tied to open-end and revolving debt instruments.