2013 Maryland Code
COMMERCIAL LAW
§ 12-124 - Property insurance coverage

§12-124.

(a) (1) (i) In this section the following words have the meanings indicated.

(ii) “Flood insurance coverage” means flood insurance against losses caused by flooding that are covered under a policy issued by:

1. The federal government; or

2. An insurer.

(iii) “Improvements” means buildings or structures erected upon or affixed to real property that enhance the value of the real property.

(iv) “Property insurance coverage” means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to “standard fire” or “standard fire with extended coverage”.

(v) 1. “Replacement cost” means the amount needed to repair damage to or rebuild improvements on real property to restore the improvements to their pre-loss condition.

2. “Replacement cost” does not include the value of land.

(2) A lender may not require a borrower, as a condition to receiving or maintaining a loan secured by a first mortgage or first deed of trust, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement cost of the improvements on the real property.

(3) A lender may not require a borrower, as a condition to receiving or maintaining a loan secured by a first mortgage or first deed of trust, to provide or purchase flood insurance coverage in an amount exceeding the replacement cost of the improvements on the real property.

(4) In determining the replacement cost of the improvements on any real property, the lender may:

(i) Accept the value placed on the improvements by the insurer; or

(ii) Use the value placed on the improvements by the lender’s appraisal of the improvements.

(5) A lender may not require that the insurance be purchased through a particular insurance producer or insurance company.

(b) (1) A violation of this section shall entitle the borrower to:

(i) Seek an injunction to prohibit the lender who has engaged or is engaging in the violation from continuing or engaging in the violation;

(ii) Reasonable attorney’s fees; and

(iii) Damages directly resulting from the violation.

(2) A violation of this section does not affect the validity of the first mortgage or first deed of trust securing the loan.

§ 12-124 - 1. Homeowner equity protection

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Covered loan" means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership Equity Protection Act set forth in 15 U.S.C. § 1602(aa), as modified from time to time by Regulation Z, 12 C.F.R. Part 226, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(aa), as modified from time to time by Regulation Z, 12 C.F.R. Part 226.

(3) "Credit health insurance" has the meaning stated in § 13-101 of the Insurance Article.

(4) "Credit involuntary unemployment benefit insurance" has the meaning stated in § 13-101 of the Insurance Article.

(5) (i) "Credit life insurance" means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower.

(ii) "Credit life insurance" does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction.

(6) "Mortgage loan" has the meaning stated in § 11-501 of the Financial Institutions Article.

(7) "Premium" has the meaning stated in § 1-101 of the Insurance Article.

(8) "Single premium coverage" means insurance for which the total premium is payable in one lump sum at or before the time coverage commences.

(b) Financing certain insurance coverage prohibited; mobile home exception. --

(1) Except as provided in this subsection, a lender making a covered loan may not finance as a part of the covered loan transaction single premium coverage for:

(i) Credit health insurance;

(ii) Credit involuntary unemployment benefit insurance; or

(iii) Credit life insurance.

(2) Nothing in this subsection shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A-101 of the Real Property Article.