HOUSE DOCKET, NO. 2470 FILED ON: 1/20/2011
HOUSE . . . . . . . . . . . . . . . No. 3127
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The Commonwealth of Massachusetts
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PRESENTED BY:
John P. Fresolo
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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to non-payment of insurance premiums from escrowed funds by lending institutions.
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PETITION OF:
Name: | District/Address: | Date Added: |
John P. Fresolo | 16th Worcester | 1/20/2011 |
Michael O. Moore |
| 1/26/2011 |
F. Jay Barrows | 1st Bristol | 2/2/2011 |
Daniel J. Foley, Jr., Esq. | 91 Cedar St. Milford, MA 01757 |
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HOUSE DOCKET, NO. 2470 FILED ON: 1/20/2011
HOUSE . . . . . . . . . . . . . . . No. 3127
By Mr. Fresolo of Worcester, a petition (accompanied by bill, House, No. 3127) of John P. Fresolo and others relative to the liability of lending institutions for failure to disburse escrow funds to pay any tax or insurance premiums. Financial Services. |
[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE HOUSE, NO. 966 OF 2009-2010.]
The Commonwealth of Massachusetts
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In the Year Two Thousand Eleven
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An Act relative to non-payment of insurance premiums from escrowed funds by lending institutions.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Chapter 167E of the General laws, as appearing in the 2006 Official Edition, is hereby amended by inserting after section 16, the following section:
Section 17. (a) if the lender, as a result of neglect, fails to pay any tax or insurance premium when the tax or premium is due and there are sufficient escrow funds on deposit to pay the tax or premium, and if the property owner suffers a loss as a result of this failure, then the lender is liable for the loss; except, however, that with respect to any loss which would otherwise have been insured, the extent of the liability shall not exceed the coverage limits of any insurance policy which has lapsed.
(b) If the lender violated paragraph (a) and the premium payment is not more than 90 days overdue, the insurer shall reinstate the insurance policy, retroactive to the date of cancellation, and the lender shall reimburse the property owner for any penalty or fees imposed by the insurer and paid by the property owner for purposes of reinstating the policy.
(c) If the lender violated paragraph (a) and the premium payment is more that 90 days overdue or if the insurer refuses to reinstate the insurance policy, the lender shall pay the
difference between the cost of the previous insurance policy and a new, comparable insurance policy for a period of 2 years.
SECTION 2. Section 99 of chapter 175 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by inserting in line 170 the following sentence:
An insurer that cancels a property insurance policy on property secured by a mortgage due to the failure of the lender to timely pay the premium when due shall reinstate the policy as required by section 17 of chapter 167E of the General Laws.