SECTION 1. Section 4 of Chapter 167E of the General Laws, as so appearing in the 2014 Official Edition, is hereby amended by inserting after clause (c), the following clause:
(d) If a bank requires, as part of its loan policies, that a borrower escrow the insurance premium for property insurance on real estate secured by a mortgage loan and said bank, as a result of neglect, fails to pay the insurance premium on a
mortgage loan when the insurance premium is due and there are sufficient escrowed funds on deposit to pay said insurance premium, and if the property owner suffers a loss as a result of this failure, then the bank 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. The bank shall pay the insurance premium and any increased cost for securing a new insurance policy for a period of three (3) years. If the bank is late in paying the insurance premium, the bank shall pay the late fee charged by the insurance company.
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