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Mortgage Servicers Disburse Insurance Proceeds

Concerning mortgage servicers, and, in connection therewith, requiring mortgage servicers to take certain actions regarding the disbursement of insurance proceeds to borrowers.
2024 Regular Session
Bill Summary

The bill requires a mortgage servicer to disclose certain information to a borrower concerning the disbursement of insurance proceeds to the borrower in the event that a residential property that is subject to a mortgage is damaged or destroyed and an insurance company pays a claim associated with such damage or destruction.

In the event that half or more of a residential property is damaged or destroyed, a mortgage servicer must work with the a borrower, to after consulting with the borrower's contractor, must create a written repair plan or a written rebuild plan that includes and submit the plan to the mortgage servicer for approval. The mortgage servicer must indicate approval or disapproval within 30 days after receiving the submitted plan. The plan must include specific milestones that require the mortgage servicer to disburse insurance proceeds. However, a mortgage servicer must also disburse insurance proceeds to a borrower in specified amounts, depending on the amount of the insurance proceeds and whether the borrower is delinquent in making payments on the mortgage.

A mortgage servicer must promptly disburse to a borrower any amount of insurance proceeds in excess of the remaining amount that the borrower owes on the mortgage.

A mortgage servicer must hold in an interest-bearing account any insurance proceeds that the mortgage servicer does not immediately disburse to a borrower. A mortgage servicer must ensure that any interest that is credited to the account is credited and disbursed to the borrower.

A mortgage servicer must retain for at least 4 years all written and electronic communications between the mortgage servicer and a borrower.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)


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Bill Text

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The effective date for bills enacted without a safety clause is August 7, 2024, if the General Assembly adjourns sine die on May 8, 2024, unless otherwise specified. Details