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Can you summarize 209 CMR 57?
Division of Banks and Loan Agencies > Flood insurance
Short Summary
The document, 209 CMR 57.00, governs the flood insurance requirements for mortgage loans secured by residential property located in special flood hazard areas in the Commonwealth of Massachusetts. It applies to creditors, including originators, holders, investors, assignees, successors, trusts, trustees, nominee holders, Mortgage Electronic Registration System, mortgage servicers, and certain government agencies. However, the Massachusetts Housing Finance Agency and the Massachusetts Housing Partnership Fund are exempt from being considered creditors. The document does not specify any penalties for non-compliance. It provides definitions for terms such as Commonwealth, Creditor, Creditor’s Representative, Designated Loan, Division of Insurance, Flood, Full Value, Insurance Producer, Mortgage Loan, National Flood Insurance Program, Notice about Flood Insurance Coverage, Principal Mortgage Balance, Residential Property, Special Flood Hazard Area, and You. The document governs the limitations on required flood insurance for residential property in Massachusetts. It states that mortgage, note, or any other agreement cannot require purchasers or owners of residential property to purchase or pay for flood insurance that exceeds the outstanding principal mortgage balance or the full value of the credit line, outstanding principal on the equity loan, or second or subsequent mortgage on the property. Additionally, the flood insurance policy cannot include coverage for contents or have a deductible of less than $5,000. The owner of the residential property has the right to request a reduction in the amount of flood insurance coverage upon policy renewal, which should be equal to the outstanding principal mortgage balance. The reduction request must be accepted by the insurer. The document also outlines the requirements for providing a Notice about Flood Insurance Coverage to purchasers or owners of residential properties in designated loan transactions. The notice must be provided at the time flood insurance is required to be purchased or paid for. It should be delivered to the purchaser or owner by the same method and at the same time as the Notice of Special Flood Hazards. If a transaction involves multiple creditors or creditor’s representatives, only one notice needs to be given, and they must agree on who will comply with the notice requirements. If the creditor’s representative has already provided the notice, the creditor is not required to provide an additional notice but must retain a record of assurance from the representative. The notice is not required at policy renewal unless there are certain changes in the mortgage loan or flood insurance coverage. In cases of lender-placed insurance, the notice must be provided when notifying the owner of the requirement to obtain flood insurance. The document also mentions that insurance producers must provide notice to purchasers or owners either at the time they are notified of the need for flood insurance or when they submit an application for it. The document outlines the requirements for providing a Notice about Flood Insurance Coverage to borrowers. The notice must be clear and conspicuous and include specific information such as the borrower’s name, property address, provider’s name and address, limitations on required flood insurance coverage, and a section for the borrower’s signature. The notice must strictly conform to the specified format. The document also highlights that flood insurance required by the lender or creditor only protects their interest in the property and may not be sufficient to cover all repairs or compensate for losses. Borrowers are encouraged to consider purchasing additional flood insurance to protect their home or investment. The document references relevant Massachusetts laws and regulations governing flood insurance coverage. No exemptions or penalties are mentioned in this document.
Whom does it apply to?
Creditors, including originators, holders, investors, assignees, successors, trusts, trustees, nominee holders, Mortgage Electronic Registration System, mortgage servicers, and certain government agencies
What does it govern?
Flood insurance requirements for mortgage loans secured by residential property located in special flood hazard areas in the Commonwealth of Massachusetts
What are exemptions?
The Massachusetts Housing Finance Agency and the Massachusetts Housing Partnership Fund are exempt from being considered creditors
What are the Penalties?
The document does not specify any penalties for non-compliance
Jurisdiction
Massachusetts