Banker & Tradesman — Wednesday, October 16, 2013, 12:38pm
Attorney General Martha Coakley and House Speaker Robert DeLeo today filed legislation to cap the amount of flood insurance mortgage lenders may require of homeowners.
The legislation comes as an effort to assist homeowners facing significant flood insurance increases due to FEMA’s updated and expanded flood zone maps, according to a press release.
The proposed legislation, An Act Relative to Flood Insurance, would prohibit creditors from requiring homeowners to purchase flood insurance in an amount that exceeds the outstanding balance of their mortgage, requires coverage for contents or includes a deductible of less than $5,000. Homeowners would still have the option of purchasing a greater amount of insurance.
“These new flood insurance changes are going to devastate many families and businesses in our coastal communities,” Coakley said in a statement. “We continue to urge the federal government to delay implementing these changes until they’ve followed all the steps required by law. In the meantime, this state legislation can help mitigate the impact of these costs on families and businesses.”
The legislation requires banks to provide a notice to homeowners, before paying for federally mandated flood insurance.