(a)The mortgagee or obligee of any mortgage or other instrument given for the purpose of creating a lien on real property shall accept as evidence of insurance a written binder issued by any authorized insurer or its agent if the binder includes or is accompanied by:
(1)The name and address of the insured borrower;
(2)The name and address of the lender as loss payee;
(3)A description of the insured real property;
(4)A provision that the binder may not be cancelled within the term of the binder unless the lender and the insured borrower receive written notice of the cancellation at least 10 days prior to the cancellation;
(5)Except in the case of a renewal of a policy subsequent to the closing of the loan, a paid receipt for the full amount of the applicable premium; and
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(a) The mortgagee or obligee of any mortgage or other instrument given for the purpose of creating a lien on real property shall accept as evidence of insurance a written binder issued by any authorized insurer or its agent if the binder includes or is accompanied by:
(1) The name and address of the insured borrower;
(2) The name and address of the lender as loss payee;
(3) A description of the insured real property;
(4) A provision that the binder may not be cancelled within the term of the binder unless the lender and the insured borrower receive written notice of the cancellation at least 10 days prior to the cancellation;
(5) Except in the case of a renewal of a policy subsequent to the closing of the loan, a paid receipt for the full amount of the applicable premium; and
(6) The amount of insurance coverage.
A mortgagee or obligee may refuse to honor a binder in cases where the lender receives notice of the cancellation of the binder by the insurer; or, at the expiration of 30 days of the date the binder was given, the insurer has failed to issue the policy of insurance.
(b) The mortgagee or obligee of any mortgage or other instrument given for the purpose of creating a lien on real property shall not require hazard insurance in an amount which exceeds the greater of:
(1) The value placed on the improvements by the insurer; or
(2) The value placed on the improvements as determined by the lender’s appraisal of the real property.
(c) In the event that subsection (a) or (b) of this section is wilfully violated, the original mortgagee or obligee listed upon the original mortgage or other instrument shall be obligated to pay to the mortgagor or obligor:
(1) Reasonable attorneys’ fees; and
(2) The greater of the actual damages directly resulting from the violation or 5% of the face amount of the mortgage.
(d) A violation of this section shall not affect the validity of the mortgage or other instrument which creates the lien securing the loan.
(e) For purposes of this section, a “mortgage or other instrument given for the purpose of creating a lien on real property” shall mean a consumer purpose mortgage or other consumer purpose instrument given for the purpose of creating a lien. For purposes of this section, “consumer purpose mortgage” and “consumer purpose instrument given for the purpose of creating a lien” shall mean mortgages or other instruments given for the purpose of creating a lien encumbering 1-to-4 family residential properties, and shall not include mortgages or other instruments given for the purpose of creating a lien encumbering other multi-unit residential properties, such as apartment buildings, or encumbering office, commercial or industrial properties.