§ 6-K — Real property insurance escrow accounts

§ 6-k. Real property insurance escrow accounts. 1. Definitions. When\nused in this section: (a) "Mortgage investing institution" means any\nbank, trust company, national bank, savings bank, savings and loan\nassociation, federal savings bank, federal savings and loan association,\nprivate banker, credit union, federal credit union, investment company,\npension fund, licensed mortgage banker or any other entity which\nmaintains a real property insurance escrow account for real property\nlocated in this state.\n (b) "Mortgagor" means a person having title to and occupying a one to\nfour family residence which is located in this state and is subject to a\nmortgage.\n (c) "Real property insurance" means a policy of insurance issued, or\nissued for delivery in this state, on a risk located or resident in this\nstate insuring the following contingency: loss or damage (including but\nnot limited to loss or damage on account of fire) to real property used\npredominantly for residential purposes and consists of not more than\nfour dwelling units, other than motels or hotels.\n (d) "Real property insurance escrow account" means an account\nestablished by contract between a mortgagor of real property improved by\na one to four family residence and the mortgage investing institution\nhaving a mortgage thereon, into which the mortgage investing institution\nshall deposit money collected from the mortgagor for the purpose of\npaying real property insurance premiums.\n (e) "One to four family residence" means property used primarily for\nresidential purposes for one to four families, including property held\nin condominium form of ownership, and which is occupied in whole or in\npart by the owner.\n 2. Duties and responsibilities of mortgage investing institutions. (a)\nEvery mortgage investing institution shall make all payments for\ninsurance for which they hold real property insurance escrow accounts in\na timely manner.\n (b) Every mortgage investing institution shall pay at least the\nminimum rate of interest on each real property insurance escrow account\nas prescribed therein.\n (c) Every mortgage investing institution shall deposit funds from a\nreal property insurance escrow account of a mortgagor in a banking\ninstitution whose deposits are insured by a federal agency or a licensed\nbranch of a foreign banking corporation whose deposits are insured by a\nfederal agency. Notwithstanding the foregoing provisions of this\nsubdivision, the superintendent shall have the power to exempt from the\nrequirements of this subdivision any banking organization which does not\nreceive deposits or share accounts from the general public.\n (d) A mortgage investing institution may debit a mortgagor's real\nproperty insurance escrow account for payments of insurance premiums\nonly if actual payment for such premiums is made within twenty-one days\nafter such debit.\n (e) Every mortgage investing institution shall, at least annually,\nprovide to the mortgagor an analysis of the real property insurance\nescrow account of the mortgagor. Such analysis shall contain, for the\ntwelve month period covered by the analysis, at least: (1) interest\nearned; (2) the amount of insurance premiums paid from the real property\ninsurance escrow account; and (3) the account balance as of the\nbeginning of the period covered by the analysis and the ending account\nbalance as of a specified date within forty-five days preceding the date\nof the analysis. In addition, the mortgage investing institution shall,\nupon request by the mortgagor, provide to the mortgagor the date or\ndates of the payment of insurance premiums from such real property\ninsurance escrow account. The information required by this paragraph may\nbe provided in notices otherwise required by federal or state law,\nregulation or rule to be sent on at least an annual basis to the\nmortgagor, including but not limited to notices under title three-A of\nthe real property tax law.\n (f) The mortgage investing institution shall provide a written\ndisclosure, in at least eight point bold face type, to the mortgagor\nwith respect to the real property insurance escrow account. Such\ndisclosure shall be provided at the time of the establishment of the\nreal property insurance escrow account. In the case of accounts already\nin existence on the effective date of this act, such disclosure shall be\nprovided to the mortgagor with the next annual analysis required by\nparagraph (e) of this subdivision. The disclosure shall contain\nsubstantially the following language:\n (i) The mortgage investing institution is obligated to make all\npayments for real property insurance for which the real property\ninsurance escrow account is maintained. If any such payments are not\ntimely, the mortgage investing institution is responsible for making\nsuch payments including any penalties and interest and shall be liable\nfor all damages to the mortgagor resulting from its failure to make\ntimely payment.\n (ii) In the event that a real property insurance premium notice is\nsent directly to the mortgagor by the insurer, the mortgagor shall have\nthe obligation to promptly transmit such premium notice to the mortgage\ninvesting institution, or such other institution or agent as may be\ndesignated in writing by the mortgage investing institution, for\npayment. Failure to do so may jeopardize the mortgagor's insurance\ncoverage and may excuse the mortgage investing institution from\nliability for failure to timely make such real property insurance\npayments.\n (iii) The mortgagor is obligated to pay one-twelfth of the real\nproperty insurance premiums each month to the mortgage investing\ninstitution for deposit into the real property insurance escrow account,\nunless there is a deficiency or surplus in the account, in which case a\ngreater or lesser amount may be required.\n (iv) If the mortgage investing institution is subject to the\nprovisions of paragraph (c) of this subdivision, the mortgage investing\ninstitution must deposit the escrow payments made by the mortgagor in a\nbanking institution or a licensed branch of a foreign banking\ncorporation whose deposits are insured by a federal agency.\n (g) Every mortgage investing institution shall provide written notice\nto a mortgagor no later than ten business days after the transfer to\nanother mortgage investing institution of the right to receive all\npayments from the mortgagor, including payments made into the real\nproperty insurance escrow account, which notice shall include the name,\naddress and telephone number of the mortgage investing institution to\nwhich such rights have been transferred. Upon request by the mortgagor,\nthe mortgage investing institution shall advise the mortgagor of the\namount of money in such account as of the date of such transfer. Every\nmortgage investing institution shall remain fully liable to pay any real\nproperty insurance premiums which are due and payable prior to the date\nof such transfer, and the mortgage investing institution to which such\nrights have been transferred shall be liable to pay any real property\ninsurance premiums which are due and payable after the date of such\ntransfer, unless otherwise agreed among the parties to the transfer.\n (h) Every mortgage investing institution shall, no later than thirty\ndays after the final payment of the mortgage loan, where the mortgagor\nretains ownership of the property, send to the mortgagor a written\nstatement that shall include, but not be limited to the following\ninformation: (i) that the real property insurance escrow account has\nbeen or will be terminated (whichever is applicable); and (ii) that\nunless the mortgagor establishes a new real property insurance escrow\naccount with a mortgage investing institution, the mortgagor will be\nobliged to pay to the appropriate insurer real property insurance\npremiums becoming due thereafter. The written notice shall also set\nforth the effective date of the termination and shall provide the name\nand address of each insurer and shall advise the mortgagor to contact\nsuch insurer for billing information.\n 3. Mailing or delivery of bills to mortgage investing institutions. A\nmortgagor who has entered into a real property insurance escrow account\nmay designate, in writing, a mortgage investing institution, and its\nsuccessors, agents or assigns to receive premium notices for real\nproperty insurance. The mortgage investing institution shall advise the\ninsurer in writing within fifteen days after the termination of such\nescrow account and shall inform the insurer that all future premium\nnotices should be sent directly to the insured. The mortgage investing\ninstitution shall, upon the request of the insurer, provide any document\nthat clearly evidences its authorization to receive insurance premium\nnotices or obligation to pay real property insurance premiums.\n 4. Payments by mortgage investing institutions. A mortgage investing\ninstitution may pay the real property insurance premiums due on more\nthan one parcel by a single instrument, provided that the mortgage\ninvesting institution also provides to the insurer a detailed list of\nthe specific parcels to which the instrument is to be applied, each\nparcel identification number (if any) and the amount of the real\nproperty insurance premium to be paid with respect to each parcel.\n 5. Liabilities of mortgage investing institutions. (a) A mortgage\ninvesting institution which receives moneys from a mortgagor for deposit\ninto a real property insurance escrow account shall be liable to such\nmortgagor, upon failure to pay such real property insurance premiums,\nfor the amount of the real property insurance premiums plus penalties\nand interest imposed thereon.\n (b) In addition to any other remedies permitted by law, a mortgagor\nwhose real property insurance premiums are to be paid by means of a real\nproperty insurance escrow account pursuant to this section may bring an\naction against the mortgage investing institution maintaining such\naccount for the mortgagor under the provisions of this subdivision if\npayments for real property insurance premiums have not been made for\nthirty days after the date such insurance premiums have become due and\npayable. If a court shall find, after considering the circumstances of\nthe failure of a mortgage investing institution to pay the real property\ninsurance premium of a mortgagor pursuant to an escrow agreement, that\nsuch failure was due to the negligence or intentional acts of the\nmortgage investing institution, its agent, or both, the court may award\nthe mortgagor injunctive relief and liquidated damages in an amount\nequal to three times the real property insurance premium not paid, but\nin no event greater than six thousand dollars.\n (c) A mortgage investing institution shall be liable to the mortgagor\nfor all damages and shall bear all responsibility for failure to make\ntimely payment of insurance premiums.\n (d) The mortgage investing institution shall have liability to the\nmortgagor under this subdivision only if:\n (i) the mortgage investing institution, or such other institution or\nagent as designated in writing by the mortgage investing institution,\nhas received the real property insurance premium notice; and\n (ii) the mortgagor has made required payments for deposit into the\nreal property insurance escrow account.\n 6. Separability. If any provision of this section or the application\nof such provision in certain circumstances shall be held invalid, the\nvalidity of the remainder of this section and its applicability to other\ncircumstances shall not be affected.\n