Connecticut Senate Bill SB00265

Connecticut 2014 Regular Session

• Introduced: 2/25/14
• Refer: 2/25/14

Caption

An Act Concerning Limits On Flood Insurance Policies.

Impact

If enacted, SB00265 would significantly impact state laws governing mortgage lending and insurance policies. It amends Section 36a-757 of the general statutes, specifically targeting the interplay between mortgage loans and flood insurance policies. The legislation is designed to create a more balanced relationship between mortgage lenders and borrowers, particularly in flood-prone areas, ensuring that homeowners are not over-insured at the behest of lenders, thereby promoting equity in real estate financing.

Summary

SB00265, known as An Act Concerning Limits On Flood Insurance Policies, aims to regulate the requirements placed upon homeowners by mortgage lenders related to flood insurance. The bill specifically prohibits lenders from requiring homeowners to obtain flood insurance coverage that exceeds the amount of their mortgage loan. This legislation seeks to alleviate some of the financial burdens placed on prospective homebuyers by ensuring that they are not forced to purchase excessive flood insurance that is not commensurate with their loan amount.

Contention

There may be points of contention regarding the potential unintended consequences of limiting flood insurance requirements. Some stakeholders in the insurance and financial sectors may argue that such restrictions could lead to increased risk exposure for lenders and may complicate the terms of mortgage agreements. The bill's supporters are likely driven by consumer protection motives, aiming to protect homeowners from potential predatory lending practices related to inflated insurance requirements.