Florida 2022 2022 Regular Session

Florida Senate Bill S1706 Analysis / Analysis

Filed 02/10/2022

The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance

BILL: CS/SB 1706
INTRODUCER: Banking and Insurance Committee and Senator Garcia
SUBJECT: Servicers and Lenders of Residential Mortgage Loans
DATE: February 10, 2022

ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Arnold Knudson BI -Fav/CS
2. JU
3. RC

Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes

I. Summary:
CS/SB 1706 amends several provisions related to the regulation of Florida’s residential mortgage
industry, mortgage foreclosures, and the Florida Insurance. Specifically, the bill:
 Requires mortgage lenders and mortgage servicers regulated under ch. 494, F.S., to comply
with federal law requirements providing periodic statements at each billing cycle;
 Establishes lender-placed insurance requirements for mortgage servicers regulated under ch.
494, F.S.;
 Requires subsequent mortgage servicers subject to ch. 494, F.S., to honor previously
executed loan modification agreements and foreclosure prevention alternatives;
 Requires mortgage servicers and mortgage lenders subject to ch. 494, F.S., to meet certain
criteria before initiating foreclosure proceedings;
 Establishes requirements when a borrower requests a foreclosure prevention alternative;
 Prohibits insurers and insurance agents from force-placing insurance with an affiliate or
making payments to a mortgage lender or servicer;
 Amends ch. 702, F.S., to require certain acts before commencing a foreclosure action.
REVISED: BILL: CS/SB 1706 Page 2

II. Present Situation:
Federal Regulation of the Residential Mortgage Industry
Most mortgage loans are a federally related mortgage loan
1
and thus subject to the provisions of
the federal Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA)
2

Any mortgage lender making a mortgage loan subject to RESPA and TILA must comply with
RESPA and TILA provisions related to mortgage lenders, accordingly. Similarly, any mortgage
servicer servicing a mortgage loan subject to RESPA and TILA must comply with RESPA and
TILA provisions related to mortgage servicing, with few exceptions.
3

RESPA
Enacted by Congress in 1974 in response to abuses in the real estate settlement process, RESPA
requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with
pertinent and timely disclosures about the nature and costs of the real estate settlement process.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) granted
rule-making authority under RESPA to the Consumer Financial Protection Bureau (CFPB) and,
with respect to entities under its jurisdiction, generally granted authority to CFPB to supervise
for and enforce compliance with RESPA and its implementing regulations.
4

1
“Federally related mortgage loan” means any loan (other than temporary financing, such as a construction loan): (i) that is
secured by a first or subordinate lien on residential real property, including a refinancing of any secured loan on residential
real property, upon which there is either (A) located or, following settlement, will be constructed using proceeds of the loan,
a structure or structures designed principally for occupancy of from one to four families (including individual units of
condominiums and cooperatives and including any related interests, such as a share in the cooperative or right to occupancy
of the unit); or located or, following settlement, will be placed using proceeds of the loan, a manufactured home; and; (ii) for
which one of the following paragraphs applies. The loan: (A) is made in whole or in part by any lender that is either regulated
by or whose deposits or accounts are insured by any agency of the Federal Government; (b) Is made in whole or in part, or is
insured, guaranteed, supplemented, or assisted in any way: (1) By the Secretary of the Department of Housing and Urban
Development (HUD) or any other officer or agency of the Federal Government; or (2) Under or in connection with a housing
or urban development program administered by the Secretary of HUD or a housing or related program administered by any
other officer or agency of the Federal Government; (C) Is intended to be sold by the originating lender to the Federal
National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation (or its successors), or a financial institution from which the loan is to be purchased by the Federal Home Loan
Mortgage Corporation (or its successors); (D) Is made in whole or in part by a “creditor,” as defined in section 103(g) of the
Consumer Credit Protection Act (15 U.S.C. 1602(g)), that makes or invests in residential real estate loans aggregating more
than $1,000,000 per year. For purposes of this definition, the term “creditor” does not include any agency or instrumentality
of any State, and the term “residential real estate loan” means any loan secured by residential real property, including single-
family and multifamily residential property; (E) Is originated either by a dealer or, if the obligation is to be assigned to any
maker of mortgage loans specified in paragraphs (1)(ii)(A) through (D) of this definition, by a mortgage broker; or (F) Is the
subject of a home equity conversion mortgage, also frequently called a “reverse mortgage,” issued by any maker of mortgage
loans specified in paragraphs (1)(ii)(A) through (D) of this definition. See 12 CFR 1042.2(b)(9). Non-depository mortgage
lenders originating at least 100 closed-end mortgage loans for the preceding two calendar years are subject to the federal
Home Mortgage Disclosure Act (Regulation C) under the authority of the Consumer Finance Protection Bureau, and thus fall
under RESPA’s definition of “federally related mortgage loan.” See 12 CFR 1003.2(g)(2).
2
RESPA exempts business purpose loans, temporary financing, vacant land, assumption without lender approval, loan
conversions, and secondary market transactions. See 12 CFR 1024.5(b)(3).
3
See Consumer Financial Protection Bureau, Mortgage Servicing Rules: Coverage,
https://files.consumerfinance.gov/f/201407_cfpb_servicing-applicability-comparison-chart-reg-x-and-z.pdf (last visited
February 5, 2022)
4
Federal Reserve, Regulation X, Real Estate Settlement Procedures Act,
https://www.federalreserve.gov/supervisionreg/caletters/ca_15-6_attach_reg_x.pdf (last visited February 5, 2022) BILL: CS/SB 1706 Page 3

RESPA regulations related to the mortgage loan process include:
 Acknowledgements of applications;
 Affiliated business arrangements;
 Applications for mortgage loans;
 Continuity of contact;
5

 Escrow accounts;
 Force-placed insurance;
6

 Mortgage loan servicing error resolution and borrower information requests;
 Mortgage loan servicing requirements;
 Mortgage origination and servicing disclosures;
 Loss mitigation and foreclosure prevention alternatives;
7

 Prohibition on dual tracking;
8

 Prohibitions on kickbacks and unearned fees;
9

 Title insurance; and
 Transfer rights
10

TILA
Enacted by Congress in 1968, TILA is intended to protect consumers and ensure competition
among financial institutions through the meaningful disclosure of credit terms, allowing
consumers to compare standardized credit terms more readily and knowledgeably. The Dodd-
Frank Act granted rule-making authority under TILA to the CFPB and, with respect to entities
under its jurisdiction, generally granted authority to CFPB to supervise for and enforce
compliance with TILA and its implementing regulations.
11

5
See 12 CFR 1024.40, providing functions of servicer personnel; information about loss mitigation options, procedures, and
deadlines; status of any loss mitigation application; complete record of the borrower’s payment history; and communication
response times.
6
See 12 CFR 1024.37, providing bases for changer borrower for force-placed insurance; requirements before charging
borrower force-placed insurance; notice requirements; renewing or replacing force-placed insurance; cancellation of force-
placed insurance; and limitations on force-placed insurance charges.
7
See 12 CFR 1024.41, providing loss mitigation applications; processes and deadlines for reviewing complete and
incomplete applications; COVID-19 related loss mitigation options; short-term loss mitigation options; acknowledgment
notices; denial of loan modification options; prohibitions on dual tracking; appeal process and timelines; and servicing
transfers.
8
12 CFR 1024.41(f)-(h), prohibiting foreclosure referral until more than 120 day delinquent, while a loss mitigation
application form is under submission, review, or appeal; and providing timelines.
9
See 12 CFR 1024.14, prohibiting in return for referrals any fees, kickbacks, split charging, monies, things, discounts,
salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise
royalties, credits representing monies that may be paid at a future date, the opportunity to participate in a money-making
program, retained or increased earnings, increased equity in a parent or subsidiary entity, special bank deposits or accounts,
special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease
or rental payments based in whole or in part on the amount of business referred, trips and payment of another person's
expenses, or reduction in credit against an existing obligation.
10
See 12 CFR 1024.33, providing, in part, that the transfer of servicing does not affect any term or condition of the mortgage
loan other than terms directly related to the servicing of the loan.
11
Consumer Finance Protection Bureau, Truth in Lending Act, https://files.consumerfinance.gov/f/201503_cfpb_truth-in-
lending-act.pdf (last visited February 5, 2022). BILL: CS/SB 1706 Page 4

TILA regulations related to the consumer credit include:
 Annual percentage rates;
 Credit card disclosures;
 Limitations on home equity lines of credit and certain closed-end home mortgages;
 Mortgage loan appraisal requirements;
 Mortgage loan disclosures;
 Mortgage loan servicing requirements; and
 Periodic statements.
12

Preemption of State Laws
State laws that are inconsistent with RESPA regulations may be preempted by RESPA. State
laws that give greater protection to consumers are not inconsistent with, and are not preempted
by, RESPA. In addition, nothing in RESPA should be construed to preempt the entire field of
regulation covered by RESPA.
13

State laws that are inconsistent with TILA regulations are preempted to the extent of the
inconsistency.
14

Exemption of Reverse Mortgages
A reverse mortgage is nonrecourse consumer credit obligation in which a mortgage, deed of
trust, or equivalent consensual security interest securing one or more advances is created in the
consumer’s principal dwelling; and any principal, interest, or shared appreciation or equity is due
and payable, other than in the case of default, only after the consumer dies, the dwelling is
transferred, or the consumer ceases to occupy the dwelling as a principal dwelling.
15

RESPA expressly exempts reverse mortgages from certain mortgage servicing regulations,
including force-placed insurance.
16

TILA expressly exempts reverse mortgages from its regulations related to periodic statements for
residential mortgage loans.
17

Exemption of Small Servicers
A small servicer is a mortgage servicer that servicers, together with any affiliates, 5,000 or fewer
mortgage loans, for all of which the servicer or affiliate is the creditor or assignee; is a Housing
Finance Agency; or is nonprofit entity that services 5,000 of fewer mortgage loans, including any

12
See 12 CFR 1026.41, providing timing of the statement; form of the statement; amount due with explanation; past payment
breakdown; transaction activity; partial payment information; contact information; account information; and delinquency
information.
13
12 CFR 1024.5(c)(1)
14
See 12 CFR 1026.28
15
12 CFR 1026.33(a)
16
See 12 CFR 1024.30; Reverse mortgages remain subject to RESPA regulations related to continuity of contact, early
intervention for certain borrowers, and dual tracking prohibited by loss mitigation procedures.
17
12 CFR 1026.41(e)(1) BILL: CS/SB 1706 Page 5

mortgage loans serviced on behalf of associated nonprofit entities, for all of which the servicer or
an associated nonprofit entity is the creditor.
18

RESPA expressly exempts small servicers from certain mortgage servicing regulations,
including forced-placed insurance.
19

TILA expressly exempts small servicers from its regulations related to periodic statements for
residential mortgage loans.
20

State Regulation of Loan Originators, Mortgage Brokers, Mortgage Lenders, and
Mortgage Servicers
The Office of Financial Regulation (OFR) licenses and regulates non-depository financial
service industries and individuals through its administration and enforcement of ch. 494, F.S.
21

The OFR has the express authority to deny, suspend, or revoke the license of, and impose
administrative fines on, an individual licensed under ch. 494, F.S., found to be in violation of its
provisions, including any violation of RESPA and TILA.
22

Notwithstanding agency enforcement authority, failure to comply with ch. 494, F.S., does not
affect the validity or enforceability of any mortgage loan, and no person acquiring a mortgage
loan, as mortgagee or assignee, is required to ascertain whether or not the provisions of ch. 494,
F.S., have been complied with.
23

Further, ch. 494, F.S., does not limit any statutory or common law right of any person to bring
any action in any court for any act involved in the mortgage loan business or the right of the state
to punish any person for any violation of any law.
24

Regulation of Insurance Agents
In general, insurance agents transact insurance on behalf of an insurer or insurers. The
Department of Financial Services (DFS) regulates the education, licensing, and compliance of
insurance agents and agencies under ch. 626, F.S., and has statutory authority to refuse, suspend,
or revoke the license of an insurance agent or agency in violation of the provisions of ch. 626,
F.S.

Under Florida law, insurance agents are prohibited from the following non-exhaustive list of
acts:

18
12 CFR 1026.41(e)(4)
19
See 12 CFR 1024.30; Small servicers remain subject to RESPA regulations related to continuity of contact, early
intervention for certain borrowers, and dual tracking prohibited by loss mitigation procedures.
20
12 CFR 1026.41(e)(4)
21
Florida Office of Financial Regulation, Division of Consumer Finance,
https://www.flofr.gov/sitePages/DivisionOfConsumerFinance.htm (last visited February 5, 2022).
22
Section 494.00255(m), F.S.
23
Section 494.0022, F.S.
24
Section 494.002, F.S. BILL: CS/SB 1706 Page 6

 Entering into agreements whereby commissions are contingent upon savings effected in the
adjustment, settlement, and payment of losses covered under an insurance policy;
25

 Except as provided for under s. 626.572, F.S., unlawfully rebating, attempting to unlawfully
rebate, or unlawfully dividing or offering to divide his or her commissioner with another;
26

and
 Sharing commissions with individuals other than similarly appointed and licensed agents,
customer representatives, or insurance agencies.
27

Conditions Precedent to Bringing a Foreclosure Action
In general, mortgage foreclosure is based on the provisions of the mortgage contract. In many
standard form mortgage contracts, a “right to cure” or “default” notice paragraph, contains
several specific requirements giving the mortgagor notice of the default and, sometimes, an
opportunity to cure it, as a condition precedent to the mortgagee or assignee bringing a
foreclosure action against the mortgagor.

For example, Fannie Mae’s Standard Mortgage Form for Florida provides, in part:

Notice of Default. Lender will give a notice of Default to Borrower prior to
acceleration following Borrower’s Default, except that such notice of Default will
not be sent when Lender exercises its right under Section 19 unless Applicable
Law provides otherwise. The notice will specify, in addition to any other
information required by Applicable Law: (i) the Default; (ii) the action required to
cure the Default; (iii) a date, not less than 30 days (or as otherwise specified by
Applicable Law) from the date the notice is given to Borrower, by which the
Default must be cured; (iv) that failure to cure the Default on or before the date
specified in the notice may result in acceleration of the sums secured by this
Security Instrument, foreclosure by judicial proceeding and sale of the Property;
(v) Borrower’s right to reinstate after acceleration; and (vi) Borrower’s right to
deny in the foreclosure proceeding the existence of a Default or to assert any other
defense of Borrower to acceleration and foreclosure.

Acceleration; Foreclosure; Expenses. If the Default is not cured on or before the
date specified in the notice, Lender may require immediate payment in full of all
sums secured by this Security Instrument without further demand and may
foreclose this Security Instrument by judicial proceeding. Lender will be entitled
to collect all expenses incurred in pursuing the remedies provided in this Section
26, including, but not limited to: (i) reasonable attorneys’ fees and costs; (ii)
property inspection and valuation fees; and (iii) other fees incurred to protect
Lender’s interest in the Property and/or rights under this Security Instrument.
28

25
Section 626.581(1), F.S.
26
Section 626.611(1)(k), F.S.
27
Section 626.753(2), F.S.
28
Fannie Mae. Security Instruments, Florida Form 3010 (July 2021)
https://singlefamily.fanniemae.com/media/document/doc/florida-security-instrument-form-3010-word (last visited February
6, 2022). BILL: CS/SB 1706 Page 7

Where there are conditions precedent to filing the foreclosure suit, the mortgagee must prove that
it has complied with them.
29
Many Florida courts apply a substantial compliance standard when
determining whether conditions precedent have been met prior to initiating a foreclosure suit.
Substantial compliance is “that performance of a contract which, while not full performance, is
so nearly equivalent that what was bargained for that it would be unreasonable to deny the
[party] the [benefit].
30
In Florida, opinions of the First, Second, Third, Fourth,
31
and Fifth District
Courts of Appeal have determined that “the lender’s default notice to borrower must only
substantially comply with the conditions precedent set forth in the mortgage.”
32

Regulation of Lender Placed Insurance
Lender-placed insurance, sometimes referred to as force-placed insurance, is insurance obtained
by a lender or servicer when a mortgagor does not maintain valid or sufficient insurance upon
mortgage real property as required by the terms of the mortgage agreement. It may be purchased
unilaterally by the lender or servicer, who is the named insured, subsequent to the date of the
credit transaction, providing coverage against loss, expense or damage to collateralized property
as a result of fire, theft, collision, or other risks of loss that would either impair a lender, servicer,
or investor’s interest, or adversely affect the value of collateral covered by limited dual interest
insurance. It is purchased according to the terms of the mortgage agreement as a result of the
mortgagor’s failure to provide evidence of required insurance.
33

In addition to compliance with RESPA provisions, lender-placed insurance is subject to several
state and federal regulations.

Fannie Mae and Freddie Mac Servicing Guidelines for Lender-Placed Insurance
Requirements
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac) provide liquidity, stability, and affordability to the mortgage market
by buying mortgages from lenders and either holding the mortgages in their own portfolios or
packaging the mortgages into mortgage-based securities for purposes of selling in the secondary
mortgage market.
34
Fannie Mae and Freddie Mac, in turn, protect their interest in each mortgage
by requiring minimum insurance coverages,
35
or lender-placed insurance coverage meeting the

29
Torres v. Deutsche Bank National Trust Company, 256 So.3d 903, 905 (Fla. 4
th
DCA 2018).
30
Ortiz v. PNC Bank, Nat. Ass’n, 188 So.3d 923, 925 (Fla. 4
th
DCA 2016)
31
See id.
32
Bank of N.Y. Mellon v. Nunez, 190 So.3d 160, 162-63(Fla. 3
rd
DCA 2015).
33
National Association of Insurance Commissioners, Real Property Lender-Placed Insurance Model Act – 631, 1 (Spring
2021), https://content.naic.org/sites/default/files/MO631.pdf (last visited February 4, 2022).
34
Federal House Finance Agency, About Fannie Mae and Freddie Mac, https://www.fhfa.gov/about-fannie-mae-freddie-mac
(last visited January 28, 2022).
35
For first-lien residential mortgages, Fannie Mae requires coverage equal to the lesser of the following:
 100 percent of the insurable value of the improvements, as established by the property insurer; or
 The unpaid principal balance of the mortgage, as long as it at least equals the minimum amount (80 percent of the
insurable value of the improvements) required to compensate for damage or loss on a replacement cost basis.

For one-to-four unit residential properties, Freddie Mac requires coverage at least equal to the higher of the following, not to
exceed the replacement cost of the insurable improvements:
 The unpaid principal balance of the mortgage; or BILL: CS/SB 1706 Page 8

required minimum insurance coverages when the mortgage servicer cannot obtain evidence of
acceptable insurance for the property securing the mortgage loan.
36

The mortgage servicer has the following responsibilities for obtaining lender-placed insurance
meeting the required minimum insurance coverages for the property securing the mortgage loan:
 Only issue lender-placed insurance coverage after it makes unsuccessful attempts to obtain
evidence of insurance in accordance with applicable law;
 Not use a lender-placed insurance carrier that is an affiliated entity, as defined below, for a
lender-placed insurance policy, including any captive insurance or reinsurance arrangements
with an affiliated entity;
 Exclude any lender-placed insurance commissions or payments (including any incentive
based compensation regardless of its designation as commission, bonus, fees, or other types
of payments from the servicer’s lender-placed insurance carrier; for example, underwriting
bonuses or other payments based on insurance loss ratios) earned on a lender-placed
insurance policy by the servicer, broker, or any affiliated entity from the lender-placed
insurance premiums charged to the borrower or submitted for reimbursement from Fannie
Mae;
 Provide copies of its lender-placed insurance policy, including any other contractual
arrangements between the servicer and a lender-placed insurance carrier, upon Fannie Mae’s
request;
 Provide any documentation or data relating to its lender-placed insurance activities and
lender-placed insurance coverage requested by Fannie Mae within 30 days of Fannie Mae’s
request;
 Terminate any lender-placed insurance, in compliance with law;
 Refund all lender-placed insurance premiums and fees charged during any period of coverage
overlap, in compliance with applicable law.
37

State Regulation of Lender-Placed Insurance
The Office of Insurance Regulation (OIR) regulates the business of lender-placed insurance by
approving the forms and rates of lender-placed insurers.
38

Part I of ch. 627, F.S., is the Rating Law
39
governing property, casualty, and surety insurance
which covers subjects of insurance resident, located, or to be performed in this state.
40
The
Rating Law provides that the rates for all classes of insurance it governs may not be excessive,
inadequate, or unfairly discriminatory.
41
Though the terms “rate” and “premium” are often used

 80 percent of the full replacement cost of the insurable improvements.
36
Fannie Mae, Servicing Guide: Fannie Mae Single Family (December 8, 2021), https://servicing-
guide.fanniemae.com/#Servicer.20Responsibilities.20Related.20to.20Lender-Placed.20Insurance (last visited February 4,
2022); Freddie Mac, Seller/Servicer Guides: Lender-Placed Insurance (July 1, 2016),
https://guide.freddiemac.com/app/guide/section/8202.12 (last visited February 4, 2022).
37
Fannie Mae, Servicing Guide: Fannie Mae Single Family (December 8, 2021), https://servicing-
guide.fanniemae.com/#Servicer.20Responsibilities.20Related.20to.20Lender-Placed.20Insurance (last visited February 4,
2022).
38
Section 627.021, F.S.
39
Section 627.011, F.S.
40
Section 627.021, F.S.
41
Section 627.062(1), F.S. BILL: CS/SB 1706 Page 9

interchangeably, the rating law specifies that “rate” is the unit charge that is multiplied by the
measure of exposure or amount of insurance specified in the policy to determine the premium,
which is the consideration paid by the consumer.
42

All insurers or rating organizations must file rates with the Office of Insurance Regulation (OIR)
either 90 days before the proposed effective date of a new rate, which is considered a “file and
use” rate filing, or 30 days after the effective date of a new rate, which is considered a “use and
file” rate filing.

Upon receiving a rate filing, the OIR reviews the filing to determine if the rate is excessive,
inadequate, or unfairly discriminatory. The office makes that determination in accordance with
generally acceptable actuarial techniques and, in a property insurance rate filing, considers the
following:
 Past and prospective loss experience.
 Past and prospective expenses.
 The degree of competition among insurers for the risk insured.
 Investment income reasonably expected by the insurer.
 The reasonableness of the judgment reflected in the rate filing.
 Dividends, savings, or unabsorbed premium deposits returned to policyholders.
 The adequacy of loss reserves.
 The cost of reinsurance.
 Trend factors, including trends in actual losses per insured unit for the insurer.
 Conflagration and catastrophe hazards.
 Projected hurricane losses.
 Projected flood losses, if the policy covers the risk of flood.
 A reasonable margin for underwriting profit and contingencies.
 Other relevant factors that affect the frequency or severity of claims or expenses.

OIR Consent Orders against Lender-Placed Insurers
Between 2013 and 2014, following its review of Florida’s lender-placed insurance market and
findings of insurer practices that potentially and practically hurt policyholders, the Office of
Insurance Regulation (OIR), issued consent orders to lender-placed insurers American Security
Insurance Company
43
and Praetorian Insurance Company,
44
requiring the modification of their
business practices related to lender-placed insurance. These two consent order had the effect of
instituting new requirements on more than 90 percent of Florida’s lender-placed insurance
market.
45

Lender-placed insurance business reforms required under the consent orders included:

42
Section 627.041, F.S.
43
Florida Office of Insurance Regulation, Consent Order No. 141841-13 (October 7, 2013),
https://www.floir.com/siteDocuments/AmericanSecurity141841-13-CO.pdf (last visited February 5, 2022).
44
Florida Office of Insurance Regulation, Consent Order No. 141851-13 (April 10, 2014),
https://www.floir.com/siteDocuments/Praetorian141851-13-CO.pdf (last visited February 5, 2022).
45
Florida Office of Insurance Regulation, Press Release: Office Order Praetorian Insurance Company to Modify its Business
Practices for Lender-Placed Insurance in Florida (April 11, 2014),
https://www.floir.com/PressReleases/viewmediarelease.aspx?id=2054 (last visited February 5, 2022). BILL: CS/SB 1706 Page 10

 Notifying all current borrowers by mail and within 120 days of the execution of the Consent
Order to inform them about alternative options available for lender-placed insurance
coverage;
 Prohibiting the payment of commissions to a mortgage servicer on lender-placed insurance
policies obtained by that servicer;
 Prohibiting the payment of contingent commissions based on underwriting profitability or
loss ratios to any servicer or entity affiliated with a servicer;
 Prohibiting the issuance of lender-placed policies on mortgaged property serviced by an
affiliate;
 Prohibiting the issuance of reinsurance on lender-placed insurance policies with a captive
insurer of any mortgage servicer;
 Prohibiting the provision of free or below-cost outsourced services to a mortgage servicer;
and
 Prohibiting the payment of any incentive to a mortgage servicer as an inducement to secure
lender-placed insurance business.
46

Adoption of NAIC Model Act 631
The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and
regulatory support organization created and governed by the chief insurance regulators from 50
states, the District of Columbia, and five U.S. territories.
47

In Spring 2021, the NAIC adopted the Real Property Lender-Placed Insurance Model Act # 631
(Model Act), governing insurers and insurance producers engaged in any transaction involving
lender-placed insurance, for the purpose of promoting the public welfare by regulating lender-
placed insurance on real property; creating a legal framework within which lender-placed
insurance on real property may be written within a state; help maintain the separation between
lenders and servicers from insurers and insurance producers; and minimize the possibilities of
unfair competitive practices in the sale, placement, solicitation, and negotiation of lender-placed
insurance.
48

The Model Act provides several reforms related to lender-placed insurance, including:
 Term of insurance policy;
 Calculation of coverage and payment of premiums;
 Prohibited practices;
 Non-circumvention;
 Evidence of coverage;
 Filing, approval, and withdrawal of forms and rates;
 Enforcement;
 Regulatory authority;
 Judicial review; and

46
Id.
47
National Association of Insurance Commissioners, Our Story, https://content.naic.org/about (last visited February 5, 2022).
48
National Association of Insurance Commissioners, Real Property Lender-Placed Insurance Model Act-631 (Spring 2021),
https://content.naic.org/sites/default/files/MO631.pdf (last visited February 5, 2022). BILL: CS/SB 1706 Page 11

 Penalties
49

Specific to prohibited practices, the Model Act prohibits an insurer or insurance producer from:
 Issuing lender-placed insurance on mortgaged property that the insurer or insurance producer
or an affiliate of the insurer or insurance producer owns, performs the servicing for, or owns
the servicing rights to the mortgage property;
 Compensating a lender, insurer, investor, or servicer (including through the payment of
commissions) on lender-placed insurance policies issued by the insurer;
 Sharing lender-placed insurance premium or risk with the lender, investor, or servicer that
obtained the lender-placed insurance;
 Offering contingent commissions, profit sharing, or other payments dependent on
profitability or loss ratios to any person affiliated with a servicer or the insurer in connection
with lender-placed insurance;
 Making any payments, including, but not limited to, the payment of expenses to a lender,
insurer, investor, or servicer for the purpose of securing lender-placed insurance business or
related outsourced services.
50

The insurer is further prohibited from providing free or below-cost outsourced services to lender,
investors, or servicers, and outsourcing its own functions to lenders, insurance producers,
investors, or servicers on an above-cost basis.
51

III. Effect of Proposed Changes:
Section 1 amends s. 494.001, F.S., related to definitions under ch. 494, F.S., to define
“borrower” may also mean a natural person who is a mortgagor under a residential mortgage
loan.

The bill defines “foreclosure prevention alternative” to mean a modification of a residential
mortgage loan term.

The bill also defines “mortgage servicer” to mean a person or entity that directly services, or is
contracted as a subservicing agent to a master servicer to service, a residential mortgage loan or
manages a residential mortgage loan, which services or management may include, but are not
limited to, the following responsibilities:
 Interacting with the borrower; managing the borrower’s loan account daily, including, but not
limited to, collecting and crediting loan payments that include principals and interests pad,
and generating periodic billing and account statements; and managing the borrower’s escrow
account, if applicable; or
 Enforcing the note and security instrument as the current owner of the promissory note or as
the authorized agent of the current owner of the promissory note.

Section 2 creates s. 494.00163, F.S., which requires mortgage lenders and mortgage servicers to
comply with certain federal regulations.

49
Id.
50
Id.
51
Id. BILL: CS/SB 1706 Page 12

The bill specifies a periodic statement for a residential mortgage loan must comply with 12 CFR
s. 1026.41, governing periodic statements for residential mortgage loans. The federal regulation
requires that periodic statements specify the amount due, payment due date, any late payment
fees, an explanation of the amount due, a breakdown of past payments, transaction activity since
the last statement, applicable partial payment information, contact information including at least
a telephone number for the consumer to obtain information about the consumer’s account,
account information including the outstanding principal balance and information regarding
interest rates and any prepayment penalties, and, if applicable, information regarding delinquent
payments.

The bill specifies a reverse mortgage servicer or a small mortgage servicer is not exempt from 12
CFR s. 1026.41, governing periodic statement for residential mortgage loans. Under the bill, a
“small mortgage servicer” means a mortgage servicer that, together with any affiliates, services
up to 5,000 residential mortgage loans, all of which have the mortgage servicer or its affiliate as
the creditor or assignee.

Section 3 creates s. 494.00164, F.S., which applies the federal force-placed insurance
requirements of 12 CFR 1024.37 to mortgage servicers.

This section defines “lender-placed insurance” to mean hazard insurance obtained by a mortgage
servicer on behalf of the owner or assignee of a mortgage loan that insurers the property securing
such loan. The term does not include hazard insurance required by the Flood Disaster Protection
Act of 1973, or, if the borrower agrees, hazard insurance obtained by a borrower but renewed by
the borrower’s servicer at its discretion.

A mortgage servicer may not assess any premium charge or fees related to lender-placed
insurance on a borrower unless the servicer has a reasonable basis to believe that the borrower
has failed to comply with the mortgage loan contract’s requirement to maintain hazard insurance
and the requirements of this section are met.

A mortgage servicer may not assess any premium charge or fee related to lender-placed
insurance on a borrower unless all of the following occur:
 The mortgage servicer, at least 45 days before assessing on a borrower a charge or fee related
to lender-placed insurance, delivers to such borrower written notice containing all of the
following:
o The date of the notice, the mortgage servicer’s name and mailing address, the borrower’s
name and mailing address, and the physical address of the property;
o In bold type, a statement requesting the borrower to provide hazard insurance information
for the borrower’s property. The statement must identify the property by its physical
address;
o A statement specifying:
o The borrower’s hazard insurance is expiring, has expired, or provides insufficient
coverage, as applicable;
o The mortgage servicer does not have evidence of hazard insurance coverage for the
property; and BILL: CS/SB 1706 Page 13

o If applicable, the type of insurance for which the servicer lacks evidence of coverage;
o In bold type, a statement that hazard insurance is required on the borrower’s property,
and that the mortgage servicer has purchased or will purchase, as applicable, hazard
insurance at the borrower’s expenses;
o In bold type, a statement that insurance the mortgage servicer has purchased or purchases
may cost significantly more than hazard insurance by the borrower and may provide less
coverage than hazard insurance purchased by the borrower;
o A clear and conspicuous statement requesting the borrower to promptly provide the
mortgage servicer with evidence of hazard insurance coverage for the property, including
a description of the requested insurance information and how the borrower may provide
such information;
o The mortgage servicer’s telephone number for borrower inquiries; and
o If applicable a statement advising the borrower to review additional information provided
in the same transmittal.
 The mortgage servicer, at least 15 days before assessing on a borrower a premium charge or
fee related to lender-placed insurance, delivers to the borrower a written notice that:
o If a mortgage servicer has not received hazard information after delivering the notice
required by paragraph (a), includes:
o The date of the notice;
o In bold type, a statement that the notice is the second and final notice;
o The information required for the notice under paragraph (a) except for the date of the
notice; and
o In bold type, the cost of the lender-placed insurance, stated as an annual premium, or,
if a servicer does not know the cost of lender-placed insurance, a reasonable estimate
of such costs;
o If a mortgage servicer received hazard insurance information after delivering the notice
required under paragraph (a) to the borrower, but has not received evidence
demonstrating that the borrower has had sufficient hazard insurance coverage in place
continuously, includes;
o The date of the notice;
o In bold type, a statement that the notice is the second and final notice;
o The information required by subparagraphs (a)1., 2., 5., 7, and 8.;
o In bold type, the cost of the lender-placed insurance, stated as an annual premium, or,
if a servicer does not know the cost of lender-placed insurance, a reasonable estimate
of such cost;
o A statement that the mortgage servicer received the hazard insurance information that
the borrower provided;
o A statement that requests the borrower to provide the information that is missing; and
o A statement that the borrower will be charged for insurance the servicer has
purchased or purchases for the period of time during which the servicer is unable to
verify coverage;
 By the end of the 15-day period beginning on the date the written notice described in
paragraph (b) is delivered to the borrower the mortgage service has not received, from the
borrower or otherwise, evidence demonstrating that the borrower has continuously had in
place hazard insurance coverage that complies with the loan contract’s requirements to
maintain hazard insurance.
BILL: CS/SB 1706 Page 14

A mortgage servicer may not assess any premium charge or fee to renewing or replacing lender-
placed insurance on a borrower unless all of the following occur:
 The mortgage servicer, at least 45 days before assessing on a borrower a premium charge or
fee related to renewing or replacing lender-placed insurance, delivers to such borrower
written notice containing all of the following:
o The date of the notice, the mortgage servicer’s name and mailing address, the borrower’s
name and mailing address, and the physical address of the property;
o In bold type, a statement requesting the borrower to update the hazard insurance
information for the borrower’s property. The statement must identify the property by its
physical address;
o A statement that the mortgage servicer previously purchased insurance on the borrower’s
property and assessed the cost of the insurance to the borrower because the servicer did
not have evidence that the borrower had hazard insurance coverage for the property:
o A statement specifying:
o The hazard insurance the mortgage servicer previously purchased is expiring or has
expired, as applicable; and
o In bold type, because hazard insurance is required on the borrower’s property, the
servicer intends to maintain insurance on the property by renewing or replacing the
insurance it previously purchased;
o In bold type, a statement that insurance the servicer has purchased or purchases may cost
significantly more than hazard insurance purchased by the borrower, that such insurance
may provide less coverage than hazard insurance purchased by the borrower;
o The cost of the lender-placed insurance, stated as an annual premium, except if a
mortgage servicer does not know the cost of the lender-placed insurance, a reasonable
estimate shall be provided;
o A statement that if the borrower purchases hazard insurance, the borrower should
promptly provide the servicer with insurance information;
o A description of the requested insurance information and how the borrower may provide
such information;
o The mortgage servicer’s telephone number for borrower inquiries; and
o If applicable, a statement advising the borrower to review additional information
provided in the same transmittal.

Within 15 days after receiving evidence demonstrating that the borrower has had hazard
insurance coverage in place that complies with the loan contract’s requirement to maintain
hazard insurance, a mortgage servicer must:
 Cancel the lender-placed insurance the servicer purchased to insure the borrower’s property;
and
 Refund to such borrower all lender-placed insurance premium charges and fees paid by such
borrower for any period of overlapping insurance coverage and remove from the borrower’s
account all lender-placed insurance charges and related fees for such period that the servicer
has assessed to the borrower.

The written notices required by this section must be sent by first-class or express mail.

Section 4 creates s. 494.00225, F.S., which provides for transfer rights for loan modifications
and foreclosure prevention alternatives. BILL: CS/SB 1706 Page 15

Following the written approval of a first lien loan modification, foreclosure prevention
alternative, or other loan modification to avoid foreclosure, the assuming mortgage servicer or
mortgage lender of bought or transferred mortgage servicing rights must assume all duties and
obligations subject to the first lien loan modification, foreclosure prevention alternative or other
loan modification.

Section 5 creates s. 494.0027, F.S., which provides a framework governing residential mortgage
foreclosure prevention alternatives.

Definitions – Subsection (1) defines “complete application” to mean an application for a
foreclosure prevention alternative for which the borrower has provided all documents required
by the mortgage servicer or mortgage lender within the reasonable timeframe specified by the
mortgage servicer or mortgage lender.

The bill defines “single point of contact” to mean a person who has, or a team of personnel of
which each member has, the ability, authority, and responsibility to:
 Communicate the process by which a borrower may apply for an available foreclosure
prevention alternative and the deadline for any required submission to be considered for the
foreclosure prevention alternative.
 Coordinate receipt of all documents associated with the available foreclosure prevention
alternatives and notify the borrower of any missing document necessary to complete an
application for a foreclosure prevention alternative.
 Have access to current information and sufficient personnel to timely, accurately, and
adequately inform the borrower of the current status of the foreclosure prevention alternative.
 Ensure that the borrower is considered for all foreclosure prevention alternatives offered by,
or through, the mortgage servicer or mortgage lender and for which the borrower is or may
be eligible.
 Have access to the person who has the ability and authority to stop the foreclosure process
when necessary.

Dual Tracking – Subsection (2) paragraph (a) prohibits the mortgage servicer or mortgage lender
from commencing a civil action for the recovery of any debt, or for the enforcement of any right,
under a residential mortgage loan which is not barred under ch. 494, F.S., or ch. 702, F.S.; record
a notice of default or a notice of sale, or conduct a foreclosure sale; after a borrower submits a
foreclosure prevention alternative application offered by or through the mortgage servicer or
mortgage lender unless one of the following has occurred:
 The borrower fails to submit all document or information required to complete the
application within the allotted timeframe authorized by the mortgage servicer or mortgage
lender, which must be at least 30 calendar days after the date of the initial acknowledgement
of receipt of the application sent to the borrower.
 The mortgage servicer or mortgage lender makes written determination that the borrower is
not eligible for foreclosure prevention alternative, and any appeal period under subsection 5
has expired.
 The borrower does not accept a written offer for a foreclosure prevention alternative within
30 days after the date of the offer. BILL: CS/SB 1706 Page 16

 The borrower accepts a written offer for a foreclosure prevention alternative, but defaults on
otherwise breaches the obligations under the foreclosure prevention alternative.

Single Point of Contact – Subsection (2) paragraph (b) requires the mortgage servicer or
mortgage lender to promptly establish a single point of contact after the borrowers request a
foreclosure prevention alternative and provide the borrower with at least one direct means of
communication. The single point of contact must remain assigned to the borrower’s account until
the mortgage servicer or mortgage lender determines all foreclosure prevention alternative have
been exhausted or the borrower’s account becomes current. The single point of contact must
refer and transfer the borrower to an appropriate supervisor if requested. The mortgage servicer
or mortgage lender is responsible for all single point of contact personnel are knowledgeable
about the borrower’s foreclosure prevention alternative status.

Acknowledgement of Application – Subsection (3) requires a mortgage servicer or mortgage
lender to provide the borrower written acknowledgement of receipt of a foreclosure prevention
application or related document within 7 business days of receipt. The acknowledgment must
include:
 A description of the process for considering the application, including, without limitation, an
estimate of when a decision on the application will be made and the length of time the
borrower will have to consider an offer for a foreclosure prevention alternative.
 A statement of any deadlines that affect the processing of an application for a foreclosure
prevention alternative, including, without limitation, the deadline for submitting any missing
document.
 A statement of the expiration dates for any document submitted by the borrower.

If the submitted application is incomplete, the acknowledgment must include:
 A statement of any deficiency in the borrower’s application and allow the borrower at least
30 calendar days to submit any missing document or information required to complete the
application.
 A description of the process for considering the application, including, without limitation, an
estimate of when a decision on the application will be made and the length of time the
borrower will have to consider an offer for a foreclosure prevention alternative.
 A statement of any deadlines that affect the processing of an application for a foreclosure
prevention alternative, including, without limitation, the deadline for submitting any missing
document.
 A statement of the expiration dates for any document submitted by the borrower.

Copies of Documents – Subsection (4) requires the mortgage servicer or mortgage lender to
provide the borrower with a copy of complete foreclosure prevention alternative signed by the
mortgage lender or its agent or authorized representative.

Notice of Denial – Subsection (5) requires the mortgage servicer or mortgage lender to send the
borrower written statement of containing the following items after a completed application is
submitted and denied:
 The reason for the denial.
 The length of time the borrower has to request an appeal of the denial. BILL: CS/SB 1706 Page 17

 Instructions regarding how to appeal the denial, including, without limitation, how to provide
evidence that the denial was in error.

The mortgage servicer or mortgage lender must allow the borrower at least 30 calendar days to
appeal a denial.

Dual Tracking, Post-Application Denial – Subsection (6) prohibits the mortgage servicer or
mortgage lender from commencing a civil action for the recovery of any debt, or for the
enforcement of any right, under a residential mortgage loan which is not barred under ch. 494,
F.S., or ch. 702, F.S., record a notice of default or a notice of sale, or conduct a foreclosure sale,
after a completed application is denied until the later of:
 60 calendar days after the borrower is sent the written statement under subsection 5; or
 If the borrower appeals the denial, the later of:
o 15 calendar days after the denial of the appeal;
o If the appeal is successful, 14 calendar days after a foreclosure prevention alternative
offered after the appeal is declined by the borrower; or
o If a foreclosure prevention alternative offered after the appeal is accepted, the date on
which the borrower fails to timely submit the first payment or otherwise breaches the
terms of the offer.

Resubmitted Applications – Subsection (7) specifies a mortgage servicer or mortgage lender is
not required to evaluate an application from a previous applicant, provided the borrower was
evaluated or afforded a fair opportunity to be evaluated, unless there has been a material change
in the borrower’s financial circumstance since the date of the borrower’s previous application,
which has been documented by the borrower and submitted to the mortgage servicer or mortgage
lender.

Restriction on Fees – Section (8) prohibits a mortgage servicer or mortgage lender from charger
or collecting an application fee, processing fee, or other fee for a foreclosure prevention
alternative, or late fee for periods during which:
 A foreclosure prevention alternative is under consideration or a denial is being appealed;
 The borrower is making timely payment under a foreclosure prevention alternative; or
 A foreclosure prevention alternative is being evaluated or exercised.

Section 6 creates s. 627.4055, F.S., “Lender-placed insurance for residential mortgage loan
guaranty”, which prohibits certain acts by an insurer or insurance agents related to lender-placed
insurance.

This section defines:
 “Affiliate” to have the same meaning as defined in s. 624.10, F.S.
 “Lender-placed insurance” to mean insurance obtained by a mortgage servicer or
mortgage lender when a borrower of a residential mortgage loan does not maintain
valid or sufficient insurance upon the mortgaged real property as required by the
terms of the mortgage agreement.
 “Mortgage servicer” to have the same meaning as defined in s. 494.001, F.S. BILL: CS/SB 1706 Page 18

 “Person affiliated” to mean an affiliate or affiliated person as defined in s. 624.10,
F.S.

The bill prohibits an insurer or insurance agent from issuing lender-placed insurance on a
mortgage property if the insurer or insurance agent or an affiliate of the insurer or insurance
agents owns, performs the servicing for, or owns the servicing right to, the mortgage property.

The bill prohibits an insurer or insurance agent from:
 Compensating a mortgage lender, insurer, investor, or mortgage servicer, including, but not
limited to, through payment of commissions, on a lender-placed insurance policy issued by
the insurer or insurance agent.
 Making any payment, including, but not limited to, payment of expenses, to any mortgage
lender, insurer, investor, or mortgage servicer for the purpose of securing lender-placed
insurance business or related outsourced services.
 Share lender-placed insurance premium or risk with the mortgage lender, investor, or
mortgage servicer that obtained the lender-placed insurance.
 Offering contingent commissions, profit sharing, or other payments depending on
profitability or loss ratios to any person affiliated with lender-placed insurance.

The bill prohibits an insurer or insurance agent from providing free or below-cost outsourced
services to mortgage lender, insurance producer, investor, or mortgage servicer or outsource its
own functions to a mortgage lender, insurance producer, investor, or mortgage servicer on an
above-cost basis.

Section 7 creates s. 635.0215, F.S., which prohibits certain acts by an insurer or insurance agents
related to lender-placed insurance.

This section defines:
 “Affiliate” to have the same meaning as defined in s. 624.10, F.S.
 “Lender-placed insurance” to have the same meaning as defined in s. 627.4055(1),
F.S.
 “Mortgage servicer” to have the same meaning as defined in s. 494.001, F.S.
 “Person affiliated” to mean an affiliate or affiliated person as defined in s. 624.10,
F.S.

 Share lender-placed insurance premium or risk with the mortgage lender, investor, or
mortgage servicer that obtained the lender-placed insurance.
 Offering contingent commissions, profit sharing, or other payments depending on
profitability or loss ratios to any person affiliated with lender-placed insurance.

Section 8 creates s. 702.013, F.S., which provides a framework governing residential mortgage
foreclosure prevention alternatives.

Definitions – Subsection (1) defines:
 “Complete application” to have the same meaning as defined in s. 494.001, F.S.
 “Foreclosure prevention alternative” to have the same meaning as defined in s.
494.001, F.S.
 “Mortgage servicer” to have the same meaning as defined in s. 494.001, F.S.
 “Single point of contact” to have the same meaning as defined in s. 494.0027(1), F.S.

Dual Tracking – Subsection (2) paragraph (a) prohibits the mortgage servicer or mortgage lender
from commencing a civil action for the recovery of any debt, or for the enforcement of any right,
under a residential mortgage loan which is not barred under ch. 494, F.S., or ch. 702, F.S.,
recording a notice of default or a notice of sale, or conducting a foreclosure sale, after a borrower
submits a foreclosure prevention alternative application offered by or through the mortgage
servicer or mortgage lender unless:
 The borrower fails to submit all document or information required to complete the
application within the allotted timeframe authorized by the mortgage servicer or mortgage
lender, which must be at least 30 calendar days after the date of the initial acknowledgement
of receipt of the application sent to the borrower.
 The mortgage servicer or mortgage lender makes written determination that the borrower is
not eligible for foreclosure prevention alternative, and any appeal period under subsection 5
has expired.
 The borrower does not accept a written offer for a foreclosure prevention alternative within
30 days after the date of the offer.
 The borrower accepts a written offer for a foreclosure prevention alternative, but defaults on
otherwise breaches the obligations under the foreclosure prevention alternative.

or mortgage lender is responsible for all single point of contact personnel are knowledgeable
about the borrower’s foreclosure prevention alternative status.

The mortgage servicer or mortgage lender must allow the borrower at least 30 calendars day to
appeal a denial.

F.S., or ch. 702, F.S., record a notice of default or a notice of sale, or conduct a foreclosure sale,
after a completed application is denied until the later of:
 60 calendar days after the borrower is sent the written statement under subsection 5; or
 If the borrower appeals the denial, the later of:
o 15 calendar days after the denial of the appeal;
o If the appeal is successful, 14 calendar days after a foreclosure prevention alternative
offered after the appeal is declined by the borrower; or
o If a foreclosure prevention alternative offered after the appeal is accepted, the date on
which the borrower fails to timely submit the first payment or otherwise breaches the
terms of the offer.

Section 9 amends s. 494.00115, F.S., related to exemptions under ch. 494, F.S., to update cross
references to the definition of “mortgage lender” in s. 494.001, F.S., to reflect renumbering as
necessitated by Section 1 of the bill.

Section 10 amends s. 494.0025, F.S., related to prohibited loan originator, mortgage broker, and
mortgage lender practices, to update a cross reference to the definition of “residential mortgage
loan” in s. 494.001, F.S., to reflect renumbering as necessitated by Section 1 of the bill.

Section 11 provides an effective date of July 1, 2022.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None. BILL: CS/SB 1706 Page 22

C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
Impairment of Contracts and Due Process
Both the Florida and the United States Constitutions prohibit the state from passing a law
impairing contractual obligations.
52
However, the Legislature may provide that a non-
criminal law, including one that affects existing contractual obligations, applies
retroactively in certain situations.
53
In determining whether a law may be applied
retroactively, courts first determine whether the law is procedural, remedial, or
substantive in nature.
54
A purely procedural or remedial law may apply retroactively
without offending the Constitution, but a substantive law generally may not apply
retroactively absent clear legislative intent to the contrary.
55
However, even where the
Legislature has expressly stated that a law will have retroactive application, a court may
reject that application if the law impairs a vested right, creates a new obligation, or
imposes a new penalty.
56
Further, where a law is designed to serve a remedial purpose, a
court may decide not to apply the law retroactively where doing so “would attach new
legal consequences to events completed before its enactment.”
57

Moreover, both the Florida and United States Constitutions prohibit the taking of life,
liberty, or property without due process of law.
58
The right to contract, as long as no
fraud or deception is involved and the contract is otherwise legal, is both a liberty and a
property right subject to due process protections, and the impairment of contracts may, in
certain instances, be viewed as the taking of property without due process.
59

For mortgage loans, the bill creates a foreclosure prevention alternative framework which
may impair the default notice provisions of current mortgage contracts and the right of
the mortgagee to initiate foreclosure preceding under the contract terms. Whether this
framework implicates the constitutional right to contract or the constitutional right to due
process, is for the courts to decide.

52
U.S. Const. art. I, s. 10; Art. I, s. 10, Fla. Const.
53
U.S. Const. art. I, ss. 9 and 10; Art. 1, s. 10, Fla. Const.
54
A procedural law merely establishes the means and methods for applying or enforcing existing duties or rights. A remedial law confers
or changes a remedy, i.e., the means employed in enforcing an existing right or in redressing an injury. A substantive law creates, alters, or
impairs existing substantive rights. Windom v. State, 656 So. 2d 432 (Fla. 1995); St. John’s Village I, Ltd. v. Dept. of State, 497 So. 2d 990
(Fla. 5th DCA 1986); McMillen v. State Dept. of Revenue, 74 So. 2d 1234 (Fla. 1st DCA 1999).
55
State Farm Mutual Automobile Ins. Co. v. Laforet, 658 So. 2d 55 (Fla. 1995).
56
Menendez v. Progressive Exp. Ins. Co., Inc., 35 So. 3d 873 (Fla. 2010).
57
L. Ross, Inc. v. R.W. Roberts Const. Co., 481 So. 2d 484 (Fla. 1986).
58
U.S. Const. amends. V and XIV; Art. I, s. 21, Fla. Const.
59
Miles v. City of Edgewater Police Dept., 190 So. 3d 171 (Fla. 1st DCA 2016); see, e.g., Griffin v. Sharpe, 65 So. 2d 751 (Fla. 1953)
(finding that a statute removing a specific deed restriction’s expiration date both impaired contracts and constituted a taking of private
property without due process). BILL: CS/SB 1706 Page 23

Access to Courts
In Kluger v. White,
60
the Florida Supreme Court evaluated to what extent the Legislature
may alter a civil cause of action. The Court stated that it would not completely prohibit
the Legislature from altering a cause of action, but neither would it allow the Legislature
"to destroy a traditional and long-standing cause of action upon mere legislative whim . .
. ."

The takeaway from Kluger and other relevant case law is that the Legislature may:
 Reduce the right to bring a cause of action as long as the right is not entirely
abolished.
61

 Abolish a cause of action that is not "traditional and long-standing" – that is, a cause
of action that did not exist at common law, and that did not exist in statute before the
adoption of the Florida Constitution's Declaration of Rights.
62

 Abolish a cause of action if the Legislature either:
o Provides a reasonable commensurate benefit in exchange;
63
or
o Shows an "overpowering public necessity for the abolishment of such right, and no
alternative method of meeting such public necessity can be shown."
64

For mortgage loans, the bill creates a foreclosure prevention alternative framework which
may impair the default notice provisions of current mortgage contracts and the right of
the mortgagee to initiate foreclosure preceding under the contract terms. Whether this
framework implicates the mortgagee’s access to courts, is for the courts to decide.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.

60
Kluger, 281 So. 2d 1 (Fla. 1973).
61
See Achord v. Osceola Farms Co., 52 So. 3d 699 (Fla. 2010).
62
See Anderson v. Gannett Comp., 994 So. 2d 1048 (Fla. 2008) (false light was not actionable under the common law); McPhail v. Jenkins,
382 So. 2d 1329 (Fla. 1980) (wrongful death was not actionable under the common law); see also Kluger, 281 So. 2d at 4 ("We hold,
therefore, that where a right of access to the courts for redress for a particular injury has been provided by statutory law predating the adoption
of the Declaration of Rights of the Constitution of the State of Florida, or where such right has become a part of the common law of the State
. . . the Legislature is without power to abolish such a right without providing a reasonable alternative . . . unless the Legislature can show an
overpowering public necessity . . .").
63
Kluger, 281 So. 2d at 4; see Univ. of Miami v. Echarte, 618 So. 2d 189 (Fla. 1993) (upholding statutory cap on medical malpractice
damages because the Legislature provided arbitration, which is a "commensurate benefit" for a claimant); accord Lasky v. State Farm Ins.
Co., 296 So. 2d 9 (Fla. 1974); but see Smith v. Dept. of Ins., 507 So. 2d 1080 (Fla. 1992) (striking down noneconomic cap on damages, which,
although not wholly abolishing a cause of action, did not provide a commensurate benefit).
64
Kluger, 281 So. 2d at 4-5 (noting that in 1945, the Legislature abolished the right to sue for several causes of action, but successfully
demonstrated "the public necessity required for the total abolition of a right to sue") (citing Rotwein v. Gersten, 36 So. 2d 419 (Fla. 1948);
see Echarte, 618 So. 2d at 195 ("Even if the medical malpractice arbitration statutes at issue did not provide a commensurate benefit, we
would find that the statutes satisfy the second prong of Kluger which requires a legislative finding that an 'overpowering public necessity'
exists, and further that 'no alternative method of meeting such public necessity can be shown'"). BILL: CS/SB 1706 Page 24

B. Private Sector Impact:
Currently, mortgage lenders, mortgage servicers, insurers, and insurance agents must
comply with federal regulations related to the residential mortgage industry and lender-
placed insurance. To the extent the provisions of the bill lack specificity in contrast to
current federal rules, the provisions of the bill may cause confusion for individuals
already in compliance.
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
Section 1 of the bill provides a definition of “foreclosure prevention alternative” which is
functionally identical to the definition of “loan modification” under s. 494.001(16), F.S., possibly
subjecting foreclosure prevention alternatives to the loan modification and fee provisions of s.
494.00296, F.S. The definition of “mortgage servicer” created by the bill conflicts with the
current definitions of “mortgage lender” under s. 494.001(24), F.S., which includes servicing a
mortgage loan, and “servicing a mortgage loan” under s. 494.001(36), F.S. This could lead to
confusion about the applicability of subsequent provisions of the bill to mortgage servicers.

Section 2 of the bill subjects reverse mortgage servicers to the periodic statement requirements of
12 CFR 1026.41. However, current Florida statutes do not provide a definition of a “reverse
mortgage” or “servicer of a reverse mortgage”. In the alternative, ch. 494, F.S., does not provide
a definition of the technical term “home equity conversion mortgage.” This could lead to
compliance and enforceability issues.

The OFR would enforce Section 5 of the bill amending ch. 494, F.S. OFR, however the agency,
does not have statutory authority to prevent mortgage foreclosures and ch. 494, F.S., does not
limit any statutory or common law right of any person to bring any action in any court for any
act involved in the mortgage loan business or right of the state to punish any person for any
violation of any law;
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and failure to comply with ch. 494, F.S. does not affect the validity or
enforceability of any mortgage loan, and no person acquiring a mortgage loan, as mortgagee or
assignee, is required to ascertain whether or not the provisions of ch. 494, F.S., have been
complied with.
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VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 494.001,
494.00115, and 494.0025.

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Section 494.002, F.S.
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Section 494.0022, F.S. BILL: CS/SB 1706 Page 25

This bill creates the following sections of the Florida Statutes: 494.00163, 494.00225, 494.0027,
627.4055, 635.0215, and 702.013.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Banking and Insurance on February 8, 2022:
The committee substitute:
 Removes the provision of s. 494.00163, F.S., requiring a servicer of a reverse
mortgage or small mortgage servicer to comply with the federal force-placed
insurance requirements of 12 CFR 1024.73, as contemplated in the underlying
bill;
 Creates s. 494.00164, F.S., to apply the federal force-placed insurance
requirements of 12 CFR 1024.37 to mortgage servicers. Newly created s.
494.00164, F.S., provides:
o A definition of lender-placed insurance, with exceptions to the definition;
o Bases for charging the borrower for lender-placed insurance;
o Requirements and timelines before charging borrowers for lender-placed
insurance;
o Notice requirements;
o Reminder notices;
o Procedures and timelines for renewing or replacing lender-placed
insurance;
o Mailing of notices; and
o Procedures and timelines for cancelling lender-placed insurance;
 Removes the burden on insurers and insurance agents from ensuring the mortgage
lender or mortgage servicer’s compliance with the federal force-placed insurance
requirements of 12 CFR 1024.37 before issuing a force-placed insurance policy,
as contemplated in ss. 627.4055 and 635.0215, F.S., respectively.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.