The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Thomas L. Tyler.
DIGEST
SB 159 Original 2017 Regular Session Lambert
Present law requires that settlement proceeds paid in settlement of a damage claim on residential
property on which another person holds a mortgage be placed in escrow and earn interest. Defines
"settlement proceeds" to be funds equal to $25,000 or more paid on an insurance claim for damage
to residential immovable property as a result of Hurricane Katrina or Hurricane Rita. Requires paid
on escrow funds held for more than 30 days.
Proposed law retains these provisions but removes the $25,000 limitation and removes references
that the funds be paid as a result of hurricanes Katrina and Rita.
Proposed law requires that while funds are in escrow, the mortgagee is prohibited from placing the
mortgagor in default or initiating foreclosure proceedings. Requires suspension of interest accrual
and mortgage payments due while the funds are in escrow. Requires the mortgagee to extend the
term of the outstanding mortgage for the same period of time as the suspension.
Present law requires that when damaged property is replaced or repaired to the satisfaction of the
mortgagee and the mortgagor, then the escrow balance is to be paid to the mortgagor with all accrued
interest. Requires that the mortgagee cooperate fully with the mortgagor and his insurer in releasing
the funds timely.
Proposed law retains these provisions but changes "claimant" to "mortgagor" and changes "person
holding the mortgage" to "mortgagee". Provides that the mortgagee cooperate in good faith with the
mortgagor in releasing the funds.
Proposed law requires payment of escrow funds after notification to the mortgagee, with sufficient
proof, that the property has been replaced or the repair completed. Requires release of funds by the
mortgagee within 30 days after receipt of sufficient proof that the property has been replaced or
repaired. Provides that failure of the mortgagee to release the funds to the mortgagor within this 30
day period shall cause the mortgagee to be liable to the mortgagor for $2,500 in damages plus
reasonable attorney fees and costs.
Effective August 1, 2017.
(Amends R.S. 6:337)