The original instrument was prepared by Xavier Alexander. The following digest,
which does not constitute a part of the legislative instrument, was prepared by
Michelle D. Ridge.
DIGEST
SB 446 Engrossed 2022 Regular Session Fred Mills
Present law provides that if payment of an insurance check or draft in settlement of a property
damage claim involving residential property in which another holds a mortgage on the property is
paid jointly to the claimant and the holder of the mortgage, then such settlement proceeds are to be
placed in an interest-bearing account and the interest accruing to the benefit of the claimant.
Proposed law replaces the term "claimant" with "borrower-payee".
Proposed law replaces the phrase "person holding the mortgage on the property" with "mortgagee
or mortgage servicer".
Proposed law provides that a mortgagee or mortgage servicer shall promptly endorse a check, draft,
or other negotiable instrument for insurance settlement proceeds payable jointly to the mortgagee
or mortgage servicer and the borrower-payee.
Proposed law provides that a mortgagee or mortgage servicer is not required to endorse a check,
draft, or other negotiable instrument for insurance settlement proceeds payable jointly to the
mortgagee or mortgage servicer and borrower-payee if the borrower-payee refuses to endorse the
instrument.
Proposed law provides that insurance settlement proceeds, related to damage of property or contents
insurance coverage, received by a mortgagee or mortgage servicer, which the mortgagee or mortgage
servicer has a security interest, shall be promptly deposited into a segregated account of a federally
insured financial institution, unless the insurance settlement proceeds are returned to the borrower-
payee or the instrument is missing the borrower-payee's endorsement.
Proposed law provides that insurance settlement proceeds, related to contents insurance coverage,
received by a mortgagee or mortgage servicer, which the mortgagee or mortgage servicer has no
security interest, shall be promptly distributed to the borrower-payee.
Proposed law provides that insurance settlement proceeds received by a mortgagee or mortgage
servicer that is related to additional living expenses shall be promptly distributed to the borrower-
payee.
Proposed law provides that a mortgagee or mortgage servicer is not required to remit the portion of
the insurance settlement proceeds related to additional living expenses and contents insurance
coverage unless it is determined which part of the settlement is related to additional living expenses
and content insurance. Proposed law provides that an insurance company can pay the borrower-payee directly for additional
living expenses or contents insurance coverage if the mortgagee or mortgage servicer has no security
interest in the contents.
Present law provides that once the property is replaced or repaired to the satisfaction of the claimant
and the person holding the mortgage, then any funds remaining in escrow shall be paid to the
claimant with any interest accrued while in escrow. Present law further provides that the holder of
the mortgage on the property is required to cooperate fully with the claimant and his insurer in
releasing funds in a timely manner for such replacement or repair of the damaged property.
Proposed law provides that once the property is replaced or repaired to the satisfaction of the
borrower-payee and mortgagee or mortgage servicer, then any funds remaining in a segregated
account shall be paid to the borrower-payee with any interest that accrued while the funds were in
the segregated account. Proposed law removes the requirement that the holder of the mortgage on
the property is required to cooperate fully with the claimant and his insurer in releasing funds in a
timely manner for such replacement or repair of the damaged property.
Present law defines "settlement proceeds" to be funds of $25,000 or more paid on insurance claims
for damage to residential immovable property as a result of Hurricane Katrina or Hurricane Rita
which are held in interest-bearing accounts for 60 days or more by the lender or loan servicer.
Present law further provides that interest shall accrue on settlement proceeds after being held in
escrow for more than 30 days.
Proposed law provides that interest shall accrue on insurance settlement proceeds that are $25,000
or more, after being held by the mortgagee or mortgage servicer segregated account for more than
30 days. Proposed law deletes the definition of "settlement proceeds" under present law.
Present law provides that compliance with Fannie Mae or Freddie Mac servicing guidelines for
payment of interest on property damage claim funds held in escrow by the lender or loan servicer
constitutes compliance. Proposed law retains this provision.
Present law provides that if a mortgage holder is presented with a jointly payable insurance proceed
check or draft, that is endorsed by mortgagor and related to residential damage to immovable
property resulting from Hurricane Katrina or Hurricane Rita, or both, and the mortgage holder
receives a written request from the borrower to release excess funds then the mortgage holder shall
have 30 days to return excess funds.
Proposed law retains present law but removes the provision that the damage must be a result of
Hurricane Katrina or Hurricane Rita.
Present law defines "excess funds" and provides that the mortgage holder holding funds in escrow
shall return all funds considered to be excess funds. Proposed law retains present law and replaces
the term "mortgage holder" with "mortgagee or mortgage servicer".
Effective August 1, 2022. (Amends R.S. 6:337 and 338(A), (B), and (C))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Commerce, Consumer
Protection, and International Affairs to the original bill
1. Makes technical change.