Provides for the process of insurance settlement payments on claims arising under homeowners' insurance policies. (8/1/14)
Impact
This legislation impacts state laws by clarifying the procedures related to the distribution of insurance settlement payments and codifying the obligations of mortgage holders regarding excess funds. It grants a clear framework for mortgagors in Louisiana, ensuring they can access any surplus from insurance claims and thus alleviating some of the financial burdens that may arise from property damage. By imposing specific timeframes and penalties for non-compliance, the bill aims to enhance accountability among financial institutions dealing with insurance claims.
Summary
Senate Bill 479, introduced by Senator Gary Smith, addresses the handling and distribution of insurance settlement payments for homeowners' insurance claims. The bill mandates that mortgage holders return excess insurance proceeds to mortgagors within a specified timeframe upon receiving a proper request. Specifically, if a jointly payable insurance check is presented, and the mortgagor has endorsed it, the mortgage holder is obligated to endorse and return any excess funds after fulfilling certain conditions, such as covering the loan balances and six months of future accrued interest.
Sentiment
The sentiment around SB 479 appears to be largely positive among advocates for consumer protection, as it provides a clearer path for homeowners to recover excess funds after an insurance claim. Supporters argue that this is a necessary reform to protect mortgagors' financial interests and streamline the claims process with mortgage holders. However, there may be concerns regarding the administrative burden it places on mortgage holders and financial institutions, which could lead to discussions about feasibility and implementation.
Contention
Notable points of contention may arise from the penalties tied to non-compliance with the bill's requirements. If a mortgage holder fails to act within the 15-day window after receiving a written request, they can be penalized up to $150 per day. This provision could lead to debates on whether such penalties are excessive and how they might affect the mortgage lending market. Additionally, questions regarding the enforcement of these rules and the extent of the commissioner's regulatory powers may also surface during discussions.