Makes clarifying changes in regards to the purchase of flood insurance by mortgagors that exceeds certain limits upon a mortgagees request; amends the effectiveness thereof.
Summary
A02056 makes clarifying changes to New York’s existing law limiting the amount of flood insurance a mortgage lender may require a borrower to purchase for improved residential real property. The bill keeps the core rule that a mortgagee cannot require flood insurance above the lesser of the home’s replacement value or the outstanding principal mortgage balance at the start of the policy year, and it continues to prohibit requiring contents coverage as part of that mandated policy.
The bill also revises the required borrower notice. It updates the warning language lenders must provide so borrowers are told that the required flood insurance may not be enough to cover all flood-related repairs or losses and that they may want to buy additional coverage if they want broader protection. In addition, the bill changes the effective date of the 2024 chapter it amends, moving it from immediate effectiveness to the ninetieth day after becoming law, while preserving coordination with the underlying 2024 enactment.
Impact
The bill amends section 283 of the Real Property Law and a related 2024 chapter to clarify lender obligations when requiring flood insurance on mortgaged residential property. It affects mortgagees, mortgagors, and residential borrowers in flood-prone or flood-insurance-sensitive transactions by limiting lender-required coverage amounts and standardizing disclosure language. The measure does not create a new insurance mandate; rather, it refines the existing statutory framework and adjusts timing for implementation.
Sentiment
The available voting record shows strong, unanimous support in both chambers, with favorable committee votes and unanimous floor passage in the Assembly and Senate. The absence of recorded opposition and the bill’s characterization as a clarifying measure suggest broad agreement that the changes are technical and consumer-protective rather than controversial. Overall, the sentiment appears positive and largely procedural.
Contention
There is little evidence of substantive contention in the available record. The main policy issue embedded in the bill is the balance between lender protection and borrower protection: lenders may want sufficient coverage to protect their collateral, while borrowers are warned that the required amount may not fully cover their losses. The bill’s clarification of notice language and its delayed effective date appear designed to reduce ambiguity and implementation issues, not to alter the underlying policy direction.
Same As
Makes clarifying changes in regards to the purchase of flood insurance by mortgagors that exceeds certain limits upon a mortgagees request; amends the effectiveness thereof.
Makes clarifying changes in regards to the purchase of flood insurance by mortgagors that exceeds certain limits upon a mortgagees request; amends the effectiveness thereof.
Sets the definition of "principal" for the purposes of limits on amount of flood insurance required by a mortgagee; clarifies applicability of the state law relative to certain federal programs and requirements.
Sets the definition of "principal" for the purposes of limits on amount of flood insurance required by a mortgagee; clarifies applicability of the state law relative to certain federal programs and requirements.