(a) (1) In this section the following words have the meanings indicated. (2) "Covered loan" means a mortgage loan made under this subtitle that meets the criteria for a loan subject to the federal Home Ownership and Equity Protection Act set forth in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026, except that the comparison percentages for the mortgage loan shall be one percentage point less than those specified in 15 U.S.C. § 1602(bb), as modified from time to time by Regulation Z, 12 C.F.R. Part 1026. (3) "Credit health insurance" has the meaning stated in § 13-101 of the Insurance Article. (4) "Credit involuntary unemployment benefit insurance" has the meaning stated in § 13-101 of the Insurance Article. (5) (i) "Credit life insurance" means insurance on the life of a borrower that provides indemnity for repayment of a specific loan or credit transaction on the death of the borrower. (ii) "Credit life insurance" does not include life insurance payable to a beneficiary designated by the borrower other than the obligee of a specific loan or credit transaction. (6) "Mortgage loan" has the meaning stated in § 11-501 of the Financial Institutions Article. (7) "Premium" has the meaning stated in § 1-101 of the Insurance Article. (8) "Single premium coverage" means insurance for which the total premium is payable in one lump sum at or before the time coverage commences. (b) Subject to the provisions of this section, a lender may require a borrower to insure and may collect from the borrower the premiums paid for insurance on: (1) Any real property securing the loan; (2) The life of any person obligated on the loan; and (3) The title of any real property securing the loan. (c) Subject to the provisions of this section, the licensee may collect from the borrower, at the borrower's option, the premiums paid for credit health insurance covering any one borrower obligated on the loan. The insurance may not provide benefits exceeding the actual period of disability. (d) (1) Subject to the provisions of subsections (e), (f), (g), and (h) of this section, a lender may collect from a borrower, at the option of the borrower, the premiums paid for credit involuntary unemployment benefit insurance covering the borrower. (2) The availability of credit involuntary unemployment benefit insurance to a borrower may not be made contingent on the purchase of any other type of insurance permitted under this section. (e) (1) Except as provided in this subsection, a lender making a covered loan may not finance as a part of the covered loan transaction single premium coverage for: (i) Credit health insurance; (ii) Credit involuntary unemployment benefit insurance; or (iii) Credit life insurance. (2) Nothing in this subsection shall prohibit the financing of any insurance coverage in connection with a mobile home or its premises, as those terms are defined in § 8A-101 of the Real Property Article. (f) (1) (i) 1. In this paragraph the following words have the meanings indicated. 2. "Improvements" means buildings or structures erected upon or affixed to real property that enhance the value of the real property. 3. "Property insurance coverage" means property insurance against losses caused by perils that commonly are covered in insurance policies described with terms similar to "standard fire" or "standard fire with extended coverage". 4. A. "Replacement cost" means the amount needed to repair damage to or rebuild improvements on real property to restore the improvements to their pre-loss condition. B. "Replacement cost" does not include the value of land. (ii) A lender may not require a borrower, as a condition to receiving or maintaining a secondary mortgage loan, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement cost of the improvements on the real property. (iii) In determining the replacement cost of the improvements on any real property, the lender may: 1. Accept the value placed on the improvements by the insurer; or 2. Use the value placed on the improvements by the lender's appraisal of the improvements. (iv) Any property insurance coverage required by a lender shall bear a reasonable relation to the existing risk of loss. (v) A violation of this paragraph or of subsection (h) of this section shall entitle the borrower to: 1. Seek an injunction to prohibit the lender who has engaged or is engaging in the violation from continuing or engaging in the violation; 2. Reasonable attorney's fees; and 3. Damages directly resulting from the violation. (vi) A violation of this paragraph or of subsection (h) of this section does not affect the validity of the mortgage or deed of trust securing the secondary mortgage loan. (2) The amount of credit life insurance may not exceed the total original amount payable under the loan contract. (3) The credit health insurance shall provide: (i) Benefits not exceeding the then scheduled unpaid total of payments of the loan; (ii) A waiting period for the collection of benefits of at least 14 days; and (iii) Periodic benefits, the amount of each of which may not exceed the originally scheduled total of payments under the loan contract, divided by the number of installments. (4) The credit involuntary unemployment benefit insurance may not provide that: (i) The periodic benefits shall continue for a period exceeding the actual period of the borrower's involuntary unemployment; or (ii) The aggregate amount of periodic benefits payable in the event of a borrower's involuntary loss of employment shall exceed the scheduled unpaid total of payments remaining on the loan on the date of the borrower's involuntary loss of employment. (5) A lender may not require a borrower to purchase credit involuntary unemployment benefit insurance as a condition of obtaining a loan. (g) Under this subtitle, insurance may be obtained only: (1) From an insurance company qualified to do business in the State; and (2) At rates not exceeding those approved by the Insurance Administration. (h) A lender may not require the borrower to purchase any insurance: (1) Through a particular insurance producer or insurance company; or (2) From the lender.
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