Assembly Bill A5073A
New York recently passed Assembly Bill A5073A, which amends New York Real Property Law by adding new section 283. The new section limits the amount of flood insurance that a lender can require a borrower to obtain on improved residential property. Section 283 prohibits lenders from requiring borrowers to pay for flood insurance: (1) at a coverage amount that exceeds the outstanding principal mortgage balance as of the beginning of the year for which the policy shall be in effect; or (2) that includes coverage for contents.
When notifying a borrower that flood insurance is required, a lender must provide a notice at the same time, stating the following:
“Please note that the flood insurance we are requiring you to purchase will only protect your creditor or lender’s interest in your property. The insurance may not be sufficient to pay for many needed repairs after a flood and may not compensate you for your losses in the property due to the flood. If you wish to protect your home or investment, you may wish to purchase more flood insurance than the amount we are requiring you to buy.”
DocMagic will provide the new notice, New York Flood Insurance Notice (Form ID: NYFIN.MSC) as of January 9, 2025, in initial, closing and flood certification packages when the property is in New York and indicated as being in a flood zone.
Assembly Bill 9686
New York passed Assembly Bill A9686 to create a new requirement for mortgage lenders and banking organizations to provide a new pamphlet, “What Mortgage Applicants Need to Know,”, to residential mortgage applicants. The pamphlet will be created by the New York Department of Financial Services and posted to the department’s website in six different languages. Lenders may provide the pamphlet electronically, by email or by providing a hyperlink to the department’s web site. Assembly Bill A9686 adds the new section 35 to the New York Banking Law, and includes the requirements for the pamphlet, with an effective date of June 11, 2025. DocMagic will provide more information regarding the new pamphlet and its implementation when it is made available by the New York Department of Financial Services.
