California

The relevant statutes are, for all lenders, Cal. Civ. Code § 14:2924.7 and Cal. Ins. Code §771. For lenders who are licensed under the California Finance Lenders Law, Cal. Financial Code §§22000 et seq. (“CA-SMLA”) the Finance Company Rules, 10 Cal. Admin. Code §§1400 et seq. (“CA-REGS”) also apply.

A. Actions lender may take:

(1) Cal. Civ. Code §14:2924.7 - The mortgage may enforce any mortgage provisions authorizing the mortgagee to accelerate or exercise other remedies under the mortgage if a mortgagor fails to pay insurance premiums or advances made by the mortgagee, whether or not the mortgagor's failure to pay insurance premiums or advances has impaired the security interest in the property.

(2) Cal. Insurance Code §771(a), (d) - Lenders may not require that borrowers negotiate insurance through a particular insurance agent or broker, but this section does not prevent lenders from furnishing required insurance if the borrower fails to furnish the insurance within such reasonable time or form as may be specified in the loan agreement. In addition, this section does not prevent lenders from exercising their right to furnish such insurance and charge the borrower's account with costs if the borrower fails to deliver required insurance at least 30 days prior the expiration of the policy.

B. Notices required:

(1) CA-REGS §10:1491(d) - If a CA-SMLA licensee elects to place required insurance or act under the borrower's authorization to write or procure additional insurance when the borrower's existing insurance expires, the finance company must notify the borrower at least 15 days before the existing insurance expires that it intends to write such additional insurance as authorized.

(2) CA-REGS §10:1491(e) - If a CA-SMLA licensee elects to act under a borrower's authorization to write or procure additional insurance when existing insurance is cancelled, the finance company must notify the borrower within 5 days after receiving an insurance cancellation notice that the finance company intends to write such additional insurance as authorized.

(3) CA-REGS §10:1491(f) - Any notice by the CA-SMLA licensee that it intends to place required insurance or sell additional insurance must state the type of insurance to be sold, the effective date, the amount of the premium, any change in the terms of the loan and the amount of any additional precomputed charges.

C. Coverage required: No express statutory provision.

D. Charges permitted: No express statutory provision.

E. Finance charge allowed on lender's payment: No express statutory provision.

Click here to view relevant California Code and Regulations.