New York

The relevant statute is N.Y. Real Property Law §254(4).

A. Actions lender may take: N.Y. Real Property Law §254(4)(a) - A mortgage covenant stating "that the mortgagor will keep the buildings on the premises insured against loss by fire for the benefit of the mortgagee; that he will assign and deliver the policies to the mortgagee; and that he will reimburse the mortgagee for any premiums paid for insurance made by the mortgagee on the mortgagor's default in so insuring the buildings or in so assigning and delivering the policies," will be construed to mean that the mortgagor must keep buildings on the mortgaged land insured against loss or damage by fire. In addition, this clause will be construed to mean that the mortgage lender may acquire and pay premiums for such fire insurance up to the full insurable value of the buildings on the mortgaged premises, and that the mortgagor must, upon demand by the mortgage lender, repay the mortgage lender for the premiums paid, along with interest from the time of payment.

B. Notices required: No express statutory provision.

C. Coverage required: No express statutory provision. Note: In Circular Letter 1995-14 to licensed property casualty insurers, the New York Property/Casualty Insurance Bureau (the "Bureau") noted that force-placed insurance is generally limited to the outstanding loan balance. However, the Bureau also stated that some force-placed insurance programs provide for dual-interest policies, and that governmental guarantors or secondary market lenders require insurance on a replacement value basis. The Bureau concluded that dual-interest policies may be appropriate where the insurance clause in the mortgage agreement actually provides for force placement of "replacement value" coverage. The Bureau also concluded that force-placed insurance should be limited to the buildings located on the property, and limited in amount according to the limits set forth in the insurance clause of the mortgage agreement. The Bureau stated that force-placed insurance should not cover the personal property or personal liability of the borrower, since the lender could become an unlicensed broker by force-placing such additional insurance.

D. Charges permitted: No express statutory provision. Note: In Circular Letter 1995-14 to licensed property casualty insurers, the New York Property/Casualty Insurance Bureau stated that insurers may not reimburse lenders for services such as tracking insurance coverage, obtaining force-placed coverage where voluntary coverage lapses, paying the premium, and recovering the amount of the premium from the borrower. The Bureau stated that the lender is acting in its own interests when the lender performs these services, and may become an unlicensed insurance agent or broker by receiving payments for those services.

E. Finance charge allowed on lender's payment: N.Y. Real Property Law §254(4) - The mortgage covenant set forth in A., above, will be construed to mean that the mortgagor must pay interest to the mortgage lender from the date the mortgage lender has to pay for any fire insurance premiums.

Click here to view relevant New York Code and Regulations.