Sets the definition of "principal" for the purposes of limits on amount of flood insurance required by a mortgagee and clarifies applicability of the state law relative to certain federal programs and requirements.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8030
SPONSOR: Hunter TITLE OF BILL:
An act to amend the real property law, in relation to limits on amount
of flood insurance required by a mortgagee
PURPOSE OR GENERAL IDEA OF BILL:
This bill clarifies minimum flood insurance standards as established by
chapter 64 of the laws of 2025. Minimum flood insurance cannot exceed
the mortgagor's interest in a collateral property, including for the
full line of credit on that property, regardless of how much available
credit has been drawn down.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends section 283 of the real property law to ensure that
lenders can require flood insurance that covers the full amount of a
home equity line of credit, regardless of how much that line of credit
has been drawn down.
JUSTIFICATION:
Allowing flexibility in how much flood insurance is purchased has given
optionality to homeowners who are mandated to purchase flood insurance
to secure financing. While it is beneficial to fully ensure a home and
its contents against flood damage, this is not something every homeowner
can afford, and a particular property might have less risk exposure than
others while still having mandated flood insurance requirements. In
providing optionality to homeowners to only purchase what is necessary
to secure collateral for a loan, there was uncertainty over whether the
lender could require coverage for the full line of credit on a home
equity loan. This legislation clarifies that necessitating full coverage
against the maximum available credit is permissible, regardless of how
much credit has been utilized, ensuring that borrowers subject to manda-
tory flood insurance continue to have access to credit.
PRIOR LEGISLATIVE HISTORY:
New legislation.
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
This act shall take effect on the same date and in the same manner as
section 1 of chapter 64 of the laws of 2025.
STATE OF NEW YORK
________________________________________________________________________
8030
2025-2026 Regular Sessions
IN ASSEMBLY
April 22, 2025
___________
Introduced by M. of A. HUNTER -- read once and referred to the Committee
on Judiciary
AN ACT to amend the real property law, in relation to limits on amount
of flood insurance required by a mortgagee
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 283 of the real property law, as amended by chapter
2 64 of the laws of 2025, is amended to read as follows:
3 § 283. Limits on amount of flood insurance required by mortgagee. 1.
4 No mortgagee shall require a mortgagor to whom the mortgagee makes,
5 increases, extends, or renews any loan or line of credit secured by
6 improved residential real property to purchase or pay for flood insur-
7 ance on such residential real property: (1) at a coverage amount that
8 exceeds the lesser of the replacement value of the improvement on the
9 residential real property or the outstanding principal mortgage balance
10 as of the beginning of the year for which the policy shall be in effect;
11 or (2) that includes coverage for contents. In the case of an open-end
12 line of credit, "principal" shall include the full line of credit amount
13 regardless of the amount that has been drawn on the line of credit. In
14 each instance where a mortgagee requires a mortgagor to purchase or pay
15 for flood insurance on such residential real property, the mortgagee
16 shall provide notice to the mortgagor at the time the mortgagee is noti-
17 fied of the need to purchase or pay for flood insurance that states the
18 following in clear and conspicuous print: 'The flood insurance we are
19 requiring you to purchase may not be sufficient to pay for many needed
20 repairs after a flood and may not compensate you for your losses in the
21 property due to the flood. If you wish to protect your home or invest-
22 ment, you may wish to purchase more flood insurance than the amount we
23 are requiring you to buy.'
24 2. Any entity subject to the requirements of subdivision one of this
25 section and subject to the National Flood Insurance Act (42 U.S.C. §
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10859-01-5
A. 8030 2
1 4001 et. seq.) and implementing regulations issued by Board of Governors
2 of the Federal Reserve System, the Federal Deposit Insurance Corpo-
3 ration, the Office of the Comptroller of the Currency, the National
4 Credit Union Administration, or the Farm Credit Administration, as
5 applicable, shall not be in violation of subdivision one of this section
6 when it requires flood insurance in minimum required amount or for
7 contents under the National Flood Insurance Act and applicable regu-
8 lations.
9 § 2. This act shall take effect on the same date and in the same
10 manner as section 1 of chapter 64 of the laws of 2025, takes effect.
