410

LAWS OF MARYLAND

[Ch. 49

(1)  SUBJECT TO THE PROVISIONS OF THIS SECTION,
A LENDER MAY REQUIRE A BORROWER:

(i) TO INSURE ANY TANGIBLE PERSONAL PROPERTY
WHICH IS SECURITY FOR A LOAN, EXCEPT HOUSEHOLD GOODS,
AGAINST ANY SUBSTANTIAL RISK OF LOSS, DAMAGE, OR
DESTRUCTION; AND

(ii) TO OBTAIN LIFE AND ACCIDENT AND HEALTH
INSURANCE, BUT ONLY ON ONE PERSON OBLIGATED ON ANY ONE
LOAN.

(2)     A LENDER MAY NOT REQUIRE THAT THE
INSURANCE BE PURCHASED THROUGH A PARTICULAR BROKER,
AGENT, OR INSURANCE COMPANY.

(3)   THE LENDER MAY:

(i) ASSIST AN APPLICANT OR ACT WITH HIM IN
FORWARDING AN APPLICATION TO A BROKER OR AGENT; AND

(ii) RECEIVE AND TRANSMIT PREMIUMS OR OTHER
IDENTIFIABLE CHARGES FOR THE INSURANCE.

(4)   IF PREMIUMS OR OTHER IDENTIFIABLE CHARGES
FOR THE INSURANCE ARE PAID BY THE LENDER, HE MAY:

(i) DEDUCT THEM FROM THE PROCEEDS OF THE
LOAM; OR

(ii) INCLUDE THEM AS PART OF THE PRINCIPAL OF
THE LOAN.

(5)   A LENDER MAY BE COINSURED OR PROTECTED TO
THE EXTENT OF HIS INTEREST BY A MORTGAGEE CLAUSE.

(B) LIMITATION ON INSURANCE COVERAGE.

(1)   THE AMOUNT OF PROPERTY INSURANCE MAY NOT
EXCEED THE REASONABLE VALUE OF THE PROPERTY INSURED, AND
THE TERMS AND CONDITIONS OF THE INSURANCE POLICY SHALL BE
REASONABLE AND APPROPRIATE IN RELATION TO THE PARTICULAR
LOAN TRANSACTION.

(2)    THE INITIAL AMOUNT OF LIFE INSURANCE MAY
NOT EXCEED THE ORIGINALLY SCHEDULED TOTAL OF PAYMENTS
UNDER THE LOAN CONTRACT. IF THE LOAN IS REPAYABLE IN
SUBSTANTIALLY EQUAL INSTALLMENTS, THE AMOUNT OF LIFE
INSURANCE AT ANY TIME MAY NOT EXCEED THE THEN SCHEDULED
UNPAID TOTAL OF PAYMENTS.

(3)    ACCIDENT AND HEALTH INSURANCE SHALL
PROVIDE FOR: