Ch. 421

2004 LAWS OF MARYLAND

(II)     "[property] PROPERTY insurance coverage" means property
insurance against losses caused by perils that commonly are covered in insurance
policies described with terms similar to "standard fire" or "standard fire with
extended coverage".

(III)   "FLOOD INSURANCE COVERAGE" MEANS FLOOD INSURANCE
AGAINST LOSSES CAUSED BY FLOODING THAT ARE COVERED UNDER A POLICY
ISSUED UNDER THE NATIONAL FLOOD INSURANCE ACT BY:

1.       THE FEDERAL GOVERNMENT; OR

2.       AN INSURER

(2)     A lender may not require a borrower, as a condition to receiving or
maintaining a loan secured by a first mortgage or first deed of trust, to provide or
purchase property insurance coverage against risks to any improvements on any real
property in an amount exceeding the replacement value of the improvements on the
real property.

(3)      A LENDER MAY NOT REQUIRE A BORROWER AS A CONDITION TO
RECEIVING OR MAINTAINING A LOAN SECURED BY A FIRST MORTGAGE OR FIRST
DEED OF TRUST, TO PROVIDE OR PURCHASE FLOOD INSURANCE COVERAGE IN AN
AMOUNT EXCEEDING THE REPLACEMENT VALUE OF THE IMPROVEMENTS ON THE
REAL PROPERTY.

[(3)] (4) In determining the replacement value of the improvements on
any real property, the lender may:

(i) Accept the value placed on the improvements by the insurer; or

(ii) Use the value placed on the improvements that is determined
by the lender's appraisal of the real property.

[(4)] (5) A lender may not require that the insurance be purchased
through a particular insurance producer or insurance company.

(b) (1) A violation of this section shall entitle the borrower to:

(i) Seek an injunction to prohibit the lender who has engaged or is
engaging in the violation from continuing or engaging in the violation;

(ii) Reasonable attorney's fees; and

(iii) Damages directly resulting from the violation.

(2) A violation of this section does not affect the validity of the first
mortgage or first deed of trust securing the loan.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2004.

Approved May 11, 2004.

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