(a) Any lender originating a loan secured by the borrower’s separate interest in a condominium project, as defined in Section 4125 or 6542, which requires earthquake insurance or imposes a fee or any other condition in lieu thereof pursuant to an underwriting requirement imposed by an institutional third-party purchaser shall disclose all of the following to the potential borrower:
(1) That the lender or the institutional third party in question requires earthquake insurance or imposes a fee or any other condition in lieu thereof pursuant to an underwriting requirement imposed by an institutional third-party purchaser.
(2) That not all lenders or institutional third parties require earthquake insurance or impose a fee or any other condition in lieu thereof pursuant to an underwriting requirement imposed by an institutional third-party purchaser.
(3) Earthquake insurance may be required on the entire condominium project.
(4) That lenders or institutional third parties may also require that a condominium project maintain, or demonstrate an ability to maintain, financial reserves in the amount of the earthquake insurance deductible.
(b) For the purposes of this section, “institutional third party” means the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, and other substantially similar institutions, whether public or private.
(c) The disclosure required by this section shall be made in writing by the lender as soon as reasonably practicable.
(Amended (as amended by Stats. 2012, Ch. 181, Sec. 41) by Stats. 2013, Ch. 605, Sec. 18. (SB 752) Effective January 1, 2014.)
Last modified: October 25, 2018