§338. Insurance settlement proceeds; return of excess funds; enforcement

A. If a mortgage holder is presented with a jointly payable insurance proceeds check or draft for residential immovable property damage resulting from either Hurricane Katrina or Hurricane Rita, or both, which contains the mortgagor's endorsement, and the mortgage holder receives a written request from the borrower to release excess funds, then all mortgage holders shall have thirty days after receiving such request and such check or draft to provide their endorsements and return all excess funds provided for in Subsection B of this Section.

B. The mortgage holder holding funds in escrow shall return to the mortgagor all funds considered to be excess funds. For purposes of this Section, the term "excess funds" shall mean insurance funds in excess of the following:

(1) All loan balances of any mortgage holder named as payee on the insurance claim check or draft calculated as of the thirtieth day following receipt of the request and check or draft as outlined in Subsection A of this Section; and

(2) Six months of future accrued interest as calculated pursuant to the terms of the mortgage loans and calculated from the date of the payoff explained in Paragraph (B)(1) of this Section.

C.(1) The commissioner may impose civil money penalties of up to one hundred fifty dollars per day of each day a mortgage holder subject to his jurisdiction fails to comply with the requirements of Subsection B of this Section.

(2) Penalties shall be due and payable upon notice of their assessment to the mortgage holder, unless set aside after administrative hearing pursuant to the provisions of the Administrative Procedure Act. The assessment of civil money penalties shall be final and definitive and subject to enforcement by the commissioner through judicial proceedings.

D. The provisions of this Section shall be applicable to state-chartered federally insured financial institutions and their affiliates to the same extent that such provisions are applicable to federally chartered financial institutions.

E. The commissioner shall have the power to enact and promulgate rules and regulations as may be necessary or appropriate to implement the provisions of this Section.

Acts 2006, 1st Ex. Sess., No. 21, §1, eff. April 1, 2006.