By the Division of Banks

Mortgage Lender's Ability To Offer Insurance

Mass. Gen. Laws chapter 255, section 12G permits creditors to sell group credit life and disability insurance to borrowers in connection with a loan for personal, family or household purposes, provided that the statute's conditions are met. These conditions include: filing a schedule of rates, with the Division of Insurance, for each type of insurance sold; limiting the insurance amount to the greater of the scheduled amount or actual amount owing on the loan, exclusive of unearned finance charges; and providing for a rebate of the insurance premium in the event of prepayment of the loan. In addition, a specific disclosure notice, stating that the borrower cannot be denied credit simply for refusing to purchase insurance, must be provided to the borrower; said section 12G contains the exact language.