                                 CODE OF VIRGINIA

TEMPORARY CONTRACTS OF INSURANCE PERMITTED (§ 38.2-205.1)

A lender engaged in making or servicing real estate mortgage or deed of trust
loans on one to four family residences shall accept as evidence of insurance a
temporary written contract of insurance meeting the requirements of § 38.2-2112
and issued by any duly licensed agent, broker, or insurance company. Nothing
herein prohibits the lender from disapproving such insurer provided such
disapproval is reasonable. Such lender need not accept a binder unless such
binder (i) includes the name and address of the insured, name and address of the
mortgagee, a description of the insured collateral, and a provision that it may
not be cancelled within the term of the binder except upon ten days&#8217;
written notice to the mortgagee; (ii) is accompanied by a paid receipt for one
year&#8217;s premium, except in the case of the renewal of a policy subsequent
to the closing of a loan; and (iii) includes an undertaking of agent to use his
best efforts to have the company issue a policy within forty-five days, unless
the binder is cancelled. The Bureau of Insurance may by administrative letter
require binders to contain such additional information as may be necessary to
permit such binders to comply with the reasonable requirements of the Federal
National Mortgage Association or Federal Home Loan Mortgage Corporation for
purchase of mortgage loans.

HISTORY: 1987, c. 10.