§ 283. Limits on amount of flood insurance required by mortgagee. No
mortgagee shall require a mortgagor to whom the mortgagee makes,
increases, extends, or renews any loan or line of credit secured by
improved residential real property to purchase or pay for flood
insurance on such residential real property: (1) at a coverage amount
that exceeds the outstanding principal mortgage balance as of the
beginning of the year for which the policy shall be in effect; or (2)
that includes coverage for contents. In each instance where a mortgagee
requires a mortgagor to purchase or pay for flood insurance on such
residential real property, the mortgagee shall provide notice to the
mortgagor at the time the mortgagee is notified of the need to purchase
or pay for flood insurance that states the following in clear and
conspicuous print: 'Please note that the flood insurance we are
requiring you to purchase will only protect your creditor or lender's
interest in your property. The insurance may not be sufficient to pay
for many needed repairs after a flood and may not compensate you for
your losses in the property due to the flood. If you wish to protect
your home or investment, you may wish to purchase more flood insurance
than the amount we are requiring you to buy.'