69th Legislature approves HB 114 regulating insurance in real estate credit agreements

House Bill 114, introduced in the Montana Legislature on April 8, 2025, aims to reform the relationship between lenders and borrowers regarding insurance requirements tied to mortgage loans. The bill seeks to protect consumers from potentially predatory practices by establishing clear guidelines on how lenders can solicit and handle insurance related to real estate transactions.

At the heart of HB 114 is a set of provisions designed to ensure that lenders cannot require borrowers to purchase insurance from specific providers or impose unreasonable conditions on insurance contracts. Notably, the bill prohibits lenders from soliciting insurance until a written commitment for a loan has been made, thereby preventing pressure tactics that could lead to hasty decisions by borrowers. Additionally, it restricts lenders from rejecting insurance contracts based on arbitrary criteria, ensuring that all insurance options are evaluated fairly.

The bill also addresses financial transparency by forbidding lenders from charging separate fees for handling insurance contracts, which could add unnecessary costs for borrowers. Furthermore, it mandates that any use of insurance information by lenders must have prior written consent from the borrower, safeguarding consumer privacy.

Debate surrounding HB 114 has highlighted concerns from both sides. Proponents argue that the bill is a necessary step to protect consumers from exploitative lending practices and to promote fair competition among insurance providers. Critics, however, warn that overly stringent regulations could lead to increased costs for lenders, which may ultimately be passed on to consumers in the form of higher interest rates.

The implications of HB 114 are significant, as it could reshape the landscape of mortgage lending in Montana. Experts suggest that if passed, the bill may lead to a more transparent and equitable lending environment, fostering greater trust between borrowers and lenders. As the legislative session progresses, stakeholders will be closely monitoring the bill's journey through the legislature, anticipating potential amendments and the final outcome.