• Mortgage insurance laws protect the insured from unfair practices.house image by Cora Reed from Fotolia.com
  
  Mortgage insurance or a mortgage guaranty is the cover used by lenders to offset any losses on a property that falls into foreclosure or is set up for a short sale. It is essential coverage on a property and is also used to back securities on the properties for investments. The rates vary and can be expensive for individual homeowners. In 2007 the mortgage insurance payments became tax deductible which allowed it to become more affordable for homeowners. Each state has its own laws to protect homeowners and Florida is no different.
  
  

Licensing

• A mortgage guaranty company must be licensed and organized under Florida law as a company insuring lenders against loss for non-payment in regards to a mortgage or rent, as well as if they provide a contingency reserve to protect lender from loss due to economic reasons. In order to be licensed, a mortgage guaranty corporation must provide for approval of procedures and rules they will follow. An insurer cannot do business in the state of Florida without at least $50 million in policy holders at the time of licensing and maintains at least $35 million after licensing.
  
  

Policy and Rates

• Rates may not be excessive or damaging to the insurer and insured and also can not damage the competition's ability to do business. All criteria used to decide rates by the insurer must be available and filed in the Florida Insurance Guaranty Association office before being used. All forms used by the insured must be filed within 30 days of use and most also state that the Florida Insurance Guaranty Association does not cover the insurance policy. All filings must be available to the public for viewing.
  
  

Limitations

• An insurer may not insure mortgages that are offered for sale by way of mailings, advertisements or in the newspaper as a way to gain profit due to the value of the insurance instead of the value of the property. Also if the advertisement or mailing expresses that the mortgage guaranty insurance is regulated by the state or federal government the property can be insured but a state licensed insurer.
  
  

Restoration of Property

• The insurance policies in the state of Florida must clearly state that in the event of default that the insured must restore the property back to the condition at the time when the insurance went into effect except for reasonable wear and tear.