State RegulationsFL specificDifficulty 2/5
A mortgage lender in Jacksonville tells a loan applicant that her loan will be denied unless she buys a life insurance policy from an agency affiliated with the lender. Under Florida law, this is
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Fla. Stat. 626.9541 (Chapter 626, Florida Statutes), it is an unfair trade practice to compel or attempt to compel, by threat or intimidation, the purchase of insurance. Conditioning unrelated credit approval on buying from a favored agency crosses from a legitimate requirement into coercion, and DFS can fine and suspend licensees who obtain business this way.
Why the other options are wrong
- B) A creditor may legitimately require adequate insurance to protect its collateral, but it may not force the borrower toward a particular seller through threats.
- C) Rebating involves returning part of a commission or other value to the buyer as an inducement; no return of value occurs here.
- D) Sliding concerns undisclosed supplementary charges within a policy sale, not a lender's threat to withhold credit.
Memory hook
Threaten to get the sale = coercion.