All banks and lending institutions doing business in this state, whether acting under state or federal authority, which include, but are not limited to: (1) a bank, savings bank, or trust company, as defined in title 19, its affiliates or subsidiaries, (2) a bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, (3) mortgage companies and mortgage services, and (4) any other individual, corporation, partnership, or association authorized to take deposits and/or to makes loans of money under the provisions of title 19, that in connection with a loan secured by residential property situated in the state of Rhode Island of four (4) or fewer units and occupied or to be occupied in whole or in part by the mortgagor, require the mortgagor to escrow for hazard insurance premiums, shall pay the annual premium to the insurance company on or before the last to occur of the following dates: (A) ten (10) days after receipt of the annual insurance premium bill, approved in writing by the mortgagor if required by the bank or lending institution provided the bank or lending institution has notified the mortgagor in writing that the mortgagor’s approval is required, or (B) seven (7) days before the effective date of the hazard insurance policy; provided, that no payment shall be required unless the mortgagor has sufficient funds escrowed for payment of the annual premium.