Code of Virginia

Code of Virginia
Title 6.2. Financial Institutions and Services
6/18/2019

Chapter 16. Mortgage Lenders and Mortgage Brokers.

§ 6.2-1600. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Entity" means any corporation, partnership, association, cooperative, limited liability company, trust, joint venture, or other legal or commercial entity.

"Licensee" means a mortgage lender or mortgage broker licensed by the Commission pursuant to this chapter.

"Mortgage broker" means any person who directly or indirectly negotiates, places or finds mortgage loans for others, or offers to negotiate, place or find mortgage loans for others. Any licensed mortgage lender that, pursuant to an executed originating agreement with the Virginia Housing Development Authority, acts or offers to act as an originating agent of the Virginia Housing Development Authority in connection with a mortgage loan shall not be deemed to be acting as a mortgage broker with respect to such mortgage loan but shall be deemed to be acting as a mortgage lender with respect to such mortgage loan, notwithstanding that the Virginia Housing Development Authority is or would be the payee on the note evidencing such mortgage loan and that the Virginia Housing Development Authority provides or would provide the funding of such mortgage loan prior to or at the settlement thereof.

"Mortgage lender" means any person who directly or indirectly originates or makes mortgage loans.

"Mortgage loan" means a loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage or deed of trust upon any interest in one- to four-family residential property located in the Commonwealth, regardless of where made, including the renewal or refinancing of any such loan, but excluding (i) loans to persons related to the lender by blood or marriage and (ii) loans to persons who are bona fide employees of the lender. "Mortgage loan" shall not include any loan secured by a mortgage or deed of trust upon any interest in a more than four-family residential property or property used for a commercial or agricultural purpose.

"Nationwide Mortgage Licensing System and Registry" or "Registry" means the mortgage licensing and registration system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

"Person" means any individual or entity.

"Principal" means any person who, directly or indirectly, owns or controls a 10 percent or greater interest in any entity.

"Residential property" means improved real property used or occupied, or intended to be used or occupied, for residential purposes.

1987, c. 596, § 6.1-409; 1993, c. 183; 2006, c. 422; 2008, c. 863; 2010, cc. 146, 665, 794, 831; 2012, cc. 53, 188.

§ 6.2-1601. License requirement.

A. No person shall engage in business as a mortgage lender or a mortgage broker, or hold himself out to the general public to be a mortgage lender or a mortgage broker, unless such person has first obtained a license under this chapter. Subject to such conditions as the Commission may prescribe, an individual who is a bona fide employee or exclusive agent of a licensee may negotiate, place or find mortgage loans without being licensed as a mortgage broker.

B. Every mortgage lender and mortgage broker required to be licensed under this chapter shall register with the Registry and be subject to such registration and renewal requirements as may be established by the Registry, in addition to any requirements of this chapter. In adopting rules and regulations pursuant to § 6.2-1613, the Commission shall include any terms, conditions, or requirements applicable to such registration and renewal. Any fees required by the Registry shall be separate and apart from any fees imposed by this chapter. The Commission, at its discretion, may collect any registration and renewal fees on behalf of the Registry and remit such fees to the Registry or permit the Registry to collect any fees imposed by this chapter and remit such fees to the Commission.

C. In connection with its implementation and administration of this chapter, the Commission may establish agreements or contracts with the Registry or other entities designated by the Registry to collect, distribute, and maintain information and records, and process fees related to mortgage lenders and mortgage brokers required to be licensed under this chapter. In establishing such agreements or contracts, the Commission shall not be subject to the Virginia Public Procurement Act (§ 2.2-4300 et seq.).

1987, c. 596, § 6.1-410; 1990, c. 4; 2001, c. 24; 2010, cc. 146, 794, 831.

§ 6.2-1602. Persons exempt from chapter.

The following shall be exempt from the licensing and other provisions of this chapter:

1. Lenders making three or fewer mortgage loans in any period of 12 consecutive months;

2. Any person subject to the general supervision of or subject to examination by the Commissioner pursuant to Chapter 7 (§ 6.2-700 et seq.), 8 (§ 6.2-800 et seq.), 11 (§ 6.2-1100 et seq.), 13 (§ 6.2-1300 et seq.), or 14 (§ 6.2-1400 et seq.);

3. Any lender authorized to engage in business as a bank, savings institution, or credit union under the laws of the United States or any state, and subsidiaries and affiliates of such entities which lender, subsidiary or affiliate is subject to the general supervision or regulation of or subject to audit or examination by a regulatory body or agency of the United States or any state;

4. Nonprofit corporations making mortgage loans to promote home ownership or improvements for the disadvantaged;

5. Agencies of the federal government, or any state or municipal government, or any quasi-governmental agency making or brokering mortgage loans under the specific authority of the laws of any state or the United States;

6. Persons acting as fiduciaries with respect to any employee pension benefit plan qualified under the Internal Revenue Code who make mortgage loans solely to plan participants from plan assets;

7. Any insurance company;

8. Persons licensed by the Commonwealth as attorneys, real estate brokers, or real estate salesmen, not actively and principally engaged in negotiating, placing or finding mortgage loans, when rendering services as an attorney, real estate broker or real estate salesman; however, a real estate broker or real estate salesman who receives any fee, commission, kickback, rebate or other payment for directly or indirectly negotiating, placing or finding a mortgage loan for others shall not be exempt from the provisions of this chapter;

9. Persons acting in a fiduciary capacity conferred by authority of any court;

10. Persons licensed as small business investment companies by the Small Business Administration;

11. The Virginia Housing Development Authority and persons who (i) are approved by the Virginia Housing Development Authority pursuant to its rules and regulations to act as field originators with respect to mortgage loans made under its programs and (ii) are not engaged in any other activities for which a license is required to be obtained under this chapter; and

12. Persons who make loans or extend credit for any part of the purchase price of real property owned by such person.

1987, c. 596, § 6.1-411; 1989, cc. 411, 667; 1992, c. 156; 1995, c. 62; 1996, c. 126; 2003, c. 386; 2010, c. 794; 2012, cc. 53, 188.

§ 6.2-1603. Application for license; form; content; fee.

A. An application for a license under this chapter shall be made in writing, under oath and on a form provided by the Commissioner.

B. The application shall set forth:

1. The name and address of the applicant;

2. If the applicant is a firm or partnership, the name and address of each member of the firm or partnership;

3. If the applicant is a corporation or a limited liability company, the name and address of each officer, director, registered agent and each principal;

4. The address of each office at which the business to be licensed is to be conducted;

5. Whether the applicant seeks a license to act as a mortgage lender, mortgage broker, or both; and

6. Such other information concerning the financial responsibility, background, experience and activities of the applicant and its members, officers, directors, and principals as the Commissioner may require.

C. The application shall be accompanied by payment of the following fees:

1. A license application fee of:

a. In the case of an application for a license to act as a mortgage lender or a mortgage broker, $500; or

b. In the case of an application for a license to act as both mortgage lender and mortgage broker, $1,000; and

2. An application fee of $150 for each office at which the business to be licensed is to be conducted.

D. The application fees shall not be refundable in any event. The fees shall not be abated by surrender, suspension or revocation of the license.

1987, c. 596, § 6.1-412; 1989, c. 411; 1992, c. 283; 1993, c. 183; 2010, c. 794; 2011, c. 435.

§ 6.2-1604. Bond required.

The application for a license shall also be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $25,000, or such greater sum as the Commissioner may require. The form of the bond shall be approved by the Commission. The bond shall be continuously maintained thereafter in full force. The bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by him in his licensed business, and conducting his licensed business in conformity with this chapter and all applicable law. Any person who may be damaged by noncompliance of a licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

1987, c. 596, § 6.1-413; 1989, c. 411; 2001, c. 511; 2010, c. 794.

§ 6.2-1605. Investigation of applications.

A. The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations.

B. For the purpose of investigating individuals who are members, senior officers, directors, and principals of an applicant, such persons shall consent to a national and state criminal history records check and submit to fingerprinting. Each member, senior officer, director, and principal shall pay for the cost of such fingerprinting and criminal records check. Such persons shall cause their fingerprints, personal descriptive information, and records check fees to be submitted to either of the following, as prescribed by the Commission:

1. The Commissioner, who shall forward these items to the Central Criminal Records Exchange. The Central Criminal Records Exchange shall (i) conduct a search of its own criminal history records and forward such individuals' fingerprints and personal descriptive information to the Federal Bureau of Investigation for the purpose of obtaining national criminal history record information regarding such individuals, and (ii) forward the results of the state and national records search to the Commissioner or his designee, who shall be an employee of the Commission; or

2. The Registry, provided that it is capable of processing such criminal history records check.

C. If any member, senior officer, director, or principal of an applicant fails to cause his fingerprints, personal descriptive information, or records check fees to be submitted in accordance with subsection B, the application for licensure as a mortgage lender or mortgage broker shall be denied.

1987, c. 596, § 6.1-414; 2008, c. 863; 2010, c. 794; 2012, c. 189.

§ 6.2-1606. Qualifications.

A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-1603 and 6.2-1604, the Commission shall issue and deliver to the applicant the license applied for to engage in business under this chapter at the office locations specified in the application if it finds:

1. That the financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest and in accordance with law; and

2. That, in the case of an application for a license to act as a mortgage lender, the applicant has funds available for the operation of the business of at least $200,000.

B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.

1987, c. 596, § 6.1-415; 1988, c. 303; 1993, c. 183; 2010, c. 794.

§ 6.2-1607. Licenses; places of business; changes.

A. Each license shall state the address of each office at which the business is to be conducted and shall state fully the name of the licensee. Each licensee shall (i) display proof of licensing upon request and (ii) prominently display at any location where the licensee conducts business in person with a borrower or prospective borrower the telephone number and website address for the Commission where borrowers and prospective borrowers may confirm the status of the license. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any name other than the name set forth on the license issued by the Commission.

B. No licensee shall open an additional office without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commission finds that the applicant has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission.

C. Every licensee shall within 10 days notify the Commissioner, in writing, of the closing of any approved office and of the name, address and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.

D. Every license shall remain in force until it expires or has been surrendered, revoked, or suspended. The expiration, surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such lender or broker.

E. Notwithstanding any other provision of this chapter, a mortgage lender or mortgage broker license shall expire at the end of each calendar year unless it is renewed by a licensee prior to the expiration date. A licensee may renew its license by (i) requesting renewal through the Registry and (ii) complying with any requirements associated with such renewal request that are imposed by the Registry. If a mortgage lender or mortgage broker license has expired, the Commission may by regulation permit the former licensee to seek license reinstatement after the license expiration date by renewing its license in accordance with this subsection and paying a reinstatement fee as prescribed by the Commission.

1987, c. 596, § 6.1-416; 1988, c. 303; 1990, c. 8; 1992, c. 283; 2010, c. 794; 2011, c. 435; 2016, cc. 329, 360.

§ 6.2-1608. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire directly or indirectly 25 percent or more of the voting shares of a corporation or 25 percent or more of the ownership of any licensee unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals and members, and of any proposed new directors, senior officers, principals, or members of the licensee;

3. Submits and furnishes to the Commissioner information concerning the identity of the directors, senior officers, principals, and members of the applicant, and of any proposed new directors, senior officers, principals, or members of the licensee. Such individuals shall (i) consent to a national and state criminal history records check, submit to fingerprinting, and pay for the cost of such fingerprinting and criminal records check; and (ii) cause their fingerprints, personal descriptive information, and records check fees to be submitted to either of the following, as prescribed by the Commission:

a. The Commissioner, who shall forward these items to the Central Criminal Records Exchange. The Central Criminal Records Exchange shall (i) conduct a search of its own criminal history records and forward such individuals' fingerprints and personal descriptive information to the Federal Bureau of Investigation for the purpose of obtaining national criminal history record information regarding such individuals, and (ii) forward the results of the state and national records search to the Commissioner or his designee, who shall be an employee of the Commission; or

b. The Registry, provided that it is capable of processing such criminal history records checks; and

4. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers and principals, and any proposed new directors, members, senior officers and principals have the financial responsibility, character, reputation, experience and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial. If an applicant or any individual specified in subdivision A 3 fails to comply with the requirements of this section, the application shall be denied.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee directly or indirectly including an acquisition by merger or consolidation by or with another licensee or a person exempt from this chapter under the provisions of subdivisions 2 through 11 of § 6.2-1602, (ii) the acquisition of an interest in a licensee directly or indirectly including an acquisition by merger or consolidation by or with a person affiliated through common ownership with the licensee, or (iii) the acquisition of an interest in a licensee by a person by bequest, descent, or survivorship or by operation of law. The person acquiring an interest in a licensee in a transaction which is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

1988, c. 303, § 6.1-416.1; 1993, c. 183; 1998, c. 33; 2010, c. 794; 2011, c. 435; 2012, c. 189.

§ 6.2-1609. Retention of books, accounts and records.

A. Every mortgage lender or mortgage broker required to be licensed under this chapter shall maintain in its offices such books, accounts, and records as the Commission may reasonably require in order to determine whether such person is complying with the provisions of this chapter and regulations adopted hereunder. Such books, accounts, and records shall be maintained apart and separate from any other business in which the mortgage lender or mortgage broker is involved.

B. Each mortgage lender required to be licensed under this chapter shall retain, for at least three years after final payment is made on any mortgage loan or the mortgage loan is sold, whichever first occurs, copies of the note, settlement statement, truth-in-lending disclosure, and such other papers or records relating to the loan as may be required by regulation.

C. Each mortgage broker required to be licensed under this chapter shall retain for at least three years after a mortgage loan is made the original contract for his compensation, a copy of the settlement statement, and an account of fees received in connection with the loan, and such other papers or records as may be required by regulation.

1987, c. 596, § 6.1-417; 1995, c. 62; 2010, c. 794.

§ 6.2-1610. Periodic reports.

Each licensee shall file periodic written reports with the Commissioner or the Registry containing such information as the Commissioner may require concerning the licensee's business and operations. Reports shall be in the form and be submitted with such frequency and by such dates as may be prescribed by the Commissioner, who shall make and publish annually an analysis and recapitulation of the reports.

1987, c. 596, § 6.1-418; 1996, c. 30; 2010, c. 794; 2016, c. 329.

§ 6.2-1611. Investigations; examinations.

The Commission may, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any mortgage lender or mortgage broker required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of such mortgage lenders shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, and employees of such mortgage lender or mortgage broker being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records and information which the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

1987, c. 596, § 6.1-419; 2010, c. 794.

§ 6.2-1612. Annual fees.

A. To defray the costs of examination, supervision, and regulation, every:

1. Mortgage lender required to be licensed under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of an individual mortgage lender, the actual cost of the examination, and to other factors relating to the supervision and regulation; and

2. Mortgage broker required to be licensed under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the volume of business transacted by such mortgage broker, to the actual cost of examination and to other factors relating to the supervision and regulation.

B. The annual fee prescribed in subsection A shall be assessed on or before April 25 for every calendar year. All such fees shall be paid by the licensees to the State Treasurer on or before May 25 following each assessment.

C. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a mortgage lender or mortgage broker required to be licensed under this chapter at a location outside the Commonwealth, the mortgage lender or mortgage broker shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision and regulation, or shall pay at a reasonable per diem rate approved by the Commission.

1987, c. 596, § 6.1-420; 1988, c. 303; 1990, c. 32; 1996, c. 524; 2010, c. 794.

§ 6.2-1613. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to present evidence and be heard, in accordance with the Commission's Rules.

1987, c. 596, § 6.1-421; 2010, c. 794.

§ 6.2-1614. Prohibitions applicable to mortgage lenders and mortgage brokers.

No mortgage lender or mortgage broker required to be licensed under this chapter shall:

1. Obtain any agreement or instrument in which blanks are left to be filled in after execution;

2. Take an interest in collateral other than the real estate or residential property securing a mortgage loan, including any fixtures and appliances thereon and any mobile or manufactured home placed on such real estate even if such mobile or manufactured home is not permanently affixed thereto;

3. Obtain any exclusive dealing or exclusive agency agreement from any borrower;

4. Delay closing of any mortgage loan for the purpose of increasing interest, costs, fees, or charges payable by the borrower;

5. Obtain any agreement or instrument executed by a borrower which contains an acceleration clause permitting the unpaid balance of a mortgage loan to be declared due for any reason other than failing to make timely payments of interest and principal, submitting false information in connection with an application for the mortgage loan, breaching any representation or covenant made in the agreement or instrument, or failing to perform any other obligations undertaken in the agreement or instrument;

6. Recommend or encourage a person to default on an existing loan or other debt, if such default adversely affects such person's creditworthiness, in connection with the solicitation or making of a mortgage loan that refinances all or any portion of such existing loan or debt;

7. Knowingly or intentionally engage in the act or practice of refinancing a mortgage loan within 12 months following the date the refinanced mortgage loan was originated, unless the refinancing is in the borrower's best interest, which act or practice is commonly referred to as "flipping." This prohibition shall apply regardless of whether the interest rate, points, fees, and charges paid or payable by the borrower in connection with the refinancing exceed any limitation established pursuant to Chapter 3 (§ 6.2-300 et seq.) or Article 2 (§ 6.2-406 et seq.) of Chapter 4. Factors to be considered in determining if the refinancing is in the borrower's best interest include but are not limited to whether:

a. The borrower's new monthly payment is lower than the total of all monthly obligations being financed, taking into account the costs and fees;

b. There is a change in the amortization period of the new loan;

c. The borrower receives cash in excess of the costs and fees of refinancing;

d. The rate of interest on the borrower's note is reduced;

e. There is a change from an adjustable to a fixed rate loan, taking into account costs and fees; and

f. The refinancing is necessary to respond to a bona fide personal need or an order of an appropriate court; or

8. Use or cause to be published any advertisement that:

a. Contains any false, misleading, or deceptive statement or representation; or

b. Identifies the mortgage lender or mortgage broker by any name other than the name set forth on the license issued by the Commission.

1987, c. 596, §§ 6.1-422, 6.1-424; 1989, c. 667; 1993, c. 183; 1995, c. 62; 1997, c. 228; 2001, cc. 502, 510, 511, § 6.1-422.1; 2003, c. 386; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1615. Other prohibitions applicable to mortgage lenders.

No mortgage lender required to be licensed under this chapter shall fail to require the person closing the mortgage loan to provide to the borrower prior to closing of the mortgage loan, a (i) settlement statement and (ii) disclosure which conforms to that required by the provisions of 15 U.S.C. § 1601 et seq. and Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).

1987, c. 596, § 6.1-422; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511; 2009, cc. 189, 261; 2010, c. 794; 2016, c. 501.

§ 6.2-1616. Other prohibitions applicable to mortgage brokers.

A. As used in this section, "person affiliated," when used with reference to another person, means (i) any person who is a subsidiary, stockholder, partner, trustee, director, officer or employee of the other person or (ii) any corporation 10 percent or more of the capital stock of which is owned by the other person or by any person who is a subsidiary, stockholder, partner, trustee, director, officer, or employee of the other person.

B. No mortgage broker required to be licensed under this chapter shall:

1. Except for documented costs of credit reports and appraisals, receive compensation from a borrower until a written commitment to make a mortgage loan is given to the borrower by a mortgage lender;

2. Receive compensation from a mortgage lender of which he is a principal, partner, trustee, director, officer, or employee;

3. Receive compensation from a borrower in connection with any mortgage loan transaction in which he is the lender or a principal, partner, trustee, director, or officer of the lender;

4. Receive compensation from a borrower other than that specified in a written agreement signed by the borrower;

5. Receive compensation for negotiating, placing or finding a mortgage loan where such mortgage broker, or any person affiliated with the mortgage broker, has otherwise acted as a real estate broker, agent or salesman in connection with the sale of the real estate which secures the mortgage loan and such mortgage broker or person affiliated with the mortgage broker has received or will receive any other compensation or thing of value from the lender, borrower, seller or any other person, unless the borrower is given the following notice in writing at the time the mortgage broker services are first offered to the borrower:

NOTICE

WE HAVE OFFERED TO ASSIST YOU IN OBTAINING A MORTGAGE LOAN. IF WE ARE SUCCESSFUL IN OBTAINING A LOAN FOR YOU, WE WILL CHARGE AND COLLECT FROM YOU A FEE OF % OF THE LOAN AMOUNT.

WE DO NOT REPRESENT ALL OF THE LENDERS IN THE MARKET AND THE LENDERS WE DO REPRESENT MAY NOT OFFER THE LOWEST INTEREST RATES OR BEST TERMS AVAILABLE TO YOU. YOU ARE FREE TO SEEK A LOAN WITHOUT OUR ASSISTANCE, IN WHICH EVENT YOU WILL NOT BE REQUIRED TO PAY US A FEE FOR THAT SERVICE.

IF YOU ARE A MEMBER OF A CREDIT UNION YOU SHOULD COMPARE OUR INTEREST RATES AND TERMS WITH THE MORTGAGE LOANS AVAILABLE THROUGH YOUR CREDIT UNION.

BORROWER'S SIGNATURE

BORROWER'S SIGNATURE

The foregoing notice shall be in at least 10-point type and the prospective borrower shall acknowledge receipt of the written notice; or

6. Fail to use reasonable skill, care, and diligence in exercising the broker's duty, which duty is hereby created, to make reasonable efforts to secure a mortgage loan that is in the best interests of the applicant, considering the applicant's circumstances and loan characteristics, including but not limited to the product type, rates, charges, and repayment terms of the loan.

C. Notwithstanding the provisions of subdivision B 5, no person shall act as a mortgage broker in connection with any real estate sales transaction in which such person, or any person affiliated with such person, has acted as a real estate broker, agent, or salesman and has received or will receive compensation in connection with such transaction, unless such person was regularly engaged in acting as a mortgage broker in the Commonwealth as of February 25, 1989.

1987, c. 596, § 6.1-422; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1617. Application to certain real estate brokers.

The provisions of this chapter shall not be construed to prohibit a real estate broker, as defined in § 54.1-2100, who is either an owner of an interest in a real estate firm or acts as a real estate broker in a sole proprietorship, from:

1. Having an ownership interest in a mortgage broker or mortgage lender;

2. Receiving returns on investment arising from the real estate broker's ownership interest in a mortgage broker or mortgage lender; or

3. Receiving payment of compensation for services actually performed for a mortgage broker or mortgage lender in which the real estate broker has an ownership interest.

1987, c. 596, § 6.1-422; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1618. Escrow accounts.

A. All moneys required by a mortgage lender required to be licensed under this chapter to be paid by borrowers in escrow to defray future taxes or insurance premiums, or for other lawful purposes, shall be kept in accounts segregated from accounts of the lender, and shall not be commingled with other funds of the lender.

B. No licensed mortgage lender shall require any borrower to pay any moneys in escrow to defray future taxes and insurance premiums, or for any other purpose, in connection with a subordinate mortgage loan as referred to in Article 2 (§ 6.2-406 et seq.) of Chapter 4, except where escrows for such purposes are not being maintained in connection with the mortgage loan superior to such subordinate mortgage loan.

C. Mortgage lenders holding money in escrow for insurance premiums shall notify the insurer in writing within 30 days of a change of the mortgage lender's billing address, or 60 days prior to the renewal date of the insurance policy, whichever is later.

1987, c. 596, § 6.1-423; 2001, c. 504; 2010, c. 794.

§ 6.2-1619. Suspension or revocation of license.

A. The Commission may suspend or revoke any license issued under this chapter to a mortgage lender or mortgage broker upon any of the following grounds:

1. Any ground for denial of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the mortgage lender's or mortgage broker's business;

3. A course of conduct consisting of the failure to perform written agreements with borrowers;

4. Failure to account for funds received or disbursed to the satisfaction of the person supplying or receiving such funds;

5. Failure to pay when due reasonable fees to a licensed appraiser for appraisal services that are (i) requested from the appraiser in writing by the mortgage broker or mortgage lender or an employee of the mortgage broker or mortgage lender and (ii) performed, in accordance with the terms of the contract with the appraiser and all regulatory requirements related to such appraiser and appraisal, by the appraiser in connection with the origination or closing of a mortgage loan for a customer of the mortgage broker or mortgage lender;

6. Failure to disburse funds in accordance with any agreement connected with, and promptly upon closing of, a mortgage loan, taking into account any applicable right of rescission;

7. Conviction of a felony or misdemeanor involving fraud, misrepresentation or deceit;

8. Entry of a judgment against the licensee involving fraud, misrepresentation or deceit;

9. Entry of a federal or state administrative order against the licensee for violation of any law or any regulation applicable to the conduct of his business;

10. Refusal to permit an investigation or examination by the Commission;

11. Failure to pay any fee or assessment imposed by this chapter; or

12. Failure to comply with any order of the Commission.

B. For the purposes of this section, acts of any officer, director, member, partner, or principal shall be deemed acts of the licensee.

1987, c. 596, § 6.1-425; 1993, c. 183; 2008, c. 863; 2010, c. 794.

§ 6.2-1620. Censuring, suspending, or barring persons.

A. The Commission, after providing notice and an opportunity for a hearing, may (i) censure a person, (ii) suspend a person for a defined period from any position of employment, management, or control of any licensee, or (iii) bar a person from any position of employment, management, or control of any licensee, if the Commission finds that:

1. The censure, suspension or bar is in the public interest and that the person, after July 1, 2003, has committed or caused a violation of this chapter or any regulation or order of the Commission; or

2. The person, after July 1, 2003, was (i) convicted of, or pled guilty or nolo contendere to, any crime; (ii) held liable in any civil action by final judgment; or (iii) held liable in any administrative proceeding by any public agency, if the criminal conviction or plea, or the holding in the civil action or administrative proceeding, involved any offense reasonably related to the qualifications, functions, or duties of a person employed by, or in a position of management or control of, a licensee.

B. Persons suspended or barred under this section are prohibited from participating in any business activity of a licensee and from engaging in any business activity on the premises where a licensee is conducting its business. This subsection shall not be construed to prohibit suspended or barred persons from having their personal transactions processed by a licensee.

2003, c. 386, § 6.1-425.1; 2010, c. 794.

§ 6.2-1621. Filing of written report with Commissioner; events affecting activities of licensee.

A. A licensee shall file a written report with the Commissioner within 15 days of becoming aware of the occurrence of any of the following:

1. The filing for bankruptcy or reorganization by the licensee;

2. The institution of revocation or suspension proceedings against the licensee by any state or governmental authority;

3. The denial of the opportunity of the licensee to engage in business by any state or governmental authority;

4. Any felony indictment of the licensee or any of its employees, officers, directors, or principals;

5. Any felony conviction of the licensee or any of its employees, officers, directors, or principals; and

6. Such other events as the Commissioner may determine and identify by regulation.

B. The report shall be in writing and describe the event and its expected impact on the activities of the licensee in the Commonwealth.

2003, c. 386, § 6.1-425.2; 2010, c. 794.

§ 6.2-1622. Cease and desist orders.

A. If the Commission determines that any mortgage lender or mortgage broker required to be licensed hereunder has violated any provision of this chapter or any regulation adopted pursuant thereto, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such mortgage lender or mortgage broker and shall state the grounds for the contemplated action.

B. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at the hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such fines and penalties as may be prescribed by Commission regulations.

1987, c. 596, § 6.1-426; 2010, c. 794.

§ 6.2-1623. Notice of proposed suspension or revocation.

The Commission may not revoke or suspend the license of any licensee upon any of the grounds set forth in § 6.2-1619 until it has given the mortgage lender or mortgage broker (i) 21 days' notice in writing of the reasons for the proposed revocation or suspension and (ii) an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of such licensee and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the licensee named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1.

1987, c. 596, § 6.1-427; 2010, c. 794.

§ 6.2-1624. Civil penalties.

In addition to the authority conferred under §§ 6.2-1619 and 6.2-1622, the Commission may impose a civil penalty not exceeding $2,500 upon any mortgage lender or mortgage broker required to be licensed under this chapter who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or any other law or regulation applicable to the conduct of the mortgage lender's or mortgage broker's business. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed, and each day after the date of notification, excluding Sundays and holidays, as prescribed in § 2.2-3300, that an unlicensed person engages in the business or holds himself out to the general public as a mortgage lender or mortgage broker shall constitute a separate violation.

1987, c. 596, § 6.1-428; 1990, c. 4; 2001, c. 511; 2008, c. 863; 2010, c. 794.

§ 6.2-1625. Criminal penalties.

Any person not exempt from the licensure requirements of this chapter who acts as a mortgage lender or mortgage broker in the Commonwealth without having obtained a license is guilty of a Class 6 felony. For the purposes of this section, each violation shall constitute a separate offense.

1987, c. 596, § 6.1-429; 2010, c. 794.

§ 6.2-1626. Authority of Attorney General; referral by Commission to Attorney General.

A. If the Commission determines that a licensee is in violation of, or has violated, § 6.2-1614, 6.2-1615, or 6.2-1616, or any provision of Chapter 3 (§ 6.2-300 et seq.) or Chapter 4 (§ 6.2-400 et seq.), the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations.

B. Upon such referral, the Attorney General:

1. May seek to enjoin violations of such laws. The appropriate circuit court may enjoin such violations notwithstanding the existence of an adequate remedy at law; and

2. May seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law.

C. Persons entitled to any relief authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.

D. In any action brought by the Attorney General by virtue of the authority granted in this section, the Attorney General shall be entitled to seek attorney fees and costs.

E. The Attorney General shall be authorized to bring an action to enjoin violations of the Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C. § 2601 et seq.), to the extent authorized by §§ 8 and 16 of RESPA (12 U.S.C. §§ 2607 and 2614).

1987, c. 596, § 6.1-430; 2001, c. 510; 2008, c. 863; 2009, cc. 204, 727; 2010, c. 794.

§ 6.2-1627. Private actions.

A. Nothing in this chapter shall be construed to preclude any person who suffers loss as a result of a violation of Chapter 3 (§ 6.2-300 et seq.) or Chapter 4 (§ 6.2-400 et seq.) from maintaining an action to recover damages or restitution and, as provided by statute, attorney fees. However, in any matter in which the Attorney General has exercised his authority pursuant to § 6.2-1626, an individual action shall not be maintainable if the individual has received damages or restitution pursuant to § 6.2-1626.

B. A borrower who suffers a loss as a result of a mortgage broker's breach of duty as set forth in subdivision B 6 of § 6.2-1616 may bring an action against such broker to recover actual damages. In addition to any damages awarded, such borrower also may be awarded attorney fees and court costs.

1987, c. 596, § 6.1-431; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1628. Enforcement of prohibitions on certain practices; recovery of attorney fees.

A. The Attorney General, the Commission, or any party to a mortgage loan may enforce the provisions of §§ 6.2-1614, 6.2-1615, and 6.2-1616.

B. In any suit instituted by a borrower who alleges that the defendant violated § 6.2-1614, 6.2-1615, or 6.2-1616, the presiding judge may, in the judge's discretion, allow reasonable attorney fees to the attorney representing the prevailing party. The attorney fees shall be taxed as a part of the court costs and payable by the losing party upon a finding by the presiding judge that (i) the party charged with the violation has willfully engaged in the act or practice with which he was charged or (ii) the party instituting the action knew, or should have known, that the action was frivolous and malicious.

C. The provisions of this section shall be in addition to, and shall not impair, the rights of and remedies available to borrowers in mortgage loans otherwise provided by law.

2001, c. 510, § 6.1-422.1; 2003, c. 386; 2010, c. 794.

§ 6.2-1629. Prohibited practices; authority of the Attorney General.

A. Notwithstanding whether a person is licensed, is required to be licensed, or is exempt from licensure under this chapter, and notwithstanding any other provision of the law to the contrary, no person that is engaged in the business of originating residential mortgage loans in the Commonwealth shall use any deception, fraud, false pretense, false promise, or misrepresentation in connection with a mortgage loan transaction.

B. Whenever the Attorney General has reasonable cause to believe that any person has engaged in, or is engaging in, or is about to engage in, any violation of this section, the Attorney General is empowered to issue a civil investigative demand. The provisions of § 59.1-9.10 shall apply, mutatis mutandis, to civil investigative demands issued pursuant to this section.

C. The Attorney General may cause an action to be brought in the appropriate circuit court in the name of the Commonwealth to enjoin any violation of this section. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law. In any action under this section, it shall not be necessary that damages or intent be proved to establish a violation. The standard of proof at trial shall be preponderance of the evidence. The circuit courts are authorized to issue temporary or permanent injunctions to restrain and prevent violations of this section.

D. In any action brought under this section, if the court finds that a person has willfully engaged in a violation of this section, the Attorney General may recover, upon petition to the court, a civil penalty of not more than $2,500 per violation.

E. In any action brought under this section, the Attorney General may recover damages and such other relief allowed by law, including restitution on behalf of borrowers injured by violations of this section as well as costs and reasonable expenses incurred by the Commonwealth in investigation and preparing the case, including attorney fees.

F. Unless the Attorney General determines that a person subject to the provisions of this section intends to depart from the Commonwealth or to remove his property from the Commonwealth, or to conceal himself or his property in the Commonwealth, or on a reasonable determination that irreparable harm may occur if immediate action is not taken, the Attorney General shall, before initiating any legal proceedings as provided in this section, give notice in writing that such proceedings are contemplated, and allow such person a reasonable opportunity to appear before the Attorney General and show that a violation did not occur or execute an assurance of voluntary compliance or consent judgment.

G. Nothing in this section shall create a private right of action in favor of any individual aggrieved by a violation of this section.

2009, cc. 204, 727, § 6.1-430.1; 2010, c. 794.

The chapters of the acts of assembly referenced in the historical citation at the end of these sections may not constitute a comprehensive list of such chapters and may exclude chapters whose provisions have expired.

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