Code of Virginia

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Code of Virginia
Title 6.2. Financial Institutions and Services
Chapter .
7/31/2021

Chapter 1. Definitions and General Provisions.

Article 1. Definitions.

§ 6.2-100. Definitions.

As used in this title, unless the context otherwise requires:

"Bureau" means the Bureau of Financial Institutions, a division of the Commission.

"Commission" means the State Corporation Commission.

"Commissioner" means the Commissioner of Financial Institutions.

"Commission's Rules" means the rules of practice and procedure prescribed by the Commission pursuant to § 12.1-25.

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

"Finance charge" has the meaning assigned to it in Consumer Financial Protection Bureau Regulation Z, 12 C.F.R. § 1026.4, as amended.

"Financial institution" means any bank, trust company, savings institution, industrial loan association, consumer finance company, or credit union.

"Person" means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity.

Code 1950, § 6-1; 1966, c. 584, § 6.1-1; 1970, c. 270, § 6.1-2.1; 1976, c. 658; 1978, c. 683; 1983, c. 491; 1996, c. 16; 2010, c. 794; 2016, c. 501.

Article 2. General Provisions.

§ 6.2-101. Confidentiality of information.

A. Except as otherwise provided in this title or § 12.1-19, the following shall not be disclosed by the Commission or any of its employees: (i) a report of examination of any person subject to this title, including any contents thereof; (ii) any information furnished to or obtained by the Bureau, the disclosure of which, in the opinion of the Commissioner, could endanger the safety and soundness of a bank, savings institution, or credit union; or (iii) any personal financial information furnished to, or obtained by the Bureau.

B. Any reports and information described in subsection A may be provided to:

1. Members and employees of the Commission in the performance of their duties;

2. In the case of an entity, directors and officers thereof and such other persons as may be authorized by resolution of the entity's board of directors;

3. Such governmental officers, instrumentalities, or agencies as the Commissioner may determine, in his discretion, to be proper recipients of such reports or information;

4. Any persons pursuant to lawful process and, if necessary to protect the confidentiality of the reports and information, an appropriate protective order issued by or under the authority of any appropriate court;

5. Other persons pursuant to grand jury subpoenas; or

6. Any other persons with the consent of the person to whom the report or information pertains.

1988, c. 555, § 6.1-1.1; 1991, c. 127; 2004, c. 165; 2010, c. 794.

§ 6.2-101.1. Certified mail; subsequent mail or notices may be sent by regular mail.

Whenever in this title the Commission is required to send any mail or notice by certified mail and such mail or notice is sent certified mail, return receipt requested, then any subsequent, identical mail or notice that is sent by the Commission may be sent by regular mail.

2011, c. 566.

§ 6.2-102. Use of funds collected under this title.

A. All fees assessed under any provision of this title and paid into the state treasury shall be deposited to a special fund designated "Financial Institutions Special Fund -- State Corporation Commission," and out of such special fund and the unexpended balance thereof shall be appropriated the sums necessary for the regulation, supervision, and examination of all entities subject to regulation under this title. The Commission shall have the authority to maintain a reasonable margin in the nature of a reserve in the Financial Institutions Special Fund for the expenses of operating the Bureau.

B. In order to provide additional funds for the operation of the Bureau, the Commission is authorized to increase the fees and assessments for the examination and supervision of banks, trust companies, savings institutions, industrial loan associations, credit unions, consumer finance licensees, mortgage lenders, and mortgage brokers by an amount not to exceed 50 percent of the fees and assessments provided for in §§ 6.2-908, 6.2-1033, 6.2-1202, 6.2-1310, 6.2-1414, 6.2-1532, and 6.2-1612.

Code 1950, § 6-4; 1966, c. 584, § 6.1-2; 1974, c. 183; 1987, cc. 556, 558; 1988, c. 303; 1993, cc. 419, 432; 1994, c. 312; 2010, c. 794.

§ 6.2-103. Financial institutions to furnish certain information to fiduciaries.

The provisions of this title and any other provisions of law notwithstanding, any financial institution subject to the provisions of this title shall make available to any fiduciary, upon request, all information concerning assets or liabilities in which his decedent or ward had or has any interest.

1970, c. 270, § 6.1-2.1; 1976, c. 658; 1978, c. 683; 1983, c. 491; 1996, c. 16; 2010, c. 794.

§ 6.2-104. Directors to serve only one institution.

A. No officer or director of any financial institution, other than a consumer finance company or credit union domiciled in the Commonwealth, shall at the same time serve as an officer or director of any other financial institution unless both such institutions are within a single financial institution holding company.

B. Notwithstanding the provisions of subsection A, the Commission, upon petition brought on behalf of an individual, may permit him to serve on the boards of more than one such institution if the Commission finds that the financial institutions are not in competition with each other or that one or both of the institutions might otherwise be denied capable management or direction from an individual residing in or employed in the locality served by an institution.

1978, c. 683, § 6.1-2.7; 1979, c. 376; 1987, c. 556; 1989, c. 162; 2010, c. 794.

§ 6.2-105. Reclassification or conversion of banking institution shares.

A. As used in this section, unless the context requires otherwise:

"Banking institution" means a corporation that is organized under the Virginia Stock Corporation Act (§ 13.1-601 et seq.) and that is a (i) bank, (ii) savings institution, (iii) bank holding company as defined in 12 U.S.C. § 1841 or § 6.2-800, (iv) savings and loan holding company, or (v) multiple or diversified savings and loan holding company as defined in 12 U.S.C. § 1467a.

"Issuer" means a banking institution required to file periodic reports under § 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)).

B. A banking institution may adopt an amendment to its articles of incorporation to reclassify or convert a portion of its issued and outstanding shares of common stock into a class or series of preferred stock for the purpose of ceasing to be, or avoiding the status of, an issuer, provided (i) such reclassification or conversion is authorized by the banking institution's original or amended articles of incorporation and (ii) the reclassified or converted shares continue to be a part of the equity capital of the corporation.

C. A reclassification or conversion of shares pursuant to this section shall not be subject to the provisions of Article 15 (§ 13.1-729 et seq.) of the Virginia Stock Corporation Act, notwithstanding that such shares are being reclassified or converted and other shares of the same class or series are not being reclassified or converted, if:

1. The board of directors of the banking institution has recommended to the shareholders approval of the amendment to reclassify or convert such shares;

2. The shareholders of the corporation approve the amendment;

3. All affected shares are reclassified or converted on the same terms; and

4. Articles of amendment are filed in accordance with § 13.1-710.

2009, cc. 253, 356, § 6.1-2.7:1; 2010, c. 794.

§ 6.2-106. Payment of civil penalties.

Civil penalties paid pursuant to this title, when collected, shall be paid by the Commission into the treasury of Virginia, in the manner provided for judgments collected as set forth in § 12.1-35.

2010, c. 794.

§ 6.2-107. Effect of contract provision requiring amendment or waiver to be in writing.

If any written contract to which a financial institution is a party contains a provision to the effect that no amendment or waiver of any terms or provisions thereof shall be valid unless such amendment or waiver is in writing, then any amendment or waiver of any terms or provisions of that contract by conduct, course of practice or dealing, or otherwise shall not apply to future rights and obligations under that contract unless it is in writing.

2013, cc. 67, 142.

Chapter 2. Money and Currency.

Article 1. Money of Account.

§ 6.2-200. Money of account.

A. The money of account of the Commonwealth shall be the dollar, cent, and mill. All accounts by public officers shall be kept in accordance with such monetary units.

B. No writing shall be invalid, nor shall the force of any account or entry be impaired, because a sum of money is expressed in other monetary units.

1987, c. 622, § 6.1-330.50; 2010, c. 794.

§ 6.2-201. Ascertaining value in money of account for money expressed in foreign currency.

A. In any suit for a sum of money expressed in any foreign currency or otherwise than in the money of account of the Commonwealth, the jury or the court shall ascertain the value in the money of account of the sum so expressed, including an appropriate allowance for the difference of exchange. The judgment or order may be for either the amount so ascertained, or for the amount of money so expressed, and the judgment or order shall be discharged by an amount so ascertained.

B. In any such suit involving an instrument to which § 8.3A-107 is applicable, the provisions of that section shall apply.

1987, c. 622, § 6.1-330.51; 2010, c. 794.

Article 2. Currency Issuance and Circulation.

§ 6.2-202. Issuance of currency and related prohibited acts.

A. No individual or entity, unless authorized by law, shall:

1. Issue any note, bill, scrip, or other paper or thing with intent that the same be circulated as currency; or

2. Otherwise deal, trade, or carry on business as a bank of circulation.

B. All contracts made for forming any entity to engage in any activity prohibited by subsection A shall be void.

1987, c. 622, § 6.1-330.52; 2010, c. 794.

§ 6.2-203. Contracts and securities from illegal currency dealing void; recovery of payments.

A. All contracts and securities that originate from, or are made or obtained in whole or in part by means of any illegal currency dealing, trade, or business, shall be void.

B. If any person pays any money or other valuable consideration on account of any contract or security originating from, or made or obtained in whole or in part by means of, any illegal currency dealing, trade, or business, such person or his representative or assignee may recover the amount or value of such payment from the person to whom, or to whose use, the payment was made, by bringing suit within one year after such payment.

1987, c. 622, § 6.1-330.52; 2010, c. 794.

§ 6.2-204. Capital stock of certain entities vested in Commonwealth; proceedings to recover stock; liability.

A. The capital stock of every entity formed to engage in any activity prohibited by subsection A of § 6.2-202, whether paid up or merely subscribed, shall belong to the Commonwealth. The Attorney General, whenever informed of the existence of any such entity, shall institute a suit in the Circuit Court of the City of Richmond, for the purpose of recovering such capital stock. In such suit, all or any of the members of such entity, and any of its officers, agents, or managers, may be made defendants, and compelled to exhibit all their books and papers, and an account of everything necessary to enable the court to enter a proper order.

B. No disclosure made by a defendant in such suit, and no book or paper exhibited by him in answer to the bill, or under the order of the court, shall be used as evidence against him in any case at law.

C. Every member of any entity formed to engage in any activity prohibited by subsection A of § 6.2-202 who is made defendant in any such suit, shall be held liable to the Commonwealth for his proportion of the capital stock in such entity held by him, or for his use or benefit, at the institution of such suit, or at the time of the order. Such order against any defendant shall be a bar to a proceeding against him for any act done in violation of subsection A of § 6.2-202.

1987, c. 622, § 6.1-330.52; 2010, c. 794.

Chapter 3. Interest and Usury.

Article 1. Definitions.

§ 6.2-300. Definitions.

As used in this chapter, unless the context otherwise requires:

"Bank" means any national bank, any bank organized under Chapter 8 (§ 6.2-800 et seq.), or any bank incorporated and organized under the laws of another state.

"Credit union" means any credit union organized under Chapter 13 (§ 6.2-1300 et seq.) or any credit union incorporated and organized under the laws of another state. "Credit union" shall not include any federal credit union.

"First deed of trust" or "first mortgage" includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate.

"Grantor" or "mortgagor" includes an owner of real estate, and spouse, who has assumed responsibility for the obligation secured by a mortgage or deed of trust encumbering the real estate.

"Loan" means a loan or forbearance of money.

"Open-end credit" or "open-end credit plan" means consumer credit extended by a creditor under a plan in which: (i) the creditor reasonably contemplates repeated transactions; (ii) the creditor may impose a finance charge from time to time on an outstanding unpaid balance; and (iii) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the creditor, is generally made available to the extent that any outstanding balance is repaid.

"Savings institution" means any savings institution, as defined in § 6.2-1100, incorporated and organized under the laws of the United States, the Commonwealth, or another state.

"Subordinate mortgage or deed of trust" means a mortgage or deed of trust that is subject to a prior mortgage or deed of trust in existence at the time of the making of the loan secured by such subordinate mortgage or deed of trust.

1987, c. 622, §§ 6.1-330.49, 6.1-330.69, 6.1-330.71; 1991, c. 157; 1996, c. 243; 2010, c. 794.

Article 2. Legal, Judgment, and Contract Rates of Interest.

§ 6.2-301. Legal rate of interest; when legal rate implied.

A. The legal rate of interest shall be an annual rate of six percent.

B. Except as provided in subsection (b) of § 8.3A-112 and § 6.2-302, the legal rate of interest shall be implied when there is an obligation to pay interest and no express contract to pay interest at a specified rate.

C. The seller or provider of goods sold or services provided on an open account shall be entitled to, and may collect, interest at the legal rate upon the unpaid balance if (i) there exists no written agreement for closed-end credit under § 6.2-311 or open-end credit plan under § 6.2-312 and (ii) the purchaser or recipient of the goods or services fails to make payment in full within 60 days after mailing or presentation of a billing statement or invoice. Such interest shall begin to accrue on the day following such 60-day period.

1987, c. 622, § 6.1-330.53; 1991, c. 375, § 6.1-330.77:1; 2004, c. 646; 2010, c. 794.

§ 6.2-302. Judgment rate of interest.

A. The judgment rate of interest shall be an annual rate of six percent, except that a money judgment entered in an action arising from a contract shall carry interest at the rate lawfully charged on such contract, or at six percent annually, whichever is higher.

B. If the contract or other instrument does not fix an interest rate, the court shall apply the judgment rate of six percent to calculate prejudgment interest pursuant to § 8.01-382 and to calculate post-judgment interest.

C. The rate of interest for a judgment shall be the judgment rate of interest in effect at the time of entry of the judgment on any amounts for which judgment is entered and shall not be affected by any subsequent changes to the rate of interest stated in this section.

1987, cc. 622, 623, 630, § 6.1-330.54; 1991, c. 508; 2004, c. 646; 2005, c. 455; 2010, cc. 550, 794.

§ 6.2-303. Contracts for more than legal rate of interest.

A. Except as otherwise permitted by law, no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year.

B. Laws that permit payment of interest at a rate that exceeds 12 percent per year are set out, without limitation, in:

1. Article 4 (§ 6.2-309 et seq.) of this chapter;

2. Chapter 15 (§ 6.2-1500 et seq.), relating to powers of consumer finance companies;

3. Chapter 18 (§ 6.2-1800 et seq.), relating to short-term loans;

4. Chapter 22 (§ 6.2-2200 et seq.), relating to interest chargeable by motor vehicle title lenders;

5. § 36-55.31, relating to loans by the Virginia Housing Development Authority;

6. § 38.2-1806, relating to interest chargeable by insurance agents;

7. Chapter 47 (§ 38.2-4700 et seq.) of Title 38.2, relating to interest chargeable by premium finance companies;

8. § 54.1-4008, relating to interest chargeable by pawnbrokers; and

9. § 58.1-3018, relating to interest and origination fees payable under third-party tax payment agreements.

C. In the case of any loan upon which a person is not permitted to plead usury, interest and other charges may be imposed and collected as agreed by the parties.

D. Any provision of this chapter that provides that a loan or extension of credit may be enforced as agreed in the contract of indebtedness, shall not be construed to preclude the charging or collecting of other loan fees and charges permitted by law, in addition to the stated interest rate. Such other loan fees and charges need not be included in the rate of interest stated in the contract of indebtedness.

E. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:

1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;

2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and

3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.

F. Any contract made in violation of this section is void and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the contract.

1987, c. 622, § 6.1-330.55; 1997, c. 180; 2002, c. 897; 2010, cc. 477, 794; 2020, cc. 1215, 1258.

Article 3. Usury.

§ 6.2-304. Plea of usury; judgment.

Any borrower may plead in general terms that the contract on which the action is brought was for the payment of interest greater than is allowed by statute. If the court determines that the contract is usurious, judgment shall be rendered only for the principal sum.

1987, c. 622, § 6.1-330.56; 2010, c. 794.

§ 6.2-305. Recovery of twice total usurious interest paid; limitation of action; injunction to prevent sale of property pending action; effect of errors in computation.

A. If interest in excess of that permitted by an applicable statute is paid upon any loan, the person paying may bring an action within two years from the first to occur of: (i) the date of the last scheduled loan payment or (ii) the date of payment of the loan in full, to recover from the person taking or receiving such payments:

1. The total amount of the interest paid to such person in excess of that permitted by the applicable statute;

2. Twice the total amount of interest paid to such person during the two years immediately preceding the date of the filing of the action; and

3. Court costs and reasonable attorney fees.

B. If the sale of property in which an interest has been conveyed to secure the payment of the debt is scheduled or anticipated, an injunction may be granted to prevent such sale pending the completion of an action brought pursuant to subsection A.

C. Any creditor who proves that interest or other charges in excess of those permitted by law were imposed or collected as a result of a bona fide error in computation or similar mistake shall not be liable for the penalties prescribed in this section. In such event, the creditor shall only be liable to return to the borrower the amount of interest or other charges collected in excess of the amount permitted by applicable statute.

1987, c. 622, § 6.1-330.57; 2010, c. 794.

§ 6.2-306. Waiver of rights violative of public policy.

A. Any agreement or contract in which the borrower waives the benefits of this chapter or releases any rights he may have acquired under this chapter shall be deemed to be against public policy and void.

B. The provisions of subsection A shall not apply to a waiver of benefits or release of rights made subsequent to a loan as part of a settlement of potential or pending claims by a borrower involving such loan.

1987, c. 622, § 6.1-330.58; 2010, c. 794.

§ 6.2-307. Assertion of defenses or claims by borrowers; effect of assignment.

As to any loan to which the provisions of §§ 6.2-327 and 6.2-328 are applicable, the borrower may assert any defense or claim he may have under §§ 6.2-304 and 6.2-305 against any assignee or transferee of the contract of indebtedness.

1987, c. 622, § 6.1-330.59; 2010, c. 794.

§ 6.2-308. Entities not permitted to plead usury.

A. No (i) corporation, (ii) partnership that is required to file a certificate pursuant to Chapter 2.1 (§ 50-73.1 et seq.) of Title 50 or was required to file a certificate pursuant to former Chapter 2 (§ 50-44 et seq.) or Chapter 3 (§ 50-74 et seq.) of Title 50 or that is formed under laws other than those of the Commonwealth, (iii) limited liability company, (iv) business trust, or (v) joint venture organized for the purpose of holding, developing, and managing real estate for profit, shall, by way of defense or otherwise, avail itself of any of the provisions of this chapter or any other statutory or case law relating to usury or compounding of interest to avoid or defeat the payment of any interest or any other sum that it has contracted to pay.

B. Nothing contained in this chapter or any other statutory or case law relating to usury or compounding of interest shall be construed to prevent the recovery of interest or any other sum that an entity described in subsection A has contracted to pay, regardless of whether it is more than the contract rate of interest and the fact appears on the face of the contract.

1987, c. 622, § 6.1-330.76; 1988, c. 765; 1993, c. 113; 2010, c. 794.

Article 4. Loans Exempt From Limit on Contract Rate of Interest.

§ 6.2-309. Charges by banks and savings institutions on installment loans.

Notwithstanding any statutory or case law, a bank or savings institution making a loan payable in installments may impose finance charges and other charges and fees at such rates and in such amounts and manner as the borrower has agreed.

1987, c. 622, § 6.1-330.60; 1996, c. 242; 1997, c. 128; 1999, c. 610; 2001, c. 743; 2010, c. 794.

§ 6.2-310. Rate of interest chargeable by state banks and savings institutions.

In addition to the permissible interest rates and charges specifically granted to banks and savings institutions by this title, state banks and savings institutions may take, receive, reserve, and charge on any loan, any rate of interest, finance charge, or other loan charge permitted to any other lender under the laws of the Commonwealth, other than those rates or charges permitted to consumer finance companies under § 6.2-1520.

1980, c. 336, § 6.1-5.3; 1981, c. 93, § 6.1-195.3:1; 1985, c. 425, § 6.1-194.6; 1987, c. 556; 1988, c. 2; 2010, c. 794.

§ 6.2-311. Closed-end installment loans by sellers of goods or services.

A. Any seller of goods or services who extends credit under a closed-end installment credit plan or arrangement may impose finance charges at such rate or rates as the seller and the purchaser have agreed. Deferrals and extensions of the time for payment, if allowed by a seller of goods or services who extends credit under a closed-end installment credit plan or his assignee, may be subject to a finance charge if agreed to in the original contract or at the time of the renewal or extension. No additional finance charge shall be made for the extension of credit under such a plan or arrangement. If the total finance charge on the transaction is precomputed according to the actuarial method, the finance charge shall be calculated on the assumption that all scheduled payments will be made when due. The balance on which such finance charge may be imposed may include the deferred portion of the sales price, costs and charges incidental to the transaction, including (i) any insurance premium financed in connection therewith and (ii) the amount actually paid or to be paid by the seller to discharge a security interest or lien on the property traded in. The payment by a lessor to discharge a security interest or lien on the property traded in may be included in the gross capitalized cost of the goods leased and, for purposes of this chapter and Chapter 6 (§ 55.1-600 et seq.) of Title 55.1, shall not constitute a loan.

B. The debtor shall have the right to prepay in full on precomputed transactions and receive a rebate of unearned finance charge determined in accordance with the Rule of 78, as illustrated in § 6.2-403, or other method elected by the seller under which the finance charge imposed does not exceed the amount that results from application of the Rule of 78 on extensions of credit with an initial maturity of 61 months or less. On extensions of credit with an initial maturity of more than 61 months, the debtor shall receive a rebate computed under a method at least as favorable to the debtor as the actuarial method. The seller may also condition such rebate upon receiving a minimum of $25 in finance charges. This amount, to the extent not earned, may be withheld from the rebate required hereunder.

C. In connection with such a credit plan, the seller may also:

1. Impose a late charge pursuant to § 6.2-400; and

2. Charge and collect a document fee as may be agreed upon by the seller and purchaser in connection with such credit plan. The document fee shall (i) be for the preparation, handling, and processing of documents relating to the goods or services and to the closing of the transaction and (ii) not be considered a finance charge for the purposes of this chapter.

D. Premiums for credit life insurance and credit accident and health insurance purchased by the debtor shall not be construed as an additional charge for the extension of credit if such insurance coverage is purchased voluntarily by the debtor. Premiums for property insurance on the goods purchased or leased, including vendor's single interest insurance on such goods, shall not be construed as additional charges for the extension of credit if a clear and conspicuous statement in writing is furnished by the seller or lessor to the buyer or lessee setting forth the cost of the insurance if obtained from or through the seller or lessor and stating that the buyer or lessee may choose the person through which the insurance is to be obtained.

1987, c. 622, § 6.1-330.77; 1988, c. 145; 1990, c. 338; 1999, cc. 62, 373; 2010, c. 794.

§ 6.2-312. Open-end credit plans.

A. The provisions of this section shall apply to any person that makes, arranges, or negotiates a loan or otherwise extends credit under an open-end credit plan, whether or not the person maintains a physical presence in the Commonwealth. However, the provisions of this section shall not apply to any bank, savings institution, or credit union as such terms are defined in § 6.2-300.

B. Notwithstanding any provision of this chapter other than § 6.2-327, and except as provided in subsections D, E, and F, a seller or lender engaged in extending credit under an open-end credit plan may impose, on credit extended under the plan, finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed upon by the creditor and the obligor, if under the plan a finance charge is imposed upon the obligor if payment in full of the unpaid balance is not received at the place designated by the creditor prior to the next billing date, which shall be at least 25 days later than the prior billing date.

C. Notwithstanding the provisions of § 6.2-327 and subject to the provisions of § 8.9A-204.1, any loan made under this section may be secured in whole or in part by a subordinate mortgage or deed of trust on residential real estate improved by the construction thereon of housing consisting of one- to four-family dwelling units.

D. The following persons are prohibited from engaging in the extension of credit under an open-end credit plan described in this section: (i) any person licensed under Chapter 18 (§ 6.2-1800 et seq.), any person affiliated through common ownership with such licensed person, and any person that is a subsidiary of such licensed person; (ii) any person licensed under Chapter 22 (§ 6.2-2200 et seq.), any person affiliated through common ownership with such licensed person, and any person that is a subsidiary of such licensed person; and (iii) any person conducting business at any office, suite, room, or place of business where a person described in clause (i) or (ii) is conducting business.

E. No person shall make a loan or otherwise extend credit under an open-end credit plan or any other lending arrangement that is secured by a non-purchase money security interest in a motor vehicle, as such term is defined in § 6.2-2200, unless such loan or extension of credit is made in accordance with, or is exempt from, the provisions of Chapter 22 (§ 6.2-2200 et seq.).

F. A seller or lender engaged in extending credit under an open-end credit plan to a resident of the Commonwealth or to any individual in the Commonwealth shall not charge, collect, or receive, directly or indirectly, credit insurance premiums, charges for any ancillary product sold, charges for negotiating forms of loan proceeds or refunds other than cash, charges for brokering or obtaining an extension of credit, or any fees, interest, or charges in connection with credit extended under the plan, other than (i) interest at a simple annual rate not to exceed 36 percent and (ii) a participation fee not to exceed $50 per year. Any extension of credit made in violation of this subsection is void and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the extension of credit.

G. Any violation of the provisions of this section shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).

H. A third party shall not engage in the extension of credit under an open-end credit plan described in this section.

1987, cc. 622, 639, 714, § 6.1-330.78; 1992, Sp. Sess., c. 4; 1997, c. 112; 2009, cc. 784, 860; 2010, cc. 477, 794; 2020, cc. 1215, 1258.

§ 6.2-313. Open-end credit extended by banks or savings institutions.

A. Notwithstanding any statutory or case law, any bank or savings institution may impose finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed by the borrower under an open-end credit plan.

B. In the event of the extension of credit by a bank or savings institution hereunder to be effected by the use of a credit card for the purchase of merchandise or services, no finance charge shall be imposed upon the cardholder or borrower on such extension of credit if payment in full of the unpaid balance owing for all extensions of credit under the open-end credit plan is received at the place designated by the creditor prior to the payment due date, which shall be at least 25 days later than the billing date.

1987, cc. 622, 639, 714, § 6.1-330.63; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2010, c. 794; 2015, cc. 453, 454.

§ 6.2-314. Motor vehicle purchase loans by subsidiaries and affiliates of banks and savings institutions.

Notwithstanding any statutory or case law, a subsidiary or affiliate of a bank or savings institution that is not a licensee under the provisions of Chapter 15 (§ 6.2-1500 et seq.) may impose finance charges and other charges and fees at such rates and in such amounts and manner as the borrower has agreed on loans payable in installments for the purpose of financing the purchase of a motor vehicle.

1987, c. 622, § 6.1-330.60; 1996, c. 242; 1997, c. 128; 1999, c. 610; 2001, c. 743; 2010, c. 794.

§ 6.2-315. Loans by certain financial institutions or brokers payable on demand or having a term up to one year.

Any bank, savings institution, broker duly licensed to transact business as a stockbroker, or broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission, may loan money or discount bonds, bills, notes or other paper, whether payable on demand or for periods up to one year. Such a loan or discounting may be lawfully enforced as agreed in the contract of indebtedness. An interest rate charged in advance upon the entire amount of the loan or discount shall be lawful.

1987, c. 622, § 6.1-330.62; 2010, c. 794.

§ 6.2-316. Loans of $5,000 or more made by certain financial institutions.

No person shall, by way of defense or otherwise, avail himself of the provisions of this chapter or any other section relating to usury to avoid or defeat the payment of interest, or any other sum, upon a loan made to a person by a bank, savings institution, industrial loan association, or credit union, if the initial principal amount of the loan is $5,000 or more.

1987, c. 622, § 6.1-330.61; 2010, c. 794.

§ 6.2-317. Loans of $5,000 or more for business or investment purposes.

A. For purposes of this section:

1. A loan shall be deemed to be for business or investment purposes if it is not for personal, family, or household purposes; and

2. Personal, family, or household purposes do not include a passive or active investment.

B. No person shall, by way of defense or otherwise, avail himself of the provisions of this chapter, or any other statutory or case law relating to usury or compounding of interest, to avoid or defeat the payment of interest, or any other sum, in connection with a loan made to a person for business or investment purposes, if the initial amount of the loan is $5,000 or more.

1987, c. 622, § 6.1-330.75; 2010, c. 794.

§ 6.2-318. Loans by credit unions.

A. As used in this section, "average daily balance" means, for any billing period, that amount which is the sum of the actual amounts outstanding each day during the billing period divided by the number of days in the billing period.

B. Notwithstanding any other statute or provision relating to interest or usury, any credit union may charge interest as agreed by the borrower provided such interest is not charged in advance.

C. Any open-end credit plan offered by a credit union shall provide:

1. For computation of any finance charges by application of a rate, at the option of the credit union, to:

a. The average daily balance for the period ending on the billing date;

b. The balance existing on the billing date of the month; or

c. Any other balance which does not result in the credit union charging or receiving any sum in excess of what would be charged or received under subdivision a or b;

2. That no finance charge shall be imposed unless the bill is mailed not later than eight days, excluding Saturdays, Sundays and holidays, after the billing date, except that such time limitation shall not apply in any case where the credit union has been prevented, delayed, or hindered in mailing or delivering the bill within such time period because of an act of God, war, civil disorder, natural disaster, strike, or other excusable or justifiable cause; and

3. That in the event of the extension of open-end credit by a credit union to be effected by the use of a credit card for the purchase of merchandise or services, no finance charge shall be imposed upon the member or cardholder on such extension of credit if payment in full of the unpaid balance owing for extensions of credit for merchandise or services is received at the place designated by the credit union prior to the payment due date, which shall be at least 25 days later than the billing date.

D. Notwithstanding any provision of this chapter other than § 6.2-327 and subsection C, a credit union engaged in extending credit under an open-end credit plan may impose, on credit extended under the plan, finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed upon by the credit union and the obligor, if under the plan a finance charge is imposed upon the obligor.

1987, c. 622, § 6.1-330.64; 2006, c. 753; 2010, c. 794; 2015, cc. 453, 454.

§ 6.2-319. Loans by pension plans to participants.

A. As used in this section, "pension plan" includes an "employee pension benefit plan" or "pension plan" as defined in § 3(2) of the federal Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829).

B. Loans by a pension plan to an individual participating in the pension plan shall be lawfully enforced as agreed in the contract of indebtedness. No such participating individual, by way of defense or otherwise, shall avail himself of the provisions of this chapter, or any other law relating to interest or usury, to avoid or defeat the payment of interest or any other sum on any loan made by the pension plan. Nothing contained in any law relating to interest or usury shall be construed to prevent the recovery of such interest or other sum though it is more than otherwise lawful interest and though that fact appears on the face of the contract.

1987, c. 622, § 6.1-330.67; 2010, c. 794.

§ 6.2-320. Loans by industrial loan associations.

A. Notwithstanding any statutory or case law relating to interest or usury, loans made by an industrial loan association payable in weekly, monthly, or other periodic installments may be enforced as agreed in the contract of indebtedness. In addition, such association may charge or collect in advance from the borrower on such loans a loan fee not exceeding two percent of the principal amount of the loan. An interest rate charged in advance upon the entire amount of the loan or pursuant to a written modification agreement shall be lawful.

B. An industrial loan association may charge interest at an annual rate not exceeding 18 percent on loans payable on demand or in a single payment. In addition, such association may charge or collect in advance from the borrower on such loans a loan fee not exceeding two percent of the principal amount of the loan.

1987, c. 622, § 6.1-330.68; 2010, c. 794.

§ 6.2-321. Loans pursuant to stock option financing programs.

A. As used in this section, "stock option financing program loan" means a loan pursuant to which a lender finances the option holder's exercise of the option to purchase stock, which exercise is financed through such means as purchasing the stock on margin, selling sufficient shares of the stock to cover the total exercise cost, or selling the full quantity of stock to cover the total exercise cost.

B. No person shall, by way of defense or otherwise, avail himself of the provisions of this chapter, or any other statutory or case law relating to usury or compounding of interest, to avoid or defeat the payment of interest, or any other sum, in connection with a loan made to a person pursuant to a stock option financing program loan.

2003, c. 439, § 6.1-330.78:1; 2010, c. 794.

§ 6.2-322. Extensions of credit on pledged securities.

A broker-dealer licensed by the Commission and registered with the Securities Exchange Commission who extends credit to a customer on pledged securities as permitted under the provisions of the Securities Exchange Act of 1934, may charge the customer, on his debit balances that are payable on demand, interest at a annual rate that does not exceed one and three-quarters percent above the higher of:

1. The interest rate charged such broker-dealer by a bank doing business in the Commonwealth on loans collateralized by securities; or

2. The interest rate charged such broker-dealer by a bank doing business in the Commonwealth on loans for business purposes.

1987, c. 622, § 6.1-330.65; 2010, c. 794.

§ 6.2-323. Educational loans by banks or savings institutions.

Notwithstanding any statutory or case law relating to interest or usury, including the deferral and capitalization of interest, any loan made by a bank or savings institution to defray educational expenses, including tuition, fees, books, supplies, room, board, and personal expenses, shall be lawfully enforced as agreed in the contract of indebtedness.

1987, c. 622, § 6.1-330.60; 1996, c. 242; 1997, c. 128; 1999, c. 610; 2001, c. 743; 2010, c. 794.

§ 6.2-324. Educational loans by private institution of higher education.

A. As used in this section, "private institution of higher education" means an accredited nonprofit private institution of higher education in the Commonwealth whose primary purpose is to provide collegiate or graduate education.

B. Loans made by a private institution of higher education to defray educational expenses of its students, including tuition, fees, books, supplies, room, board, and personal expenses, may be enforced as agreed in the contract of indebtedness.

1987, c. 622, § 6.1-330.66; 2010, c. 794.

§ 6.2-325. Certain loans secured by first deed of trust or mortgage.

A. As used in this section, "real estate" includes a leasehold estate of not less than 25 years.

B. Notwithstanding the provisions of any law relating to interest or usury, contracts made for the loan of money, secured or to be secured by a first deed of trust or first mortgage on real estate, or by a first priority security interest in the stock of a residential cooperative housing corporation, may be enforced as agreed in the contract of indebtedness or other agreement signed by the borrower.

C. For the purpose of this section, an interest rate which varies in accordance with any exterior standard, or which cannot be ascertained from the contract without reference to any exterior circumstances or documents, shall be enforceable as agreed in the contract of indebtedness or other signed agreement.

D. Disclosure of charges in a disclosure given to the borrower pursuant to federal disclosure laws or regulations and acceptance of the loan proceeds by the borrower shall be deemed an agreement signed by the borrower within the meaning of this section.

1987, c. 622, § 6.1-330.69; 2010, c. 794.

§ 6.2-326. Fees and charges in connection with loans by real estate lenders.

A. A lender engaged in making real estate mortgage or deed of trust loans, other than loans subject to the provisions of §§ 6.2-327 and 6.2-328, may:

1. Charge or collect in advance from the borrower a loan fee as agreed between the parties; and

2. Require the borrower to pay the reasonable and necessary charges in connection with making the loan, including the cost of title examination, title insurance, recording and filing fees, taxes, insurance, including mortgage guaranty insurance, appraisals, credit reports, surveys, drawing of papers, and closing the loan.

B. The fees and charges permitted by this section and other sections of this chapter are in addition to those permitted by § 6.2-325 and may be added to the principal of the loan, and shall not be considered in determining whether a loan contract is usurious.

1987, c. 622, § 6.1-330.70; 1990, c. 3; 2010, c. 794.

§ 6.2-327. Certain loans secured by a subordinate deed of trust or mortgage.

A. As used in this section:

"Exempt subordinate mortgage lender" means (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.

"New money" means money advanced in excess of the outstanding principal balance at the time a new advance is made.

"Real estate" includes a leasehold estate of not less than 25 years.

"Residential real estate" means real estate improved by the construction thereon of housing consisting of one- to four-family dwelling units.

B. An add-on interest loan shall be subject to the following provisions:

1. Any person may charge add-on interest that results in an annual yield of not more than 18 percent upon loans secured in whole or in part by a subordinate mortgage or deed of trust on residential real estate;

2. An add-on interest loan may be made only under this subsection and shall not exceed a period of five years and one month; and

3. The lender may also impose a loan fee not exceeding two percent of the principal amount of the loan provided that such loan fee shall not be imposed more often than once each 18 months except to the extent that new money is advanced within such 18-month period by a renewal or additional loan. New money shall be money advanced in excess of the outstanding principal balance at the time such new advance is made. These provisions shall apply whether such loan fee is payable directly to the lender or to a third party in connection with such loan.

C. No charge, other than actual costs documented to the applicant and expended for a credit report and an appraisal of the real estate conducted in connection with the loan application, may be made if a loan secured by a subordinate mortgage or deed of trust is not made. Such charge:

1. Shall not exceed one percent of the amount of the loan applied for; but in no event shall such charge exceed $50 or one-half of such costs, whichever is less; and

2. May be made only if the lender commits to make the loan. Such commitment shall be in writing and signed by the lender or a person who the lender has authorized to execute such documents.

D. Any loan secured by a subordinate mortgage or deed of trust on residential real estate upon which the interest is charged at an annual interest rate on the unpaid balance thereof shall be subject to the following provisions:

1. Such a loan may be lawfully enforced at the annual interest rate stated in the contract of indebtedness on the principal amount of the loan. Such annual interest rate may vary in accordance with an exterior standard;

2. In addition to the annual interest rate permitted by subdivision 1, the lender may charge the borrower a loan fee not exceeding five percent of the principal amount of the loan, provided that such loan fee shall not be imposed more often than once each 18 months except to the extent that new money is advanced within such 18-month period by a renewal or additional loan. Such loan fee may only be reimposed by the lender upon a borrower in connection with the refinancing of a loan made pursuant to this subsection; and

3. The lender may charge the borrower with the actual costs of the loan as permitted by § 6.2-328.

E. The rates, charges and other provisions permitted or required by this section or by § 6.2-328 shall apply to all loans secured by a subordinate mortgage or deed of trust, including, without limitation, (i) single maturity loans, (ii) amortizing loans, and (iii) loans secured by a credit line deed of trust as permitted by § 55.1-318.

F. Except for the loan fee permitted in this section, no discount, initial interest, points or charges by any other name may be collected, charged or added to a loan secured by a subordinate mortgage or deed of trust upon residential real estate.

G. The provisions of this section shall not apply to any loan by an exempt subordinate mortgage lender.

H. For the purpose of this section, an interest rate that varies in accordance with any exterior standard, or that cannot be ascertained from the contract without reference to any exterior circumstances or documents, shall be enforceable as agreed in the contract of indebtedness or other signed agreement.

I. The borrower under any loan to which the provisions of this section apply may assert any defense or claim he may have under §§ 6.2-304 and 6.2-305 against any assignee or transferee of the contract of indebtedness.

1987, c. 622, §§ 6.1-330.59, 6.1-330.69, 6.1-330.71; 1991, c. 157; 1996, c. 243; 2010, c. 794.

§ 6.2-328. Charges allowed on loan secured by subordinate mortgage.

A. Any lender making a loan secured by a subordinate mortgage or deed of trust may require the borrower to pay, in addition to the loan fee and interest permitted by § 6.2-327, the actual cost of a credit report, title examination, title insurance, mortgage guaranty insurance, recording fees, surveys, attorney fees, appraisal fees, and a fee to determine if the property securing the loan is located in a special flood hazard area. No other charges of any kind shall be imposed on or be payable by the borrower either to the lender or any other party in connection with such loan other than:

1. A fee charged by the settlement agent as defined in § 55.1-1000;

2. Late charges in the amount specified in § 6.2-400 and a prepayment penalty permitted under § 6.2-423 that are contracted for; and

3. Upon default, court costs, attorney fees, trustee's commission, and other expenses of collection to which the borrower may be subject as otherwise permitted by law.

B. Broker's or finder's fees may be paid by the lender from the loan fee or interest permitted under § 6.2-327. A broker's fee, finder's fee, or commission not to exceed five percent of the principal amount of the loan may be paid by the borrower if the total of the loan fee permitted under § 6.2-327 and the broker's fee, finder's fee, or commission does not exceed five percent of the principal amount of the loan.

C. The premium for any insurance required or provided pursuant to § 6.2-411 shall not be considered a charge imposed on or payable by the borrower in connection with the loan.

D. No charge may be imposed or collected, except as permitted by § 6.2-327, if the loan is not made.

E. This section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.

F. The borrower under any loan to which the provisions of this section apply may assert any defense or claim he may have under §§ 6.2-304 and 6.2-305 against any assignee or transferee of the contract of indebtedness.

1987, c. 622, § 6.1-330.72; 1993, c. 774; 1995, c. 75; 1996, c. 243; 1998, cc. 69, 89; 2010, c. 794.

§ 6.2-329. Loans insured or guaranteed by certain governmental agencies.

A. No person shall, by way of defense or otherwise, avail himself of any of the provisions of this chapter or any other law relating to usury or any statutory or case law relating to compounding of interest to avoid or defeat the payment of any interest or any other sum which he has contracted to pay on any loan:

1. Insured by the Federal Housing Administration, pursuant to the provisions of the National Housing Act (12 U.S.C. § 1701 et seq.);

2. Guaranteed by the U.S. Department of Veterans Affairs, pursuant to Title 38 of the United States Code; or

3. Insured or guaranteed by any similar federal governmental agency or organization, or made directly or indirectly by the Virginia Housing Development Authority pursuant to the provisions of Chapter 1.2 (§ 36-55.24 et seq.) of Title 36.

B. Nothing contained in this chapter shall be construed to prevent the recovery of such interest or any other sum from any person who has contracted to pay the same in connection with any loan described in this section.

1987, c. 622, § 6.1-330.74; 2010, c. 794.

Chapter 4. Certain Lending Practices.

Article 1. Late Charges and Rebates of Unearned Interest.

§ 6.2-400. Amount of late charge; when charge can be made.

A. As used in this section:

"Late charges" does not include charges imposed upon acceleration of the entire debt or costs of collection and attorney fees as otherwise permitted by law by reason of a default by the debtor.

"Timely payment" means a payment made by the date fixed for payment or within a period of seven calendar days after such due date.

B. Any lender or seller may impose a late charge for failure to make timely payment of any installment due on a debt, whether installment or single maturity, provided that such late charge does not exceed five percent of the amount of such installment payment and that the charge is specified in the contract between the lender or seller and the debtor.

C. If any federal governmental agency or organization shall adopt any rules or regulations dealing with the application of late penalties as to loans insured or guaranteed by such federal agency or organization, then such rules and regulations shall control as to such loans insured or guaranteed by them.

D. Any provision for late charges in excess of the amount permitted by this section shall be void as to such excess but shall not otherwise affect the validity of the obligation.

1987, c. 622, § 6.1-330.80; 2010, c. 794.

§ 6.2-401. Acceleration clause in note evidencing installment loan; effect of acceleration.

A. Any note or other contract evidencing an installment loan or other installment sales obligation with add-on interest may provide that the entire unpaid loan balance, at the option of the holder, shall become due and payable upon default in payment of any installment without impairing the negotiability of the note, if otherwise negotiable.

B. Upon such acceleration, the holder of the contract of indebtedness shall not be entitled to judgment for unearned interest, but the balance owing shall be computed as follows:

1. On loans payable in equal periodic installments with an initial maturity and corresponding amortization period not exceeding 61 months, the accelerated balance shall be calculated as if the borrower had made a voluntary prepayment and obtained as of the date of acceleration an interest credit based upon the Rule of 78 rebate method as defined in § 6.2-403; and

2. On other loans, the accelerated balance shall be calculated under a method at least as favorable to the borrower as the actuarial method.

C. The accelerated balance shall bear interest at the rate shown, or that should have been shown as the annual percentage rate under a truth in lending disclosure pursuant to federal law if the transaction was a consumer credit transaction.

1987, c. 622, § 6.1-330.89; 1990, c. 338; 1991, cc. 171, 365; 2010, c. 794.

§ 6.2-402. Notice of use of Rule of 78 rebate method.

Where any loan or sale on credit contains a provision that a rebate of unearned interest shall be calculated in accordance with the Rule of 78 rebate method as defined in § 6.2-403, the note or other instrument evidencing the loan or sale on credit shall contain a notice advising the borrower of the effect of the interest calculation. The notice shall be in all capital letters and in 10-point type, and shall be substantially as follows:

NOTICE: IF YOU PAY THIS LOAN OR SALE ON CREDIT PARTIALLY OR IN FULL BEFORE ITS DUE DATE, THE AMOUNT OF INTEREST YOU PAY WILL BE GREATER THAN THE AMOUNT OF INTEREST YOU WOULD PAY FOR A SIMPLE INTEREST LOAN OF THE SAME PRINCIPAL AMOUNT.

1990, c. 941, § 6.1-330.85:1; 2010, c. 794.

§ 6.2-403. The Rule of 78.

A. The Rule of 78 is so named because the integers one through 12 added together total 78.

B. The amount of the rebate of unearned interest to be credited upon the acceleration or anticipation of a loan on which such rebate is required to be calculated under the Rule of 78 shall be calculated as follows:

1. Determine the denominator of the fraction, to be used as provided in subdivision 3, by adding the integers corresponding to the number of months over which the loan is to be repaid according to its terms, which in the example of a four-year loan would be the sum obtained by adding all of the integers in the series one through 48.

2. Determine the numerator of the fraction, to be used as provided in subdivision 3, by adding in inverse sequence the integers corresponding to the number of months remaining on the loan after payment is anticipated, which in the example of a four-year loan anticipated after the third month, would be the sum obtained by adding all of the integers in the series 45 through one.

3. Multiply the original amount of interest that would have been paid over the life of the loan by a fraction that has as its denominator the number determined as in subdivision 1 and as its numerator the number determined as in subdivision 2. The product is the amount of unearned interest to be rebated under the Rule of 78.

C. Payment anticipated between scheduled payment dates shall not be considered but instead the succeeding scheduled payment date shall be used in determining the amount of unearned interest to be rebated under the Rule of 78 pursuant to this section.

1987, c. 622, § 6.1-330.86; 2010, c. 794.

§ 6.2-404. When use of Rule of 78 prohibited or permitted.

A. The Rule of 78 shall not be used to determine the amount of unearned interest to be rebated if payment of the debt is anticipated on any (i) loan of money made after January 1, 1991, with an initial maturity of more than 61 months; or (ii) sales contract made after January 1, 1991, that necessitates a loan as described in clause (i).

B. On any loan of money made with an initial maturity and corresponding amortization period of 61 months or less and that is payable in equal periodic installments, the Rule of 78 may be used to determine the amount of unearned interest to be rebated if payment of the debt is anticipated on the loan or contract.

1990, c. 338, § 6.1-330.86:1; 1991, c. 171; 2010, c. 794.

§ 6.2-405. References to sections regulating rebates of unearned interest and prepayment penalties.

A. This article does not affect the application of §§ 6.2-420 through 6.2-423 regarding the imposition of prepayment penalties or rebates of unearned interest on certain loans secured by a lien on real estate.

B. This article does not affect the application of § 6.2-1409 regarding the imposition of prepayment penalties or rebates of unearned interest on loans made by an industrial loan association.

2010, c. 794.

Article 2. Loans Secured By Lien on Real Estate.

§ 6.2-406. Disclosure of terms of mortgage application.

A. Any lender making, or broker arranging, loans secured by a first mortgage or first deed of trust on owner occupied residential real estate consisting of one- to four-family dwelling units shall provide, at the time an application for such a loan is submitted by a loan applicant, to the loan applicant a written statement that:

1. Describes when the interest, points, and fees quoted will be locked in; and

2. Provides a good faith estimate of the processing time required for the loan. The estimate shall take into account the time needed for the performance of any local government inspections or other functions necessary to close the loan.

B. The requirements of subsection A shall not apply to any lender making 10 or fewer loans secured by a first mortgage or first deed of trust on such owner occupied residential real estate in any 12-month period.

1988, c. 311, § 6.1-2.9:5; 2010, c. 794; 2016, c. 328.

§ 6.2-407. Lenders to furnish borrower with copy of appraisal.

Any lender that requires a borrower or prospective borrower to pay for an appraisal of residential real estate made in connection with a loan or application for a loan secured by the real estate shall, upon request by the borrower or prospective borrower, furnish free of charge the borrower or prospective borrower with a copy of the written appraisal or, if no written appraisal exists, with a statement of the appraised value within 10 business days of the receipt of such request.

1979, c. 101, § 6.1-2.9; 1988, c. 155; 1990, c. 7; 2010, c. 794.

§ 6.2-408. Priority of interest on debts secured by mortgage or deed of trust.

Interest that is charged pursuant to a written agreement, whether or not recorded, shall be of equal priority with the principal debt secured by the mortgage or deed of trust and shall have priority as to third parties as provided in Title 55.1.

1987, c. 622, § 6.1-330.69; 2010, c. 794.

§ 6.2-409. Addition of unpaid interest to principal balance.

A. For the purpose of this section:

"First deed of trust" or "first mortgage" includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate.

"Grantor" or "mortgagor" includes an owner of real estate, and spouse, who has assumed responsibility for the obligation secured by such deed of trust or mortgage encumbering the real estate.

"Real estate" includes a leasehold estate of not less than 25 years.

B. Notwithstanding any other statutory or case law relating to compounding of interest, if regularly scheduled periodic payments on an obligation secured by a first mortgage or first deed of trust on real estate are insufficient to pay currently accruing interest on the then principal balance, an agreement in the contract of indebtedness, or other agreement signed by the borrower, providing for the addition of such unpaid interest to the principal balance and the future accrual of interest on such balances, shall be enforceable as written.

C. Disclosure of charges in a disclosure given to the borrower pursuant to federal disclosure laws or regulations and acceptance of the loan proceeds by the borrower shall be deemed an agreement signed by the borrower within the meaning of this section.

1987, c. 622, § 6.1-330.69; 2010, c. 794.

§ 6.2-410. Borrowers not to be required to employ particular professionals.

In the case of loans secured by deeds of trust or mortgages on one- to four-family dwelling units, the lender may not require the borrower to use the services of a particular attorney, surveyor, or insurer. The lender shall have the right to approve any attorney, surveyor, or insurer selected by the borrower, provided such approval is not unreasonably withheld.

1987, c. 622, § 6.1-330.70; 1990, c. 3; 2010, c. 794.

§ 6.2-411. Requirements relating to insurance.

A. Any lender making a loan secured by a subordinate mortgage or deed of trust, as defined in § 6.2-300, may require the borrower to provide:

1. Evidence of flood insurance if the security property is located in a special flood hazard area;

2. Evidence of fire and extended coverage insurance; and

3. Decreasing term life insurance, in an amount not exceeding the amount of the loan and for a period not exceeding the term of the loan.

B. At the option of the borrower, accident and health insurance and involuntary unemployment insurance may be provided by the lender.

C. Proof of all insurance issued in connection with loans subject to this chapter shall be furnished to the borrower within 10 days from the date the loan is closed.

1987, c. 622, § 6.1-330.72; 1993, c. 774; 1995, c. 75; 1996, c. 243; 1998, cc. 69, 89; 2010, c. 794.

§ 6.2-412. Insurance coverage under certain loans not to exceed replacement value of improvements.

A. As used in this section:

"Flood insurance coverage" means insurance against loss or damage to any property caused by flooding or the rising of the waters of the ocean or its tributaries.

"Property insurance coverage" means insurance against losses or damages caused by perils that commonly are covered in insurance policies described with terms similar to "standard fire" or "standard fire with extended coverage."

B. No lender shall require a borrower, as a condition to receiving or maintaining a loan secured by any mortgage or deed of trust, to provide or purchase property insurance coverage or flood insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement value of the improvements on the real property.

C. In determining the replacement value of the improvements on any real property, the lender may:

1. Accept the value placed on the improvements by the insurer; or

2. Use the value placed on the improvements that is determined by the lender's appraisal of the real property.

D. A violation of this section shall not affect the validity of the mortgage or deed of trust securing the loan.

1989, c. 230, § 6.1-2.6:1; 2010, c. 794; 2014, c. 247.

§ 6.2-413. Obligation of lender to reimburse unused mortgage guaranty insurance premiums.

Any lender that requires, as a prerequisite to its lending money for the purchase of real property, that private mortgage insurance be secured to insure a certain amount of the lender's interest in the property shall return to the person who paid the premium, or other person entitled thereto, any portion of the premium for such insurance that is not used to secure insurance for the lender's interest in the property.

1980, c. 748, § 6.1-2.9:1; 1990, c. 7; 2010, c. 794.

§ 6.2-414. Obligation of person maintaining escrow account to pay taxes and insurance; penalties.

Any lender or other person maintaining escrow accounts for the payment of taxes or insurance, who on receipt of notice thereof, fails to make timely payment therefor, and incurs a penalty or late charge thereon or a cancellation for nonpayment if there are sufficient funds in such escrow account at least five days before such due date to make such payment, shall be liable for the penalty or late charge assessed for late payment and for any loss as a result of the property being uninsured for nonpayment. The lender or other person shall give written notice to any obligor of the payment of such penalty or late charge within five days after such payment is made.

1978, c. 685, § 6.1-2.8; 2010, c. 794.

§ 6.2-415. Lender not to cancel insurance policy at time of refinancing under certain circumstances.

A. No lender shall require a borrower or debtor, for the protection of property securing the credit or lien, to cancel an existing insurance policy on such property at the time of a refinancing solely to change the effective dates of coverage under the policy, unless the expiration date of such policy is within four months of the date of the closing.

B. The provision of subsection A shall not prevent a lender from requesting a new policy when the coverage under the existing policy is inadequate or there is reasonable concern over the soundness or services of the insurer.

1995, c. 175, § 6.1-2.9:6; 2010, c. 794.

§ 6.2-416. Certain mortgages not to prohibit further encumbrance of real property.

Where any loan is secured by a mortgage or deed of trust on real property comprised of one- to four-family residential dwelling units, the note, or mortgage or deed of trust evidencing such loan shall in no way prohibit the further encumbrance of the real property.

1975, c. 398, § 6.1-2.5; 2010, c. 794.

§ 6.2-417. Mortgage or deed of trust to contain notice that debt is subject to call or modification on conveyance of property.

Where any loan is secured by a mortgage or deed of trust on real property comprised of one- to four-family residential dwelling units, and the note or mortgage or deed of trust evidencing or securing the loan contains a provision that the holder of the note secured by such mortgage or deed of trust may accelerate payment of or renegotiate the terms of such loan upon sale or conveyance of the security property or part thereof, then the mortgage or deed of trust shall contain in the body a statement, either in capital letters or underlined, that advises the borrower as follows: "Notice -- The debt secured hereby is subject to call in full or the terms thereof being modified in the event of sale or conveyance of the property conveyed."

1987, c. 622, § 6.1-330.88; 2010, c. 794; 2014, c. 330.

§ 6.2-418. Property owner entitled to written statement of payoff amount.

A. If an obligation is secured by the lien of a deed of trust or mortgage on real estate, and the owner of the real estate is entitled to prepay the obligation secured by the deed of trust or mortgage, the owner shall be entitled to receive from the holder of the obligation a written statement setting forth the total amount to be paid as of a particular date in order to obtain a release of the deed of trust or mortgage.

B. The holder of the obligation secured by the deed of trust or mortgage shall mail or deliver such written statement of the payoff amount to the property owner or his designee within 10 business days of the receipt of a written request for such payoff information from the property owner or his designee if the request contains the loan number and the address or other description of the location of the subject premises.

C. Upon payment in full of the obligation, the holder shall promptly cause the cancelled loan documents to be forwarded to the owner or his designee.

D. An inadvertent error made in the calculation of the payoff amount shall neither release the obligor from the requirement to pay the full amount due under the contract of indebtedness, nor release the holder of the contract of indebtedness from the requirement to return any overpayment to the obligor or his designee.

E. A request for payoff information under this section may be made one time within a 12-month period without charge, and a fee not exceeding $15 may be charged for each additional request made within such period.

1987, c. 622, § 6.1-330.82; 2010, c. 794.

§ 6.2-419. Disclosure of terms of assumption.

A. An owner of residential real estate that is improved by the construction thereon of housing consisting of four or fewer dwelling units and encumbered by a mortgage or deed of trust shall have the right, upon written request to any holder of the obligation secured by the mortgage or deed of trust, to receive a written disclosure of whether the holder will permit a qualified purchaser to assume the mortgage or deed of trust. If the answer is in the affirmative, the holder shall disclose the following information regarding the terms of such assumption:

1. The rate of interest to be assumed, which may vary with an exterior standard;

2. The balance of the escrow account, if any;

3. Any fees and charges to be assessed by the holder against the seller and buyer in connection with the assumption;

4. Usual limitations or requirements placed on the assumption; and

5. Other terms and conditions of the assumption deemed pertinent by the holder.

B. The holder shall state the time period during which the terms disclosed pursuant to subsection A shall be valid, together with any limitations thereon.

C. Any holder receiving such a written request from an owner shall respond in writing within 10 business days of the receipt of the request.

D. Any holder receiving a second or subsequent written request with respect to the same mortgage or deed of trust within any 12-month period may charge a fee, not to exceed $15, for each additional request. The fee shall be paid in advance.

1982, c. 233, § 6.1-2.9:3; 1990, c. 7; 2010, c. 794.

§ 6.2-420. Prepayment penalty not to be collected in certain circumstances.

No lender shall collect or receive any prepayment penalty on loans secured by real property comprised of one- to four-family residential dwelling units if the prepayment results from the enforcement of the right to call the loan upon the sale of the real property that secures the loan. If the loan is prepaid because of sale to a person who the lender has refused to approve for purposes of assuming the loan or failed to approve within 15 days after receipt by it of written request for approval, the prepayment shall be presumed to result from enforcement of the right to call the loan.

1987, c. 622, § 6.1-330.87; 2010, c. 794.

§ 6.2-421. Certain contracts to permit prepayment; amount of prepayment penalty.

A. For the purpose of this section:

1. "First deed of trust" or "first mortgage" includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate; and

2. "Real estate" includes a leasehold estate of not less than 25 years.

B. Every loan contract, except as provided in subsection D, that is secured by a first deed of trust or first mortgage on real estate if the principal amount of the loan is less than $75,000, shall:

1. Permit the prepayment of the unpaid principal at any time; and

2. Not provide for a prepayment penalty in excess of one percent of the unpaid principal balance.

C. Any prepayment penalty provision in violation of subdivision B 2 shall be unenforceable as to the amount in excess of one percent of such balance.

D. The provisions of:

1. Subsections B and C shall not apply to secured or unsecured notes evidencing installment sales contracts; and

2. Subdivision B 2 and subsection C shall not apply to any loan contract that is (i) subject to § 6.2-422 or 6.2-1409 or (ii) governmentally regulated as to prepayment privilege.

1987, c. 622, §§ 6.1-330.69, 6.1-330.81; 2010, c. 794.

§ 6.2-422. Prepayment penalty for loan secured by home occupied by borrower.

The prepayment penalty in the case of a loan secured by a mortgage or deed of trust on a home that is occupied or to be occupied in whole or in part by a borrower shall not exceed two percent of the amount of such prepayment.

1987, c. 622, § 6.1-330.83; 2010, c. 794.

§ 6.2-423. Prepayment of loans secured by certain subordinate mortgages or deeds of trust; rebates for unearned interest.

A. Any borrower under any loan secured by a subordinate mortgage or deed of trust on residential real estate, which loan is subject to the provisions of § 6.2-327, shall have the right to anticipate payment of his debt in whole or in part at any time. If agreed to by the borrower, a lender may contract for a penalty for prepayment of the full amount of the loan if the prepayment penalty shall not exceed two percent of the principal amount prepaid, but no prepayment penalty shall be imposed if:

1. The loan is refinanced or consolidated with the same lender or a subsequent noteholder;

2. The loan is accelerated due to default;

3. A partial prepayment is made; or

4. In the case of an open-end credit plan, as defined in § 6.2-300, where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage.

B. If interest has been added to the face amount of a note payable in installments, the borrower shall have the right to a rebate of any unearned interest. On loans with an initial maturity and corresponding amortization period of 61 or fewer months that are payable in equal periodic installments, the rebate shall be computed in accordance with the Rule of 78 as illustrated in § 6.2-403. On loans with an initial maturity of more than 61 months, the rebate shall be computed under a method at least as favorable to the borrower as the actuarial method.

C. The provisions of this section shall not apply to any loan made by (i) a bank, savings institution, industrial loan association, or credit union or (ii) a seller in a real estate sales transaction who takes a subordinate mortgage or deed of trust on such real estate.

1987, c. 622, § 6.1-330.85; 1990, c. 338; 1991, c. 171; 1998, c. 89; 2010, c. 794.

Article 3. Credit Cards.

§ 6.2-424. Definitions.

As used in this article, unless the context otherwise requires:

"Cardholder" means the person or organization named on the face of a credit card to whom or for whose benefit the credit card was issued by an issuer.

"Credit card" means any instrument or device, whether known as a credit card, credit plate, or by any other name, issued with or without fee by an issuer for the use of the cardholder in obtaining money, goods, services, or any other thing of value.

"Issuer" means the business organization or financial institution or its duly authorized agent that issues a credit card.

"Payment device" means any credit card, any "accepted card or other means of access" as defined in 15 U.S.C. § 1693a(1), or any card that enables a person to pay for transactions through the use of value stored on the card itself.

1970, c. 324, § 11-30; 2010, c. 794.

§ 6.2-425. Cardholder not liable in absence of request for, consent to issuance of, or use of card.

A. A cardholder who receives a credit card from an issuer, which card the cardholder has not requested nor consented to the issuance of in writing, nor used, shall not be liable for any amount owing because of a use of the credit card.

B. The failure to destroy or return an unsolicited credit card shall neither:

1. Be evidence of a cardholder's request for or consent to the issuance of the credit card, nor

2. Constitute negligence on the part of the cardholder.

C. Use by an authorized agent of the cardholder shall be the equivalent of use by the cardholder. The burden of proving the authority of an agent shall be upon the issuer.

1970, c. 324, § 11-31; 2010, c. 794.

§ 6.2-426. When request, consent, or use not condition precedent to liability.

The request, consent, or use required in § 6.2-425 as a condition precedent to liability shall not be necessary in any instance:

1. Of a credit card that is a renewal of a credit card previously held and used by the cardholder or his authorized agent within 12 months of the renewal date; or

2. Where the card is issued to a customer who has previously established credit with the issuer and has used such credit within 12 months prior to the issuance of the card.

1970, c. 324, § 11-32; 2010, c. 794.

§ 6.2-427. Costs and attorney fee in suit on card; evidence of request or consent.

A. In any suit arising out of the use of a credit card, where the request, consent, or use as required by § 6.2-425 is denied and is not proved, and judgment shall be for the defendant, the court shall assess against the issuer all court costs and shall award the defendant a reasonable attorney fee.

B. For purposes of subsection A, a certified copy of the request or consent shall be admissible as evidence that such request or consent was obtained.

1970, c. 324, § 11-33; 2010, c. 794.

§ 6.2-428. Production of credit card number as condition of check cashing or acceptance prohibited.

A. Except as otherwise provided in subsection D, no person shall, as a means of identification or for any other purpose:

1. Require that a person produce a credit card number for recordation; or

2. Record a credit card number in connection with (i) a sale of goods or services in which a purchaser pays by check or (ii) the acceptance of a check.

B. A person aggrieved by a violation of this section shall be entitled to institute an action to recover his actual damages or $100, whichever is greater, and to injunctive relief against any person who has engaged, is engaged, or is about to engage in any act in violation of this section. Such action shall be brought in the general district or circuit court, whichever is appropriate, of any county or city wherein the defendant resides or has a place of business. In the event the aggrieved party prevails, he may be awarded reasonable attorney fees and court costs in addition to any damages awarded.

C. This section shall not be construed to (i) impose liability on any employee or agent of a person, where that employee or agent has acted in accordance with the directions of his employer, (ii) prohibit a person from requesting a purchaser to display a credit card as an indication of creditworthiness or financial responsibility or as identification, and in these instances the type, the issuer, and the expiration date of the credit card may be recorded, or (iii) require acceptance of a check, whether or not a credit card is presented.

D. A person may require production of and may record a credit card number as a condition for cashing a check only where (i) the person requesting the card number has agreed with the issuer to cash checks as a service to the issuer's cardholders, (ii) the issuer has agreed to guarantee cardholder checks cashed by that person, and (iii) the cardholder has given actual, apparent, or implied authority for use of his card number in this manner and for this purpose.

1990, c. 587, § 11-33.1; 2010, c. 794.

§ 6.2-429. Improper use of payment device numbers.

A. No person that accepts payment devices for any purpose shall print on any receipt provided to the holder of the payment device (i) more than the last four digits of the payment device number or (ii) the expiration date.

B. For transactions in which the sole means of recording the person's payment device number is by handwriting or by an imprint or copy of the payment device, no receipt, other than the one original, shall display the information prohibited in subsection A. Returning all copies, including carbons, that do not comply with this section, to the payment device holder or authorized user or destroying such copies and carbons in front of the payment device holder or authorized user shall constitute compliance with this section.

C. The provisions of this section shall apply to all cash registers or other machines or devices that electronically print receipts for payment device transactions that are placed in service on or after July 1, 2003.

D. For all cash registers or other machines or devices that electronically print receipts for payment device transactions in service prior to July 1, 2003, the provisions of this subsection shall not apply until July 1, 2005.

E. Any person violating this section (i) shall be liable to the payment device holder and the issuer for any damages or expenses, or both, including attorney fees, that the payment device holder incurs due to the use of the payment device without the permission of the payment device holder and (ii) may be compelled, in a proceeding instituted in any appropriate court by the attorney for the Commonwealth, to comply with this section by injunction, mandamus, or other appropriate remedy. Without limiting the remedies authorized by this section in a proceeding instituted by the attorney for the Commonwealth, any person failing, neglecting, or refusing to obey any injunction, mandamus, or other remedy obtained pursuant to this section, shall be subject, in the discretion of the court, to a civil penalty not to exceed $1,000 for each violation.

2002, c. 744, § 11-33.2; 2004, c. 793; 2009, c. 373; 2010, c. 794.

§ 6.2-430. Place where transaction occurred; federal Fair Credit Billing Act.

Solely for the purpose of a buyer asserting claims and defenses pursuant to 15 U.S.C. § 1666i, a transaction shall be presumed to have occurred at the mailing address most recently provided by the cardholder to the card issuer, without regard to the location where the last act necessary for the formation of the contract between the cardholder and the party honoring the card took place.

2004, c. 373, § 11-33.3; 2010, c. 794.

§ 6.2-431. Certain cards excepted.

Except as set forth in § 6.2-428, the provisions of §§ 6.2-424 through 6.2-430 shall not apply to any credit card issued by any telephone company that is subject to supervision or regulation by the Commission.

1970, c. 324, § 11-34; 1990, c. 587; 2010, c. 794.

§ 6.2-432. Credit card account disclosures.

Any application form or preapproved written solicitation for an open-end credit card account to be used for personal, family, or household purposes that is mailed to a consumer residing in the Commonwealth by or on behalf of a creditor, whether or not the creditor is located in the Commonwealth, other than an application form or solicitation included in a magazine, newspaper, or other publication distributed by someone other than the creditor, shall contain or be accompanied by a disclosure that satisfies the initial disclosure requirements of Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).

1987, cc. 622, 639, 714, §§ 6.1-330.63, 6.1-330.78; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2009, cc. 784, 860; 2010, c. 794; 2016, c. 501.

Article 4. Open-End Credit Plans.

§ 6.2-433. Amendment to open-end credit contract or plan by bank or savings institution.

A. Any open-end credit plan, as defined in § 6.2-300, by a bank or savings institution may be amended in any respect by the bank or savings institution at any time and from time to time to modify or delete terms, or to add new terms, which new or modified terms and amendment need not be of a kind previously included in or contemplated by such contract or plan, or of a kind integral to the relationship of the parties, by following the procedures, if any, set forth in the contract or plan for effecting changes in the terms thereof, subject to the bank's or savings institution's complying with any applicable notice requirements under the Truth in Lending Act (15 U.S.C. § 1601 et seq.) and regulations promulgated thereunder, as in effect from time to time.

B. Unless the contract or plan referred to in subsection A otherwise expressly provides, a bank or savings institution may amend such contract or plan in any respect at any time and from time to time, whether or not the amendment or the subject of the amendment was originally contemplated or addressed by the parties or is integral to the relationship between the parties. Without limiting the foregoing, such amendment may change terms by the addition of new terms or by the deletion or modification of existing terms, whether relating to plan benefits or features, the periodic rate or rates used to calculate finance charges, the manner of calculating periodic rate finance charges or outstanding unpaid indebtedness, variable schedules or formulas, finance charges other than periodic rate finance charges, other charges or fees, collateral requirements, methods for obtaining or repaying extensions of credit, attorney fees, plan termination, the manner for amending the terms of the contract or plan, arbitration or other alternative dispute resolution mechanisms, or other matters of any kind whatsoever. Unless the contract or plan otherwise expressly provides, any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower's account under the contract or plan, including any such indebtedness that arose prior to the effective date of the amendment. A contract or plan may be amended pursuant to this subsection regardless of whether the contract or plan is active or inactive or whether additional borrowings are available thereunder. Any such amendment may become effective as determined by the bank or savings institution, subject to compliance by the bank or savings institution with any applicable provisions under the Truth in Lending Act (15 U.S.C. § 1601 et seq.) and the regulations promulgated thereunder, as in effect from time to time. Any notice of an amendment sent by the bank or savings institution may be included in the same envelope with a periodic statement or as part of the periodic statement or in other materials sent to the borrower.

1987, cc. 622, 639, 714, § 6.1-330.63; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2010, c. 794.

§ 6.2-434. Law governing open-end credit contract or plan by bank or savings institution.

An open-end credit plan, as defined in § 6.2-300, between a bank or savings institution and an obligor, or any plan which permits an obligor to avail himself of the credit so established, shall be governed solely by federal law, and by the laws of the Commonwealth, unless otherwise expressly agreed in writing by the parties.

1987, cc. 622, 639, 714, § 6.1-330.63; 1992, Sp. Sess., c. 4; 1997, c. 112; 2005, c. 670; 2010, c. 794.

§ 6.2-435. Law governing open-end credit contract or plan by seller or lender.

An open-end credit plan as defined in § 6.2-300, between a seller or lender and an obligor shall be governed solely by federal law and by the laws of the Commonwealth.

1987, cc. 622, 639, 714, § 6.1-330.78; 1992, Sp. Sess., c. 4; 1997, c. 112; 2009, cc. 784, 860; 2010, c. 794; 2020, cc. 1215, 1258.

Article 5. Additional Provisions Applicable to Consumer Credit.

§ 6.2-436. Compliance with federal law.

Every person subject to the provisions of 15 U.S.C. § 1601 et seq. and Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026) shall comply with such statutes and regulations when offering or extending consumer credit as defined therein. A lender who fails to comply with this section shall not be subject to any liability or penalty beyond those imposed by such federal statutes and regulations.

1987, c. 622, § 6.1-330.79; 2010, c. 794; 2016, c. 501.

§ 6.2-437. Right of buyer of consumer goods to refinance certain payments; agreements as to fluctuation in schedule of payments.

A. In any sales transaction, except one pursuant to an open-end account, involving exclusively consumer goods as defined in subdivision (a) (23) of § 8.9A-102 in which credit is extended and a security interest in consumer goods is taken, any installment payment, other than a down payment made prior to or contemporaneously with the execution of an agreement evidencing the transaction, that is more than 10 percent greater than the regular or recurring installment payments, shall be subject to the buyer's right to refinance such a payment on the basis of an extended period of time. Such additional payments shall be in amounts that shall allow the unpaid balance to be paid in as few periodic payments, not more than 10 percent greater than the regularly scheduled installment payments, as are required to pay such balance. Such additional payments shall be considered and treated as part of the original transaction.

B. The parties may agree in a separate writing that one or more payments or the intervals between one or more payments shall be reduced or expanded in accordance with the desires or needs of the buyer, if such fluctuations in the schedule of payments are expressly arranged to coincide with the anticipated fluctuations in the buyer's capability to make such payments.

C. No seller who has refused to refinance in compliance with the provisions of this section shall be entitled (i) to the return or repossession of the goods involved in the transaction or (ii) to a judgment for the unpaid balance involved in the transaction at the time of his failure to do so.

1987, c. 622, § 6.1-330.90; 2010, c. 794.

Chapter 5. Equal Credit Opportunities.

§ 6.2-500. Definitions.

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

"Adverse action" means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. The term does not include a refusal to extend additional credit under an existing credit arrangement where the applicant is delinquent or otherwise in default, or where such additional credit would exceed a previously established credit limit.

"Applicant" means any person who applies to a creditor directly for an extension, renewal, or continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding the previously established credit limit.

"Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment or to purchase property or services and defer payment therefor.

"Creditor" means any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.

1975, c. 627, § 59.1-21.20; 1977, c. 589; 2010, c. 794.

§ 6.2-501. Prohibited discrimination.

A. As used in this section, "age" means being an individual who is at least 18 years of age.

B. It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction:

1. On the basis of race, color, religion, national origin, sex, marital status, sexual orientation, gender identity, pregnancy, childbirth or related medical conditions, age, disability, or status as a veteran provided that the applicant has the capacity to contract; or

2. Because all or part of the applicant's income derives from any public assistance or social services program.

C. It shall not constitute discrimination for purposes of this chapter for a creditor:

1. To make an inquiry of marital status if such inquiry is for the purpose of ascertaining the creditor's rights and remedies applicable to the particular extension of credit and not to discriminate in a determination of creditworthiness;

2. To make an inquiry of the applicant's age or of whether the applicant's income derives from any public assistance or social services program if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of creditworthiness as provided in regulations of the Commission;

3. To use any empirically derived credit system which considers age if such system is demonstrably and statistically sound in accordance with regulations of the Commission, except that in the operation of such system the age of an elderly applicant may not be assigned a negative factor or value; or

4. To make an inquiry or to consider the age of an elderly applicant when the age of such applicant is to be used by the creditor in the extension of credit in favor of such applicant.

D. It is not a violation of this section for a creditor to refuse to extend credit offered pursuant to:

1. Any credit assistance program expressly authorized by law for an economically disadvantaged class of persons;

2. Any credit assistance program administered by a nonprofit organization for its members or an economically disadvantaged class of persons; or

3. Any special purpose credit program offered by a profit-making organization to meet special social needs which meets standards prescribed in regulations by the Commission, if such refusal is required by or made pursuant to such program.

1977, c. 589, § 59.1-21.21:1; 2002, c. 747; 2010, c. 794; 2020, cc. 1137, 1140.

§ 6.2-502. Notification of action on credit application.

Within 30 days, or such longer reasonable time as specified in regulations of the Commission for any class of credit transaction, after receipt of a completed application for credit, a creditor shall notify the applicant of its action on the application.

1977, c. 589, § 59.1-21.21:1; 2002, c. 747; 2010, c. 794.

§ 6.2-503. Statement of reasons for adverse action.

A. Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for the action on the application from the creditor. A creditor shall satisfy this obligation by:

1. Providing statement of reasons in writing as a matter of course to applicants against whom adverse action is taken; or

2. Giving written notification of adverse action that discloses (i) the applicant's right to a statement of reasons within 30 days after receipt by the creditor of a request made within 60 days after such notification and (ii) the identity of the person or office from which such statement may be obtained. The statement may be given orally if the written notification advises the applicant of his right to have the statement of reasons confirmed in writing on written request.

B. A statement of reasons meets the requirements of this section only if it contains the specific reasons for the adverse action taken.

C. Where a creditor has been requested by a third party to make a specific extension of credit directly or indirectly to an applicant, the notification and statement of reasons required by this section may be made directly by such creditor, or indirectly through the third party, provided in either case that the identity of the creditor is disclosed.

D. The requirements of subsections A, B, and C may be satisfied by oral statements or notifications in the case of any creditor who did not act on more than 150 applications during the calendar year preceding the calendar year in which the adverse action is taken, as determined under regulations of the Commission.

1977, c. 589, § 59.1-21.21:1; 2002, c. 747; 2010, c. 794.

§ 6.2-504. Requirement of signatures of both parties to a marriage not discriminatory in a secured transaction.

For the purposes of a secured transaction, a request for the signature of both parties to a marriage for the purpose of creating a valid lien, passing clear title, waiving inchoate rights to property, or assigning earnings, shall not constitute discrimination under this chapter. This provision shall not be construed to permit a creditor to take sex or marital status into account in connection with the evaluation of creditworthiness of any applicant.

1975, c. 627, § 59.1-21.22; 1977, c. 589; 2010, c. 794.

§ 6.2-505. Remedies for violation.

A. Any creditor who fails to comply with any requirement imposed under this chapter shall be liable to the aggrieved applicant in an amount equal to the sum of any actual damages sustained by such applicant.

B. Any creditor, other than the federal or state government or any political subdivision or agency of such government, who fails to comply with any requirement imposed under this chapter shall be liable to the aggrieved applicant for punitive damages in an amount not greater than $10,000, as determined by the court, in addition to any actual damages provided in subsection A.

C. Upon application by an aggrieved applicant, an appropriate court may grant such equitable and declaratory relief as is necessary to enforce the requirements imposed under this chapter.

D. In the case of any successful action to enforce the foregoing liability, the costs of the action, together with the reasonable attorney fee as determined by the court, shall be added to any damages awarded by the court under the provisions of subsections A, B, and C.

E. Any action under this chapter may be brought in an appropriate court within two years from the date of the occurrence of the violation.

1975, c. 627, § 59.1-21.23; 1977, c. 589; 2010, c. 794.

§ 6.2-506. Commission regulations.

The Commission shall adopt regulations to effectuate the purposes of this chapter provided that such regulations conform to and are no broader in scope than regulations, and amendments thereto, adopted by the Consumer Financial Protection Bureau under the federal Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.). Such conforming regulations shall exempt from the coverage of this chapter any class of transactions which may be exempted from time to time from the federal Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), by regulations of the Consumer Financial Protection Bureau.

1975, c. 627, § 59.1-21.24; 1977, c. 589; 2010, c. 794; 2016, c. 501.

§ 6.2-507. Limitation on liability.

No provision of this chapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Commission or by the Consumer Financial Protection Bureau or officer or employee duly authorized by the Bureau to issue such interpretation or approvals under the comparable provisions of the federal Equal Credit Opportunity Act, (15 U.S.C. § 1691 et seq.), and regulations thereunder, notwithstanding that after such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

1975, c. 627, § 59.1-21.24; 1977, c. 589; 2010, c. 794; 2016, c. 501.

§ 6.2-508. Compliance with Equal Credit Opportunity Act constitutes compliance with chapter.

Compliance with the federal Equal Credit Opportunity Act, (15 U.S.C. § 1691 et seq.), as amended, and regulations issued by the Consumer Financial Protection Bureau thereunder, constitutes compliance with this chapter.

1975, c. 627, § 59.1-21.24; 1977, c. 589; 2010, c. 794; 2016, c. 501.

§ 6.2-509. Public to be informed of rights under chapter.

The Commission shall use any methods available to it to inform the public of the rights created by this chapter. Notice given pursuant to the federal Equal Credit Opportunity Act, (15 U.S.C. § 1691 et seq.), and regulations promulgated thereto, shall satisfy the requirements of this section.

1977, c. 589, § 59.1-21.25; 2010, c. 794.

§ 6.2-510. Commission to investigate complaints; records to be open to public.

The Commission shall receive, investigate, and mediate complaints of violations of this chapter and shall keep all records pertaining to such complaints, investigations, and mediations open to the public. Nothing in this section shall toll the operation of subsection E of § 6.2-505.

1977, c. 589, § 59.1-21.26; 2010, c. 794.

§ 6.2-511. Credit standards discoverable.

Nothing in this chapter shall be construed to prohibit the discovery of a creditor's standards for granting credit, which discovery shall be under appropriate discovery procedures in the court in which an action is brought.

1977, c. 589, § 59.1-21.27; 2010, c. 794.

§ 6.2-512. Election of remedies.

Where the same act or omission constitutes a violation of this chapter and of applicable federal law, a person aggrieved by such conduct may bring a legal action to recover monetary damages either under this chapter or under federal law, but not both. This election of remedies shall not apply to court actions in which the relief sought does not include monetary damages or to administrative actions.

1977, c. 589, § 59.1-21.28; 2010, c. 794.

§ 6.2-513. Authority of Attorney General.

Notwithstanding any other provisions of the law to the contrary, the Attorney General may investigate and bring an action in the name of the Commonwealth to enjoin any violation of this chapter.

1970, c. 780, § 59.1-68.2; 1973, c. 537; 1975, c. 43; 1984, c. 582; 2010, c. 794.