2006 Code of Virginia § 6.1-422 - Prohibited predatory practices

6.1-422. Prohibited predatory practices.

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

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

2. Take an interest in collateral other than the real estate or residentialproperty securing a mortgage loan, including any fixtures and appliancesthereon and any mobile or manufactured home placed on such real estate evenif such mobile or manufactured home is not permanently affixed thereto;

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

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

5. Obtain any agreement or instrument executed by a borrower which containsan acceleration clause permitting the unpaid balance of a mortgage loan to bedeclared due for any reason other than failure to make timely payments ofinterest and principal, submitting false information in connection with anapplication for the mortgage loan, breaching any representation or covenantmade in the agreement or instrument, or failing to perform any otherobligations undertaken in the agreement or instrument;

6. If acting as a mortgage lender, fail to require the person closing themortgage loan to provide to the borrower prior to closing of the mortgageloan, a (i) settlement statement and (ii) disclosure which conforms to thatrequired by the provisions of 15 U.S.C. ( 1601 et seq.) and Regulation Z, 12CFR Part 226; or

7. Recommend or encourage a person to default on an existing loan or otherdebt, if such default adversely affects such person's creditworthiness, inconnection with the solicitation or making of a mortgage loan that refinancesall or any portion of such existing loan or debt.

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

1. Except for documented costs of credit report and appraisals, receivecompensation from a borrower until a written commitment to make a mortgageloan is given to the borrower by a mortgage lender;

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

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

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

5. Receive compensation for negotiating, placing or finding a mortgage loanwhere such mortgage broker, or any person affiliated with such mortgagebroker, has otherwise acted as a real estate broker, agent or salesman inconnection with the sale of the real estate which secures the mortgage loanand such mortgage broker or affiliated person has received or will receiveany other compensation or thing of value from the lender, borrower, seller orany other person, unless the borrower is given the following notice inwriting at the time the mortgage broker services are first offered to theborrower:

NOTICE
WEHAVEOFFEREDTOASSISTYOUINOBTAININGAMORTGAGELOAN.IFWEARE
SUCCESSFULINOBTAININGALOANFORYOU,WEWILLCHARGEANDCOLLECTFROMYOUA
FEEOF.....%OFTHELOANAMOUNT.
WEDONOTREPRESENTALLOFTHELENDERSINTHEMARKETANDTHELENDERSWEDO
REPRESENTMAYNOTOFFERTHELOWESTINTERESTRATESORBESTTERMSAVAILABLETO
YOU.YOUAREFREETOSEEKALOANWITHOUTOURASSISTANCE,INWHICHEVENTYOU
WILLNOTBEREQUIREDTOPAYUSAFEEFORTHATSERVICE.
IFYOUAREAMEMBEROFACREDITUNIONYOUSHOULDCOMPAREOURINTERESTRATES
ANDTERMSWITHTHEMORTGAGELOANSAVAILABLETHROUGHYOURCREDITUNION.
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BORROWER'SSIGNATURE
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BORROWER'SSIGNATURE

The foregoing notice shall be in at least 10-point type and the prospectiveborrower shall acknowledge receipt of the written notice.

As used in this subdivision, the term "affiliated person of a mortgagebroker" means any person which is a subsidiary, stockholder, partner,trustee, director, officer or employee of a mortgage broker, and anycorporation ten percent or more of the capital stock of which is owned by amortgage broker or by any person which is a subsidiary, stockholder, partner,trustee, director, officer or employee of a mortgage broker.

C. Notwithstanding the provisions of subdivision 5 of subsection B, no personshall act as a mortgage broker in connection with any real estate salestransaction in which such person, or any person affiliated with such person(as defined in subdivision 5 of subsection B), has acted as a real estatebroker, agent or salesman and has received or will receive compensation inconnection with such transaction, unless such person was regularly engaged inacting as a mortgage broker in the Commonwealth as of February 25, 1989.However, the provisions of this chapter shall not be construed to prohibit areal estate broker, as defined in 54.1-2100, who is either an owner of aninterest in a real estate firm or acts as a real estate broker in a soleproprietorship from having an ownership interest in a mortgage broker ormortgage lender, as defined in this chapter, or from receiving returns oninvestment arising from such ownership interest or payment of compensationfor services actually performed for such mortgage broker or lender.

(1987, c. 596; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511.)