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1998 SESSION
980835144Be it enacted by the General Assembly of Virginia:
1. That §§ 6.1-330.72 and 6.1-330.85 of the Code of Virginia are amended and reenacted as follows:
§ 6.1-330.72. Loans secured by subordinate mortgage; charges allowed; requirements relating to insurance.
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 § 6.1-330.71, the actual cost of a credit report, title
examination, title insurance, mortgage guaranty insurance, recording fees,
surveys, attorney's fees, and appraisal fees, and fees 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; provided, late charges in the amount specified in §
6.1-330.80 and a prepayment penalty permitted under § 6.1-330.85
may be made contracted for and, upon default, the
borrower may be subject to court costs, attorney's fees, trustee's commission
and other expenses of collection as otherwise permitted by law. Broker's or
finder's fees may be paid by the lender from the loan fee or interest permitted
under § 6.1-330.71. A broker's fee, finder's fee or commission may be paid
by the borrower not to exceed five percent of the principal amount of the loan
if the total of the loan fee permitted under § 6.1-330.71 and broker's
fees, finder's fees or commissions does not exceed five percent of the
principal amount of the loan.
B. Evidence of flood insurance if the security property is located in a special flood hazard area, fire and extended coverage insurance may be required by the lender of the borrower and the premium shall not be considered as a charge. 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, may also be required by the lender of the borrower and the premium shall not be considered as a charge. At the option of the borrower, accident and health insurance and involuntary unemployment insurance may be provided by the lender, and the premium therefor shall not be considered a charge. Proof of all insurance issued in connection with loans subject to this chapter shall be furnished to the borrower within ten days from the date the loan is closed.
C. No charge may be imposed or collected, except as permitted by § 6.1-330.71, if the loan is not made.
D. This section shall not apply to any loan made by any lender enumerated in § 6.1-330.73.
§ 6.1-330.85. Prepayment of loan described in § 6.1-330.71; rebates for unearned interest.
A. Any borrower under any loan described in § 6.1-330.71 shall have the
right to anticipate payment of his debt in whole or in part at any time
without penalty. A lender may contract for a
penalty for prepayment of the full amount of the
loan, but such prepayment penalty shall not exceed two percent of
the principal amount prepaid. However, such prepayment
penalty may not be imposed if
(i) the loan is refinanced or
consolidated with the same lender or a subsequent
noteholder or (ii) the loan is
accelerated due to default. No penalty shall be charged in the event of partial
prepayment or in the case of an
open-end credit plan where there is a payment of the outstanding
balance without a demand to release the subordinate deed of trust or
mortgage. In cases where 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, which rebate shall be computed in accordance
with the Rule of 78 as illustrated in § 6.1-330.86 on loans (i) with an
initial maturity and corresponding amortization period of sixty-one months or
less and (ii) payable in equal periodic installments. On loans with an initial
maturity of more than sixty-one months, the borrower shall receive a rebate
computed under a method at least as favorable to the borrower as the actuarial
method.
B. The provisions of this section shall not apply to any loan made by any lender enumerated in § 6.1-330.73.