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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 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; 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 [ , and ] 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. [ As agreed to by the borrower, 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.