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Developed and maintained by the Division of Legislative Automated Systems.
1998 SESSION
Be 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 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.