Banking and Finance


Consumer Finance Act; limitation to natural persons. Limits the applicability of the Consumer Finance Act to loans made to natural persons for personal, family, household or other nonbusiness purposes.
Patron - Keating

Money order sales and money transmission services; acquisition of control. Requires the State Corporation Commission to receive and review an application and other necessary information from any person seeking to acquire directly or indirectly 25 percent or more of the voting shares or ownership of a business engaged in the sale of money orders or money transmission. The State Corporation Commission will permit the acquisition if, following investigation of the application and other information, it finds that the applicant and any directors, senior officers, and principals have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with the law. Persons acquiring an interest in such a business directly or indirectly by merger or consolidation (i) by or with a person already licensed, (ii) by or with a person affiliated through common ownership, or (iii) by bequest, descent, survivorship or operation of law do not have to file an application, but must send written notice to the State Corporation Commission of such acquisition.
Patron - Keating

Credit unions; out-of-state credit unions. Allows the State Corporation Commission to examine out-of-state credit unions conducting business in Virginia and to enter into cooperative agreements with other state credit union supervisors and federal agencies having concurrent jurisdiction over out-of-state credit unions regarding reports of examination and reports of investigation. This bill also permits the State Corporation Commission to assess out-of-state credit unions for supervisory and examination fees and authorizes the State Corporation Commission to enter into agreements to share such fees with other state and federal regulators.
Patron - Morgan

Banking; subordinate mortgages. Allows a lender making a subordinate mortgage loan to collect (i) a fee for having the secured property examined to determine if it is in a flood plain and (ii) a prepayment fee not to exceed two percent of the principal amount of the loan for prepayment of the loan in full. The bill prohibits a lender from collecting a prepayment penalty in the event of partial prepayment or where there is a payment of the outstanding balance on an open-end loan without demand to release the evidence of indebtedness.
Patron - Callahan

Consumer Real Estate Settlement Protection Act; settlement services. Provides that a licensee or his employees or independent contractors, who are not named as settlement agents in a real estate purchasing contract or on the settlement statement may perform escrow, closing, or settlement services to facilitate the settlement of the transaction so long as the licensee is otherwise authorized by law or regulation to perform such services.
Patron - Croshaw

Banking and finance and local government; recovery of costs for bad checks and failure to pay accounts due. Increases from $20 to $25 the amount a local government may collect from a person using a bad check to pay taxes or other sums due.
Patron - Quayle

Banking; certificate of authority. Removes the requirement of establishing a separate capital account labeled "reserve for operation" prior to a bank receiving a certificate of authority from the State Corporation Commission. Financial reports do not normally provide such reserves, and including these reserves is in violation of Generally Accepted Accounting Procedures (GAAP).
Patron - Colgan

Banking; fees for supervision, regulation, and investigations. Permits the State Corporation Commission to reduce by order or regulation the statutory fees charged to banks, savings institutions and state savings banks for investigating various applications, including applications (i) for a certificate of authority, (ii) to establish, acquire or relocate one or more branches, (iii) for approval of a merger or consolidation, (iv) for authority to exercise trust powers, and (v) for certain conversions. The Commission may reduce such rates if the Commission concludes that there is a reasonable basis for doing so and that the reduction of the fee will not be detrimental to the effectiveness of the Bureau of Financial Institutions.
Patron - Colgan

Mortgage lenders and brokers; acquisition of control. Provides a technical and clarifying amendment concerning the control share acquisition threshold of 25 percent or more in the Mortgage Lender and Broker Act.
Patron - Miller, Y.B.

Credit unions; electronic filing of annual reports. Authorizes credit unions to file electronically their annual reports to the Virginia State Corporation Commission. A credit union that submits a report electronically must maintain a copy of the report with certified signatures affixed.
Patron - Holland

Banking; acquisitions of Virginia banks by out-of-state bank holding companies. Provides that acquisitions of Virginia banks by out-of-state bank holding companies are subject to the same application and review process as acquisitions of Virginia banks by other entities. This bill eliminates differences between interstate acquisitions by bank holding companies and by other entities. Any proposed acquisitions of Virginia banks and bank holding companies will continue to be subject to an application and review process.
Patron - Watkins

Consumer Real Estate Settlement Protection Act; settlement services. Provides that a licensed realtor, his employees and independent contractors not named as settlement agents in a real estate purchasing contract or on the settlement statement may nevertheless perform escrow, closing, or settlement services to facilitate the settlement of the transaction without complying with the provisions of CRESPA, if the licensed realtor is not otherwise prohibited by law or regulation from performing such services.
Patron - Barry

Consumer finance companies; examination of accounts, books and records. Reduces the frequency of the State Corporation Commission's examinations of finance companies from twice to once in every three-year period. The bill also permits records of consumer finance licensees to be maintained electronically. Finally, the bill permits notes pledged as security for commercial funding of a finance company to be deposited wherever the commercial lender may require.
Patron - Holland

Controlled subsidiary; transaction of insurance business. Permits controlled subsidiary corporations, subject to conditions imposed by the State Corporation Commission, to underwrite reinsurance of mortgage guaranty insurance on real estate loans made or purchased by the controlled subsidiary's affiliates or by banks owning such controlled subsidiary. "Controlled subsidiary corporations" are defined as domestic or foreign corporations whose majority voting stock is owned directly or indirectly by (i) a bank organized under the laws of the United States, (ii) a bank organized under the laws of Virginia or any other state, or (iii) a bank holding company owning a bank in Virginia or any other state.
Patron - Norment

Settlement Agents. Amends provisions concerning settlement agents in the Consumer Real Estate Settlement Protection Act (CRESPA), and adds provisions concerning settlement agent fees in a statute governing subordinate mortgage loans. Principal changes in CRESPA include those which: (i) authorize licensed realtors, their employees or independent contractors not named as the settlement agents in real estate purchase contracts to nevertheless perform escrow, closing or settlement services (if such licensees are not otherwise prohibited by law or regulation from performing these functions) without complying with CRESPA; (ii) redefine "settlement agent" to mean the individual furnishing settlement services who is listed as the settlement agent in the real estate purchase contract; (iii) require settlement agents other than attorneys or title insurance companies to have analyses of their escrow accounts conducted at least once in each consecutive 12-month period; (iv) delete reference to the requirement that escrow fund disbursements be accomplished via written instructions (signed by both sellers and purchasers or borrowers) conforming to the federal Real Estate Settlement Procedures Act; as amended, written instructions signed by both sellers and purchasers or borrowers will be deemed sufficient; and (v) require all CRESPA-governed real estate settlement statements to be in writing, and identify, by name and business address, the settlement agent. An additional provision in the bill permits lenders to charge borrowers for the cost of a settlement agent's services in connection with making a loan secured by a subordinate mortgage or deed of trust.
Patron - Barry

Consumer Real Estate Settlement Protection Act; party to the real estate transaction. Amends the definition of "party to the real estate transaction" to include, with respect to real estate transactions to which a corporate entity is a party, any entity which is a subsidiary of or under common ownership with that corporate entity.
Patron - Reasor


Insurance agents; extension of time for completion of continuing education requirements. Permits the Insurance Continuing Education Board (the Board) to grant extensions of time for an insurance agent to complete continuing education requirements for instances of excusable neglect. The Board may grant this extension on such terms and conditions as it may deem warranted.
Patron - Edwards

Carried Over

Banking and finance; joint accounts; rights of survivorship; identification of joint accounts. Provides that sums remaining in a joint account at the time of death of a party to the joint account shall be owned in proportion to the ownership interests of all joint owners, including the estate of the deceased party. The bill also allows owners of joint accounts, P.O.D. accounts, and trust accounts to specify beneficiaries, payees, or owners in a will. Such will must be executed subsequent to the establishment of the joint, P.O.D., or trust account and provided to the bank or other institution holding the funds of the account. Unless the bank or party holding the funds has received a copy of the will providing otherwise, funds are to be paid out in accordance with the records establishing the joint, P.O.D., or trust account. In the absence of a will, any bank or institution making payment in accordance with the terms of the account is not liable to any party for making such payment. A party entitled to funds from a joint, P.O.D., or trust account under the terms of a will may recover the funds from any party who received such funds according to the express terms of a joint, P.O.D., or trust account. Additionally, the bill requires that all documents establishing P.O.D. accounts, joint accounts with survivorship, and joint accounts with no survivorship be executed with the formalities of a will. Documents establishing a joint account with no survivorship must specifically state that a new joint owner will own an equal share in the account and that this ownership will continue after the death of any joint owner unless the account is established to specifically state otherwise.
Patron - Dickinson

Banking and finance; private mortgage insurance; termination. Establishes criteria terminating private mortgage insurance by operation of law. The bill requires lenders of mortgage loans to disclose to borrowers in writing at or before settlement the conditions and procedures for termination of private mortgage insurance. The borrower's obligation to make payments for private mortgage insurance terminates when the principal balance outstanding on all residential mortgages securing the property is equal to or less than 75 percent of either (i) the sales price of the property when purchased, (ii) the appraised value of the property as determined by the appraisal performed in connection with the making of the loan, or (iii) the appraised value of the property as determined by an appraisal performed at any time after the making of the loan. These automatic termination provisions do not apply to (i) mortgage loans on which the payments are not current, (ii) mortgage loans for which the borrower has been assessed more than one late penalty in the 12-month period preceding cancellation, (iii) mortgage loans executed before July 1, 1998, or (iv) loans funded in whole or part pursuant to a statute or regulation that prohibits or limits termination of payments for private mortgage insurance.
Patron - Quayle