Code of Virginia - Title 6.1 Banking And Finance - Section 6.1-422.1

§ 6.1-422.1. "Flipping" prohibited

A. As used in this section, "flipping" a mortgage loan means refinancing a mortgage loan within 12 months following the date the refinanced mortgage loan was originated, unless the refinancing is in the borrower's best interest. Factors to be considered in determining the same would include but not be limited to whether:

1. The borrower's new monthly payment is lower than the total of all monthly obligations being financed, taking into account the costs and fees;

2. There is a change in the amortization period of the new loan;

3. The borrower receives cash in excess of the costs and fees of refinancing;

4. The borrower's note rate of interest is reduced;

5. There is a change from an adjustable to a fixed rate loan, taking into account costs and fees; or

6. The refinancing is necessary to respond to a bona fide personal need or an order of a court of competent jurisdiction.

B. No mortgage lender or broker shall knowingly or intentionally engage in the act or practice of "flipping" a mortgage loan. This provision shall apply regardless of whether the interest rate, points, fees, and charges paid or payable by the borrower in connection with the refinancing exceed any limitation established pursuant to Article 9 (§ 6.1-330.69 et seq.) of Chapter 7.3 of this title.

C. The Attorney General, the Commission, or any party to a mortgage loan may enforce the provisions of this section or § 6.1-422.

D. In any suit instituted by a borrower who alleges that the defendant violated this section or § 6.1-422, the presiding judge may, in the judge's discretion, allow reasonable attorneys' fees to the attorney representing the prevailing party, such attorneys' fees to be taxed as a part of the court costs and payable by the losing party, upon a finding by the presiding judge that (i) the party charged with the violation has willfully engaged in the act or practice with which he was charged; or (ii) the party instituting the action knew, or should have known, that the action was frivolous and malicious.

E. The provisions of this section shall be in addition to, and shall not impair, the rights of and remedies available to borrowers in mortgage loans otherwise provided by law.

(2001, c. 510; 2003, c. 386.)

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Last modified: April 16, 2009