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Financial Services Law Insights and Observations

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  • Virginia issues modified stay at home order identifying banks and financial institution as essential retail businesses

    State Issues

    On December 10, the governor of Virginia issued a modified stay at home order limiting travel and gatherings for Virginia residents and operations for certain businesses. However, banks and other financial institutions with retail functions are considered essential retail businesses and may continue to remain open during normal business hours. All businesses, including essential retail businesses, are advised to adhere to the Guidelines for All Business Sectors.

    State Issues Covid-19 Virginia Financial Institutions Retail Banking Bank Compliance

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  • Virginia stays residential foreclosure proceedings

    State Issues

    On November 9, 2020 the Virginia governor signed House Bill 5115, which places restrictions on foreclosures. The law provides tenants who are defendants in a unlawful detainer action for failure to pay rent with a 60-day continuance, and a 30-day stay of foreclosure proceedings for owners of one-to-four-family units or larger residential dwelling units, if those tenants or owners provide “written proof” (as defined in the bill) that they were affected by Covid-19. Stays must be requested within 90 days following the end of the declared emergency, and the bill itself is set to expire 90 days after the end of the declared emergency.

    State Issues Covid-19 Virginia Mortgages Foreclosure

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  • Virginia directs additional funds for rent and mortgage relief

    State Issues

    On October 7, Virginia’s governor announced his direction of $12 million in additional funding from the federal CARES Act to Virginia’s Rent and Mortgage Relief Program. The program was first launched in June with $50 million in funding available for renters and homeowners. In September, the program began allowing landlords to apply for payments on behalf of tenants.

    State Issues Covid-19 Virginia Mortgages CARES Act

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  • Virginia governor announces expansion of grant program for small businesses, nonprofits

    State Issues

    On September 21, the Virginia governor announced the expansion of the Rebuild VA, the $70 million economic recovery fund for small businesses and nonprofits impacted by Covid-19. As a result of the expanded eligibility requirements, businesses that received funding from the federal CARES Act and supply chain partners of businesses whose normal operations were impacted by the Covid-19 pandemic will be eligible to receive grants of up to $10,000. The Rebuild VA funding may be used for, among other things, payroll support, employee salaries, and mortgage payments, rent, and utilities. The announcement provides additional information regarding eligibility for the grants.

    State Issues Covid-19 Virginia Small Business CARES Act Mortgages

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  • Virginia Supreme Court grants temporary statewide moratorium on evictions

    State Issues

    On August 7, the Virginia Supreme Court, at the request of the governor, granted a temporary statewide moratorium on eviction proceedings in Virginia. The order suspends the issuance of writs of eviction pursuant to unlawful detainer actions, unless such writs are unrelated to a failure to pay rent. The moratorium is effective through September 7.

    State Issues Covid-19 Virginia Mortgages Evictions

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  • 4th Circuit affirms arbitration clause waiving statutory rights is unenforceable

    Courts

    On July 21, the U.S. Court of Appeals for the Fourth Circuit affirmed a district court’s denial of defendants’ motion to compel arbitration, holding that the arbitration agreements operated as prospective waivers of federal law and were thus unenforceable. According to the opinion, a group of Virginia borrowers filed suit against two online lenders owned by a sovereign Native American tribe and their investors (collectively, “defendants”). In the action, the plaintiffs contended that they obtained payday loans from the defendants, which included annual interest rates between 219 percent to 373 percent—an alleged violation of Virginia’s usury laws and the Racketeer Influenced and Corrupt Organizations Act (RICO). The defendants moved to compel arbitration, which the district court denied, concluding that choice-of-law provisions—such as “‘[t]his agreement to arbitrate shall be governed by Tribal Law’; ‘[t]he arbitrator shall apply Tribal Law’; and the arbitration award ‘must be consistent with this Agreement and Tribal Law’”—prospectively excluded federal law, making them unenforceable.

    On appeal, the 4th Circuit agreed with the district court despite a “strong federal policy in favor of enforcing arbitration agreements.” Most significantly, the appellate court rejected the defendants’ assertion that the choice-of-law provisions did not operate as a prospective waiver. The court noted that while the choice-of-law provisions “do not explicitly disclaim the application of federal law, the practical effect is the same,” as they limit an arbitrator’s award to “remedies available under Tribal Law,” effectively preempting “the application of any contrary law—including contrary federal law.” Moreover, the appellate court concluded that under the arbitration agreement, borrowers would be unable to effectively pursue RICO claims against the defendants, and more specifically, would be unable to “effectively vindicate a federal statutory claim for treble damages” under RICO. Thus, because federal statutory protections and remedies are unavailable to borrowers under the agreement, the appellate court concluded the entire agreement is unenforceable.  

    Courts Payday Lending Tribal Lending Arbitration Interest Rate Fourth Circuit Appellate Online Lending State Issues Virginia RICO

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  • Virginia announces temporary moratorium on evictions

    State Issues

    On June 8, Virginia announced a temporary moratorium on residential eviction proceedings through June 28. The order suspending evictions remains in effect through June 28. Eviction proceedings are halted for a period of almost three weeks while the governor implements a rent relief program.

    State Issues Covid-19 Virginia Mortgages Evictions

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  • Virginia Bureau of Financial Institutions issues policy statement regarding Covid-19

    State Issues

    The Virginia Bureau of Financial Institutions issued a policy statement encouraging supervised financial institutions to work constructively to mitigate the impacts of Covid-19 on Virginia consumers and businesses. The bureau advised licensees that data security, internal controls, and adherence to safe and sound lending practices are of paramount importance in alternative work programs.  The bureau also will work with financial institutions when scheduling examinations and will place an increased emphasis on off-site reviews and examinations. The policy statement is effective through July 1, 2020, unless modified or withdrawn.

    State Issues Covid-19 Virginia Financial Institutions Licensing Privacy/Cyber Risk & Data Security Examination

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  • Virginia regulator extends procedural orders requiring electronic service and filing

    State Issues

    On May 11, the Virginia State Corporation Commission issued an order extending its earlier procedural orders that modify its operating and service of order procedures to permit electronic service of commission orders and electronic filing of certain business documents (previously covered here).

    State Issues Covid-19 Virginia Fintech

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  • States offer relief to student loan borrowers not covered by CARES Act

    Federal Issues

    On April 23 and 21, nine states announced a multi-state initiative to provide student loan relief options for borrowers with privately held student loans not covered by the CARES Act. California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, and Washington outlined within their announcements specific measures for borrowers with commercially-owned Federal Family Education Loan Program loans and borrowers with private student loans who are struggling to make payments due to the Covid-19 pandemic. The announcements also noted that Virginia is participating in the initiative as well. These relief options, offered in conjunction with the listed private student loan servicers, include (i) a minimum 90-days of forbearance relief; (ii) a waiver of late fees; (iii) no negative credit reporting; (iv) a 90-day moratorium on collection lawsuits; and (v) enrollment in applicable borrower assistance programs, such as income-based repayment. The states cautioned that enrollment in these relief options is not automatic, and recommended borrowers contact their student loan servicer to see what options best suit their needs.

    In addition, California, Colorado, Connecticut, New Jersey, Vermont, and Washington recommended that regulated student loan servicers with limited ability to take these actions due to investor restrictions or contractual obligations “should instead proactively work with loan holders whenever possible to relax those restrictions or obligations.”

    Federal Issues Student Lending State Issues State Regulators Covid-19 CARES Act Colorado Connecticut Illinois Massachusetts New Jersey Vermont Washington California Virginia

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