Blog Enforcement Watch September 03, 2021

Virginia AG Settles with Foreclosure Rescue Lender

On August 24, 2021, the Virginia Attorney General (“Virginia AG”) announced that it entered into settlement ​with a Virginia-based lender and its managing member over allegations that the lender violated §§ 6.2-303 and 6.2-1501(A) of Virginia’s consumer finance statute.​​​  The settlement was filed as a consent judgment in the Circuit Court for​ the City of Richmond and was approved by the Court on August 16.

The Virginia AG initially sued the lender in Richmond City Circuit Court on December 2020 for alleged violations of Commonwealth usury laws. The Commonwealth’s complaint alleged that the lender (and its managing member) charged interest or other compensation on loans that exceeded a 12% effective annual interest, without being licensed as a consumer finance company.  According to the Virginia AG, the company sought compensation for some loans through above-market real estate listings and sales commissions or through below-market option sales and purchase prices, instead of seeking compensation by charging traditional interest.

The consent judgment enjoins the lender from making “any loan requiring a collateral sale and/or purchase to Virginia consumers.”  The lender also agreed to pay $11,000​​ to the Commonwealth for attorney’s and other fees. The lender must also refund any fees it collected that exceeded (1) a 12% annual interest and (2) a 6% commission on real estate if the company was the listing and selling agent or a 3% commission if the company only served one of those roles.​​

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