6.2-888 - (Effective October 1, 2010) Real estate brokerage business of controlled subsidiary.

§ 6.2-888. (Effective October 1, 2010) Real estate brokerage business ofcontrolled subsidiary.

A. In addition to the types of business authorized in §§ 6.2-885 and 6.2-887,a controlled subsidiary corporation may be formed and licensed to transactbusiness as a real estate brokerage firm in accordance with § 54.1-2106.1,provided such controlled subsidiary corporation transacts the real estatebrokerage business and such services only in accordance with the specificprovisions of this section. Such controlled subsidiary corporation shall besubject to the provisions of Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1that are otherwise applicable to real estate brokerage companies transactinga comparable business.

B. A controlled subsidiary corporation of a state bank may own and transactbusiness as a real estate brokerage firm and provide the services of a realestate brokerage firm, only upon the Commission's determination that thestate bank making application to do so is in full compliance with applicablelaw. The investment of any bank in the stock, securities, or otherobligations of a controlled subsidiary corporation shall be approved by theCommission only upon a determination by the Commission that (i) thedepositors of the bank are adequately protected from the risk of suchownership and (ii) the ownership is a safe and sound investment for the bankin accordance with applicable law. Such determination shall include but notbe limited to providing written notice to the Virginia Real Estate Board andreceiving written confirmation from the Virginia Real Estate Board that thereal estate brokerage firm, to be owned, and its brokers, are in goodstanding in accordance with the requirements of Chapter 21 (§ 54.1-2100 etseq.) of Title 54.1.

C. A controlled subsidiary corporation of a state bank may own and transactbusiness as a real estate brokerage firm only in compliance with thefollowing:

1. The controlled subsidiary corporation, or a state bank that owns acontrolled subsidiary corporation, that engages in real estate brokerage,shall not:

a. Impose a requirement, orally or in writing, that a borrower shall contractfor or enter into any other arrangement for real estate services with itsaffiliated real estate brokerage firm;

b. Impose a requirement, orally or in writing, that as a condition ofapproving a loan a borrower shall contract or enter into any otherarrangement with its affiliated real estate brokerage firm;

c. Impose a requirement, orally or in writing, that a real estate brokeragecustomer shall make application for a loan or any other service or servicesof a particular bank or any of its subsidiaries, affiliates, or serviceentities, except as otherwise permitted under the Real Estate SettlementProcedures Act of 1974, (12 U.S.C. § 2601 et seq.), and regulations adoptedthereunder;

d. Impose a requirement, orally or in writing, that a condition of providingreal estate brokerage services is that the customer shall make applicationfor a loan or any other arrangement for other services of the bank or any ofits subsidiaries, affiliates, or service entities, except as otherwisepermitted under the Real Estate Settlement Procedures Act of 1974, (12 U.S.C.§ 2601 et seq.), and regulations adopted thereunder;

e. Offer or provide more favorable consideration, terms, or conditions forany financial products or services to induce or attempt to induce a person toenter into any arrangement for real estate brokerage services with anyparticular real estate brokerage firm;

f. Offer or provide more favorable terms or conditions for any real estatebrokerage services to induce or attempt to induce a person to apply for aloan or obtain any other services of a particular bank or any of itssubsidiaries, affiliates, or service entities;

g. Conduct real estate brokerage activities in the same areas of a buildingwhere the bank routinely accepts retail deposits from the general public;

h. Conduct real estate brokerage activities in areas of a building that areidentified as areas where banking activities occur;

i. Conduct banking activities in areas of the building that are identified asareas where real estate brokerage activities occur;

j. Make payment to its employees for any referrals of real estate brokeragebusiness;

k. Use confidential credit and other financial information available from thebank for solicitation purposes by a real estate brokerage affiliate, withoutfirst having obtained the written consent of the customer;

l. Use or transfer from a bank to any affiliated real estate brokerage firmany financial information of or relating to any unaffiliated competing realestate brokerage firm that is an actual or prospective customer; or

m. Use, directly or indirectly, nonpublic customer information that is heldor obtained by the bank for the purpose of soliciting real estate business,without first having obtained the written consent of the customer;

2. A state bank that makes a referral to its affiliated real estate brokeragefirm shall clearly and conspicuously disclose in writing, in a separatedocument, to any person who applies for credit related to a real estatetransaction or applies for prequalification or preapproval for credit relatedto a real estate transaction, that the person is not required to consultwith, contract for, or enter into an arrangement for real estate brokerageservices with its affiliated real estate brokerage firm; and

3. A real estate brokerage firm that is affiliated with a bank shall clearlyand conspicuously disclose in writing, in a separate document, before thetime an agency agreement for real estate brokerage services is executed, thatthe person is not required to apply, contract for, or enter into any otherarrangement for services of a particular bank or any of its subsidiaries,affiliates, or service entities.

D. The requirements of this section are in addition to the requirements ofthe Real Estate Settlement Procedures Act of 1974, (12 U.S.C. § 2601 etseq.), and regulations adopted thereunder.

E. State banks owning and transacting business as real estate brokerage firmsunder this section are subject to the provisions of Chapter 27.2 (§ 55-525.8et seq.) of Title 55.

F. A state bank that acts as a mortgage broker, as defined in § 6.2-1600, andthat transacts business as a real estate brokerage through a controlledsubsidiary corporation, is subject to subdivision B 5 and subsection C of §6.2-1616; however, a state bank that, pursuant to an executed originatingagreement with the Virginia Housing Development Authority, acts or offers toact as an originating agent of the Virginia Housing Development Authority inconnection with a mortgage loan shall not be deemed to be acting as amortgage broker with respect to such mortgage loan but shall be deemed to beacting as a mortgage lender with respect to such mortgage loan,notwithstanding that the Virginia Housing Development Authority is or wouldbe the payee on the note evidencing such mortgage loan and that the VirginiaHousing Development Authority provides or would provide the funding of suchmortgage loan prior to or at the settlement thereof.

G. In the event of a violation of this section, the Commission may take suchaction as is authorized in accordance with § 6.2-946, including issuance ofan order requiring the state bank to cease and desist the activity thatviolates this section and imposing penalties.

(2003, cc. 536, 558, § 6.1-58.3; 2006, c. 422; 2010, c. 794.)