                                 CODE OF VIRGINIA

REAL ESTATE BROKERAGE BUSINESS OF CONTROLLED SUBSIDIARY (§ 6.2-888)

A. In addition to the types of business authorized in &#xA7;&#xA7; 6.2-885 and
6.2-887, a controlled subsidiary corporation may be formed and licensed to
transact business as a real estate brokerage firm in accordance with &#xA7;
54.1-2106.1, provided such controlled subsidiary corporation transacts the real
estate brokerage business and such services only in accordance with the specific
provisions of this section. Such controlled subsidiary corporation shall be
subject to the provisions of Chapter 21 (&#xA7; 54.1-2100 et seq.) of Title 54.1
that are otherwise applicable to real estate brokerage companies transacting a
comparable business.

B. A controlled subsidiary corporation of a state bank may own and transact
business as a real estate brokerage firm and provide the services of a real
estate brokerage firm, only upon the Commission&#8217;s determination that the
state bank making application to do so is in full compliance with applicable
law. The investment of any bank in the stock, securities, or other obligations
of a controlled subsidiary corporation shall be approved by the Commission only
upon a determination by the Commission that (i) the depositors of the bank are
adequately protected from the risk of such ownership and (ii) the ownership is a
safe and sound investment for the bank in accordance with applicable law. Such
determination shall include but not be limited to providing written notice to
the Virginia Real Estate Board and receiving written confirmation from the
Virginia Real Estate Board that the real estate brokerage firm, to be owned, and
its brokers, are in good standing in accordance with the requirements of Chapter
21 (&#xA7; 54.1-2100 et seq.) of Title 54.1.

C. A controlled subsidiary corporation of a state bank may own and transact
business as a real estate brokerage firm only in compliance with the following:

   1. The controlled subsidiary corporation, or a state bank that owns a
   controlled subsidiary corporation, that engages in real estate brokerage,
   shall not:
   				a. Impose a requirement, orally or in writing, that a borrower shall
   contract for or enter into any other arrangement for real estate services with
   its affiliated real estate brokerage firm;
   				b. Impose a requirement, orally or in writing, that as a condition of
   approving a loan a borrower shall contract or enter into any other arrangement
   with its affiliated real estate brokerage firm;
   				c. Impose a requirement, orally or in writing, that a real estate
   brokerage customer shall make application for a loan or any other service or
   services of a particular bank or any of its subsidiaries, affiliates, or
   service entities, except as otherwise permitted under the federal Real Estate
   Settlement Procedures Act of 1974 (12 U.S.C. &#xA7; 2601 et seq.) and
   regulations adopted thereunder;
   				d. Impose a requirement, orally or in writing, that a condition of
   providing real estate brokerage services is that the customer shall make
   application for a loan or any other arrangement for other services of the bank
   or any of its subsidiaries, affiliates, or service entities, except as
   otherwise permitted under the federal Real Estate Settlement Procedures Act of
   1974 (12 U.S.C. &#xA7; 2601 et seq.) and regulations adopted thereunder;
   				e. Offer or provide more favorable consideration, terms, or conditions for
   any financial products or services to induce or attempt to induce a person to
   enter into any arrangement for real estate brokerage services with any
   particular real estate brokerage firm;
   				f. Offer or provide more favorable terms or conditions for any real estate
   brokerage services to induce or attempt to induce a person to apply for a loan
   or obtain any other services of a particular bank or any of its subsidiaries,
   affiliates, or service entities;
   				g. Conduct real estate brokerage activities in the same areas of a
   building where the bank routinely accepts retail deposits from the general
   public;
   				h. Conduct real estate brokerage activities in areas of a building that
   are identified as areas where banking activities occur;
   				i. Conduct banking activities in areas of the building that are identified
   as areas where real estate brokerage activities occur;
   				j. Make payment to its employees for any referrals of real estate
   brokerage business;
   				k. Use confidential credit and other financial information available from
   the bank for solicitation purposes by a real estate brokerage affiliate,
   without first having obtained the written consent of the customer;
   				l. Use or transfer from a bank to any affiliated real estate brokerage
   firm any financial information of or relating to any unaffiliated competing
   real estate brokerage firm that is an actual or prospective customer; or
   				m. Use, directly or indirectly, nonpublic customer information that is
   held or 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 brokerage
   firm shall clearly and conspicuously disclose in writing, in a separate
   document, to any person who applies for credit related to a real estate
   transaction or applies for prequalification or preapproval for credit related
   to a real estate transaction, that the person is not required to consult with,
   contract for, or enter into an arrangement for real estate brokerage services
   with its affiliated real estate brokerage firm; and

   3. A real estate brokerage firm that is affiliated with a bank shall clearly
   and conspicuously disclose in writing, in a separate document, before the time
   an agency agreement for real estate brokerage services is executed, that the
   person is not required to apply, contract for, or enter into any other
   arrangement 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 of the
federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. &#xA7; 2601 et
seq.) and regulations adopted thereunder.

E. State banks owning and transacting business as real estate brokerage firms
under this section are subject to the provisions of Chapter 9 (&#xA7; 55.1-900
et seq.) of Title 55.1.

F. A state bank that acts as a mortgage broker, as defined in &#xA7; 6.2-1600,
and that transacts business as a real estate brokerage through a controlled
subsidiary corporation, is subject to subsection C of &#xA7; 6.2-1616; however,
a state bank that, pursuant to an executed originating agreement with the
Virginia Housing Development Authority, acts or offers to act as an originating
agent of the Virginia Housing Development Authority in connection with a
mortgage loan shall not be deemed to be acting as a mortgage broker with respect
to such mortgage loan but shall be deemed to be acting as a mortgage lender with
respect to such mortgage loan, notwithstanding that the Virginia Housing
Development Authority is or would be the payee on the note evidencing such
mortgage loan and that the Virginia Housing Development Authority provides or
would provide the funding of such mortgage loan prior to or at the settlement
thereof.

G. In the event of a violation of this section, the Commission may take such
action as is authorized in accordance with &#xA7; 6.2-946, including issuance of
an order requiring the state bank to cease and desist the activity that violates
this section and imposing penalties.

HISTORY: 2003, cc. 536, 558, § 6.1-58.3; 2006, c. 422; 2010, c. 794; 2022, cc.
400, 401.