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Government Relations Team Successfully Negotiates Key Banking Legislation

Bowles Rice Banking Alert
April 10, 2017

The Bowles Rice Government Relations team, representing the Community Bankers of West Virginia, successfully negotiated two key pieces of legislation for the banking industry during the 2017 legislative session. Senate Bill 344, which amends the application of payments for consumer loans, and Senate Bill 563, which contains comprehensive amendments to the West Virginia Consumer Credit Protection Act, have passed both the Senate and House of Delegates and are awaiting the Governor's signature. A summary of key provisions of these two bills follows:

SB 344, the application of payments bill, which passed the Senate and House of Delegates is the culmination of a three-year effort by the banking industry to modify provisions of the WVCCPA that prescribed how payments received from a consumer borrower must be applied for purposes of charging a late fee. The current law, which requires that payments must be applied first to the current installment, created operational confusion and uncertainty for West Virginia banks. The new law brings clarity to the process by providing that payments will now be applied first in the order in which they are due, and then to delinquency and other outstanding charges. Additionally, this bill allows for banks to hold partial payments in suspense accounts until full payment is received. Once full payment is received, banks shall apply the payment to the loan.

On behalf of the Community Bankers of West Virginia, Bowles Rice assisted the Senate Judiciary Committee, under the leadership of Senator Charles Trump, in crafting and negotiating comprehensive amendments to the WVCCPA. SB 563 contains several significant and positive changes for the banking industry. Most notable is a new requirement that consumers provide creditors and debt collectors a notice of right to cure alleged violations of specific articles of the WVCCPA prior to filing suit.  The legislation sets forth the procedures for presenting and accepting the right to cure and prescribes the circumstances in which the consumer may be entitled to attorneys' fees and court costs.

The bill also amends current law relating to the requirement that a borrower notify a creditor that the borrower is represented by legal counsel requiring that consumers send notification by certified mail and prohibiting electronic notice. The legislation also increases the time from seventy two hours to three business days for debt collectors and creditors to cease direct contact with the consumer.

Other changes to the WVCCPA include:

  • Amending 46A-2-105(2) to only require that promissory notes which contain a balloon payment be in the form and substance substantially similar to the language contained in the code provision (as opposed to the exact language set forth in the code)
  • Amending the statute of limitations from four years to one year for any claims relating to setting aside a foreclosure sale
  • Clarifying that any counterclaim brought under the WVCCPA is subject to the applicable statute of limitations
  • Excluding pleadings as the basis of a cause of action under the WVCCPA unless the pleading is a material violation certain specific provisions of the WVCCPA.