New Virginia Laws Impacting Financial Institutions: What to Know Before July 1, 2026

Virginia’s 2026 legislative session reflects a broader trend toward increased consumer protections, heightened operational accountability for financial institutions, and greater scrutiny of servicing and collection practices. While some of the new laws require only modest procedural adjustments, others will necessitate significant updates to policies, forms, employee training programs, technology systems, and vendor relationships. Financial institutions should view these developments not as isolated statutory changes, but as part of a broader compliance landscape that increasingly places responsibility on institutions to proactively identify, prevent, and address consumer harm.

Garnishment Reform – HB 601 / SB 301

The most significant financial-services legislation enacted during the 2026 session was HB 601/SB 301, which substantially revises Virginia’s garnishment procedures that apply to depository institutions.

The legislation requires depository institutions to automatically protect:

• A minimum protected account balance of up to $1,000 for judgment debtors
• Certain protected federal and state benefit payments deposited within the preceding two months

The legislation establishes detailed account-review procedures and shifts greater responsibility to financial institutions to identify and protect exempt funds before responding to garnishment process.

Action: Financial institutions will need to revise garnishment procedures, employee training, account review processes, forms, and vendor relationships to ensure compliance. The legislation represents the most substantial change to Virginia garnishment law affecting depository institutions in decades.

Read a full explanation of this new law and its effect on financial institutions.

Conventional Mortgage Loan Assumptions Following Divorce – HB 304

This legislation requires lenders making conventional residential mortgage loans secured by owner-occupied Virginia residential real estate on or after July 1, 2026, to include provisions permitting one borrower to assume the departing borrower’s portion of the mortgage obligation in connection with a divorce or annulment, as long as the assuming borrower satisfies the lender’s underwriting requirements.

Action: Mortgage lenders will need to amend their mortgage loan documents in accordance with the legislation and address servicing procedures and assumption policies to ensure compliance with the new law.

Uniform Consumer Debt Default Judgments Act – HB 444

This legislation adopts the Uniform Consumer Debt Default Judgments Act and establishes additional procedural requirements before creditors may obtain default judgments in consumer debt collection actions.

The legislation is designed to improve the reliability of evidence supporting consumer debt claims and to reduce the risk of default judgments being entered based upon incomplete or inaccurate records.

Although directed primarily at litigation procedures, the Act will affect banks, credit unions, finance companies, debt buyers, and collection agencies pursuing judicial collection remedies in Virginia courts. The law has a delayed effective date of July 1, 2027.

Administration of Estates and Creditor Claims – HB 307

HB 307 creates a statutory procedure permitting a personal representative to provide notice to potential creditors of a decedent’s estate and establishes corresponding deadlines for the assertion of claims against the estate.

Action: Financial institutions should review the new notice and claims procedures to ensure their interests are protected.

Electronic Fund Transfer Fraud Study – HB 190

HB 190 directs the Office of the Attorney General to convene a stakeholder work group to examine fraud involving electronic fund transfers and to develop recommendations for preventing and mitigating such fraud.

The work group will include representatives of financial institutions, the Bureau of Financial Institutions, consumer groups, and other stakeholders. Particular focus will be placed on impersonation scams, digital fraud schemes, and other fraudulent activities involving electronic fund transfers.

Although the legislation does not impose new significant obligations, it signals increasing legislative attention to fraud losses occurring through electronic payment channels and may lead to further legislative or regulatory initiatives.

Small Estate Affidavit – HB 100

This legislation directs that the small asset affidavit used for the collection of an asset by successors of a decedent must be on a form prepared by the Office of the Executive Secretary of the Supreme Court of Virginia.

Action: Financial institutions generally have used their own small asset affidavit forms for successors to collect sums in decedent accounts. Such forms will need to be replaced by the new form provided by the Executive Secretary pursuant to this legislation.

Virtual Currency Kiosks – HB 665 / SB 489

This legislation establishes requirements for the operation of virtual currency kiosks in Virginia.

Consumer Finance Companies; GAP Waivers and Insurance – HB 1309

This legislation authorizes consumer finance companies to impose charges for providing guaranteed asset protection (GAP) waivers and GAP insurance in connection with their loans.

Limitation on the Enforcement of Judgment – HB 1426

This legislation states that, for judgments entered in the general district court on or after July 1, 2026, when enforcement is sought by a debt buyer, the docketing of an abstract of the judgment in the circuit court does not affect the 10-year limitation period to enforce the judgment.

Under current law, this docketing allows a general district court judgment to be treated as a judgment entered by the circuit court and may be extended in the same manner as a judgment entered by the circuit court.

Financial Institution Officers and Directors – SB 734

This legislation authorizes the State Corporation Commission, upon a petition brought by or on behalf of an individual, to permit that individual to serve as an officer of more than one financial institution.

An individual seeking to serve on the board of directors of more than one financial institution already has the ability to petition the State Corporation Commission under current law.

Conclusion

The 2026 General Assembly session produced several noteworthy developments for Virginia financial institutions. The garnishment reforms enacted through HB 601/SB 301 are likely to have the greatest immediate operational impact, while HB 304’s mortgage assumption requirements and HB 444’s debt collection reforms will require compliance reviews. Financial institutions should review policies, procedures, forms, and vendor relationships in advance of the July 1, 2026, effective date.

If you have questions about how these legislative changes may affect your institution, please contact Jay Spruill.