US VIRGIN ISLANDS Law and Practice Contributed by: George H.T. Dudley, G. Hunter Logan, Kurt Petri and Anna Vlasova, Dudley Newman Feuerzeig LLP
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background Interest Rates
make traditional residential and commercial loans to borrowers located in the USVI. 1.6 ESG/Sustainability-Linked Lending ESG or sustainability-linked lending available in the United States is generally also available in the USVI. Because of the USVI’s excellent, sunny weather, solar electricity systems are very popular and financing can be available for the purchase and installation of the systems. Persons making mortgage loans who are subject to qualification and licensing requirements will be regu- lated either as “mortgage lenders”, banks or credit unions. “Mortgage lenders” are, generally speaking, persons or companies making mortgage loans in the USVI who do not qualify as banks or credit unions. Other than federally chartered lenders, any person “doing business” by making mortgage loans in the USVI will be subject to the qualification and licens- ing requirements of the Virgin Islands Department of Banking, Insurance and Financial Regulation. 2. Authorisation 2.1 Providing Financing to a Company A lender making an isolated loan transaction in the USVI is generally considered not to be “doing busi- ness” for purposes of qualification and licensure. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans Foreign lenders who qualify and register to do busi- ness in the USVI will be subject to the qualification and licensing requirements and procedures of the Virgin Islands Department of Banking, Insurance and Finan- cial Regulation. 3.2 Restrictions on Foreign Lenders Receiving Security Foreign lenders may receive security and guarantees from borrowers located in the USVI.
After years of historically low interest rates, the sub- stantial increase in interest rates has decreased demand for loans in the residential and commercial loan markets. Many residential borrowers refinanced or obtained new loans when the rates were low. Own- ers of real property are often reluctant to sell real prop- erty and purchase new property if the interest rate on a new loan is substantially higher than their existing mortgage loan. Regulatory Environment The United States Virgin Islands (USVI) is a territory of the United States, and federal laws and regulations generally apply in the USVI. Changes in federal laws and regulations impact the USVI in much the same manner as in the United States. The government of the Virgin Islands also passes laws that can affect the direction and trends of the loan market, but it has not passed any new laws in recent years that materially impact the loan market. 1.2 Impact of Global Conflicts Like other jurisdictions, global conflicts can add uncer- tainty to the general economic environment, which can adversely impact the desire to borrow and lend money. Uncertainty may also result in higher interest rates for loans. 1.3 The High-Yield Market The high-yield market has very little impact in the USVI. 1.4 Alternative Credit Providers The loan market in the USVI has not seen significant growth in alternative credit providers. The lenders for transactions in the USVI are generally banks and mortgage companies making market rate (or slightly higher) loans. 1.5 Banking and Finance Techniques Banking and finance techniques have seen very little evolution. Banks and mortgage companies generally
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