EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. Title 54 of NRS is hereby amended by adding thereto a new chapter to consist of the 1-2 provisions set forth as sections 2 to 39, inclusive, of this act.

1-3 Sec. 2. As used in this chapter, unless the context otherwise requires, the words and terms 1-4 defined in sections 3 to 8, inclusive, of this act have the meanings ascribed to them in those sections.

1-5 Sec. 3. "Applicant" means a person who applies for licensure as a mortgage company pursuant 1-6 to this chapter.

1-7 Sec. 4. "Commissioner" means the commissioner of financial institutions.

2-1 Sec. 5. "Depository financial institution" means a bank, savings and loan association, thrift 2-2 company or credit union.

2-3 Sec. 6. "Division" means the division of financial institutions of the department of business and 2-4 industry.

2-5 Sec. 7. "Licensee" means a person who is licensed as a mortgage company pursuant to this 2-6 chapter.

2-7 Sec. 8. 1. "Mortgage company" means any person who, directly or indirectly:

2-8 (a) Holds himself out as being able to:

2-9 (1) Buy or sell notes secured by liens on real property; or

2-10 (2) Make loans secured by liens on real property using his own money; and

2-11 (b) Does not engage in any other act or transaction described in the definition of "mortgage 2-12 broker," as set forth in section 57 of this act, unless the person is also licensed as a mortgage broker 2-13 pursuant to chapter 645B of NRS.

2-14 2. For the purposes of this section, a person does not make a loan secured by a lien on real 2-15 property using his own money if any portion of the money that is used to make the loan is provided 2-16 by another person who acquires ownership of or a beneficial interest in the loan.

2-17 Sec. 9. The provisions of this chapter do not:

2-18 1. Limit any statutory or common law right of a person to bring a civil action against a 2-19 mortgage company for any act or omission involved in the transaction of business by or on behalf of 2-20 the mortgage company;

2-21 2. Limit the right of the state to punish a person for the violation of any law, ordinance or 2-22 regulation; or

2-23 3. Establish a basis for a person to bring a civil action against the state or its officers or 2-24 employees for any act or omission in carrying out the provisions of this chapter, including, without 2-25 limitation, any act or omission relating to the disclosure of information or the failure to disclose 2-26 information pursuant to the provisions of this chapter.

2-27 Sec. 10. Except as otherwise provided in section 11 of this act, the provisions of this chapter do 2-28 not apply to:

2-29 1. Any person doing business under the laws of this state, any other state or the United States 2-30 relating to banks, savings banks, trust companies, savings and loan associations, consumer finance 2-31 companies, industrial loan companies, credit unions, thrift companies or insurance companies, 2-32 unless the business conducted in this state is not subject to supervision by the regulatory authority of 2-33 the other jurisdiction, in which case licensing pursuant to this chapter is required.

2-34 2. A real estate investment trust, as defined in 26 U.S.C. § 856, unless the business conducted in 2-35 this state is not subject to supervision by

3-1 the regulatory authority of the other jurisdiction, in which case licensing pursuant to this chapter 3-2 is required.

3-3 3. An employee benefit plan, as defined in 29 U.S.C. § 1002(3), if the loan is made directly from 3-4 money in the plan by the plan’s trustee.

3-5 4. An attorney at law rendering services in the performance of his duties as an attorney at law.

3-6 5. A real estate broker rendering services in the performance of his duties as a real estate 3-7 broker.

3-8 6. Any firm or corporation:

3-9 (a) Whose principal purpose or activity is lending money on real property which is secured by a 3-10 mortgage;

3-11 (b) Approved by the Federal National Mortgage Association as a seller and servicer; and

3-12 (c) Approved by the Department of Housing and Urban Development and the Department of 3-13 Veterans Affairs.

3-14 7. Any person doing any act under an order of any court.

3-15 8. Any one natural person, or husband and wife, who provides money for investment in loans 3-16 secured by a lien on real property, on his own account, unless such a person makes a loan secured 3-17 by a lien on real property using his own money and assigns all or a part of his interest in the loan to 3-18 another person, other than his spouse or child, within 5 years after the date on which the loan is 3-19 made or the deed of trust is recorded, whichever occurs later.

3-20 9. Agencies of the United States and of this state and its political subdivisions, including the 3-21 public employees’ retirement system.

3-22 10. A seller of real property who offers credit secured by a mortgage of the property sold.

3-23 Sec. 11. 1. A person who claims an exemption from the provisions of this chapter pursuant to 3-24 subsection 1 or 6 of section 10 of this act must:

3-25 (a) File a written application for a certificate of exemption with the office of the commissioner;

3-26 (b) Pay the fee required pursuant to section 14 of this act; and

3-27 (c) Include with the written application satisfactory proof that the person meets the requirements 3-28 of subsection 1 or 6 of section 10 of this act.

3-29 2. The commissioner may require a person who claims an exemption from the provisions of this 3-30 chapter pursuant to subsections 2 to 5, inclusive, or 7 to 10, inclusive, of section 10 of this act to:

3-31 (a) File a written application for a certificate of exemption with the office of the commissioner;

3-32 (b) Pay the fee required pursuant to section 14 of this act; and

4-1 (c) Include with the written application satisfactory proof that the person meets the requirements 4-2 of at least one of those exemptions.

4-3 3. A certificate of exemption expires automatically if, at any time, the person who claims the 4-4 exemption no longer meets the requirements of at least one exemption set forth in the provisions of 4-5 section 10 of this act.

4-6 4. If a certificate of exemption expires automatically pursuant to this section, the person shall 4-7 not provide any of the services of a mortgage company or otherwise engage in, carry on or hold 4-8 himself out as engaging in or carrying on the business of a mortgage company, unless the person 4-9 applies for and is issued:

4-10 (a) A license as a mortgage company pursuant to this chapter; or

4-11 (b) Another certificate of exemption.

4-12 5. The commissioner may impose upon a person who is required to apply for a certificate of 4-13 exemption or who holds a certificate of exemption an administrative fine of not more than $10,000 4-14 for each violation that he commits, if the person:

4-15 (a) Has knowingly made or caused to be made to the commissioner any false representation of 4-16 material fact;

4-17 (b) Has suppressed or withheld from the commissioner any information which the person 4-18 possesses and which, if submitted by him, would have rendered the person ineligible to hold a 4-19 certificate of exemption; or

4-20 (c) Has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an 4-21 order of the commissioner that applies to a person who is required to apply for a certificate of 4-22 exemption or who holds a certificate of exemption.

4-23 Sec. 12. 1. A person may apply to the commissioner for an exemption from the provisions of 4-24 this chapter governing the making of a loan of money.

4-25 2. The commissioner may grant the exemption if he finds that:

4-26 (a) The making of the loan would not be detrimental to the financial condition of the lender or 4-27 the debtor;

4-28 (b) The lender or the debtor has established a record of sound performance, efficient 4-29 management, financial responsibility and integrity;

4-30 (c) The making of the loan is likely to increase the availability of capital for a sector of the state 4-31 economy; and

4-32 (d) The making of the loan is not detrimental to the public interest.

4-33 3. The commissioner:

4-34 (a) May revoke an exemption unless the loan for which the exemption was granted has been 4-35 made; and

4-36 (b) Shall issue a written statement setting forth the reasons for his decision to grant, deny or 4-37 revoke an exemption.

5-1 Sec. 13. 1. A person who wishes to be licensed as a mortgage company must file a written 5-2 application for a license with the office of the commissioner and pay the fee required pursuant to 5-3 section 14 of this act. An application for a license as a mortgage company must:

5-4 (a) Be verified.

5-5 (b) State the name, residence address and business address of the applicant and the location of 5-6 each principal office and branch office at which the mortgage company will conduct business within 5-7 this state.

5-8 (c) State the name under which the applicant will conduct business as a mortgage company.

5-9 (d) If the applicant is not a natural person, list the name, residence address and business address 5-10 of each person who will have an interest in the mortgage company as a principal, partner, officer, 5-11 director or trustee, specifying the capacity and title of each such person.

5-12 (e) Indicate the general plan and character of the business.

5-13 (f) State the length of time the applicant has been engaged in the business of a mortgage 5-14 company.

5-15 (g) Include a financial statement of the applicant.

5-16 (h) Include any other information required pursuant to the regulations adopted by the 5-17 commissioner or an order of the commissioner.

5-18 2. If a mortgage company will conduct business at one or more branch offices within this state, 5-19 the mortgage company must apply for a license for each such branch office.

5-20 3. Except as otherwise provided in this chapter, the commissioner shall issue a license to an 5-21 applicant as a mortgage company if:

5-22 (a) The application complies with the requirements of this chapter; and

5-23 (b) The applicant and each general partner, officer or director of the applicant, if the applicant is 5-24 a partnership, corporation or unincorporated association:

5-25 (1) Has a good reputation for honesty, trustworthiness and integrity and displays competence to 5-26 transact the business of a mortgage company in a manner which safeguards the interests of the 5-27 general public. The applicant must submit satisfactory proof of these qualifications to the 5-28 commissioner.

5-29 (2) Has not been convicted of, or entered a plea of nolo contendere to, a felony or any crime 5-30 involving fraud, misrepresentation or moral turpitude.

5-31 (3) Has not made a false statement of material fact on his application.

6-1 (4) Has not had a license that was issued pursuant to the provisions of this chapter or chapter 6-2 645B of NRS suspended or revoked within the 10 years immediately preceding the date of his 6-3 application.

6-4 (5) Has not had a license that was issued in any other state, district or territory of the United 6-5 States or any foreign country suspended or revoked within the 10 years immediately preceding the 6-6 date of his application.

6-7 (6) Has not violated any provision of this chapter or chapter 645B of NRS, a regulation adopted 6-8 pursuant thereto or an order of the commissioner.

6-9 4. If an applicant is a partnership, corporation or unincorporated association, the commissioner 6-10 may refuse to issue a license to the applicant if any member of the partnership or any officer or 6-11 director of the corporation or unincorporated association has committed any act or omission that 6-12 would be cause for refusing to issue a license to a natural person.

6-13 Sec. 14. 1. A license issued to a mortgage company pursuant to this chapter expires each year 6-14 on December 31, unless it is renewed. To renew a license, the licensee must submit to the 6-15 commissioner on or before December 31 of each year:

6-16 (a) An application for renewal that complies with the requirements of this chapter; and

6-17 (b) The fee required to renew the license pursuant to this section.

6-18 2. If the licensee fails to submit any item required pursuant to subsection 1 to the commissioner 6-19 on or before December 31 of any year, the license is canceled. The commissioner may reinstate a 6-20 canceled license if the licensee submits to the commissioner:

6-21 (a) An application for renewal that complies with the requirements of this chapter;

6-22 (b) The fee required to renew the license pursuant to this section; and

6-23 (c) A reinstatement fee of $200.

6-24 3. Except as otherwise provided in section 11 of this act, a certificate of exemption issued 6-25 pursuant to this chapter expires each year on December 31, unless it is renewed. To renew a 6-26 certificate of exemption, a person must submit to the commissioner on or before December 31 of 6-27 each year:

6-28 (a) An application for renewal that complies with the requirements of this chapter; and

6-29 (b) The fee required to renew the certificate of exemption.

6-30 4. If the person fails to submit any item required pursuant to subsection 3 to the commissioner 6-31 on or before December 31 of any year, the certificate of exemption is canceled. Except as otherwise 6-32 provided in

7-1 section 11 of this act, the commissioner may reinstate a canceled certificate of exemption if the 7-2 person submits to the commissioner:

7-3 (a) An application for renewal that complies with the requirements of this chapter;

7-4 (b) The fee required to renew the certificate of exemption; and

7-5 (c) A reinstatement fee of $100.

7-6 5. A person must pay the following fees to apply for, to be issued or to renew a license as a 7-7 mortgage company pursuant to this chapter:

7-8 (a) To file an original application for a license, $1,500 for the principal office and $40 for each 7-9 branch office. The person must also pay such additional expenses incurred in the process of 7-10 investigation as the commissioner deems necessary. All money received by the commissioner 7-11 pursuant to this paragraph must be placed in the investigative account created by NRS 232.545.

7-12 (b) To be issued a license, $1,000 for the principal office and $60 for each branch office.

7-13 (c) To renew a license, $500 for the principal office and $100 for each branch office.

7-14 6. A person must pay the following fees to apply for or to renew a certificate of exemption 7-15 pursuant to this chapter:

7-16 (a) To file an application for a certificate of exemption, $200.

7-17 (b) To renew a certificate of exemption, $100.

7-18 7. To be issued a duplicate copy of any license or certificate of exemption, a person must make a 7-19 satisfactory showing of its loss and pay a fee of $10.

7-20 8. Except as otherwise provided in this chapter, all fees received pursuant to this chapter must be 7-21 deposited in the state treasury for credit to the state general fund.

7-22 Sec. 15. 1. In addition to the requirements set forth in sections 13 and 14 of this act, a natural 7-23 person who applies for the issuance or renewal of a license as a mortgage company shall submit 7-24 to the commissioner:

7-25 (a) In any application for issuance of a license, the social security number of the applicant and 7-26 the statement prescribed by the welfare division of the department of human resources pursuant to 7-27 NRS 425.520. The statement must be completed and signed by the applicant.

7-28 (b) In any application for renewal of a license, the statement prescribed by the welfare division of 7-29 the department of human resources pursuant to NRS 425.520. The statement must be completed 7-30 and signed by the applicant.

7-31 2. The commissioner shall include the statement required pursuant to subsection 1 in:

8-1 (a) The application or any other forms that must be submitted for the issuance or renewal of the 8-2 license; or

8-3 (b) A separate form prescribed by the commissioner.

8-4 3. The commissioner shall not issue or renew a license as a mortgage company if the applicant 8-5 is a natural person who:

8-6 (a) Fails to submit the statement required pursuant to subsection 1; or

8-7 (b) Indicates on the statement submitted pursuant to subsection 1 that he is subject to a court 8-8 order for the support of a child and is not in compliance with the order or a plan approved by the 8-9 district attorney or other public agency enforcing the order for the repayment of the amount owed 8-10 pursuant to the order.

8-11 4. If an applicant indicates on the statement submitted pursuant to subsection 1 that he is 8-12 subject to a court order for the support of a child and is not in compliance with the order or a plan 8-13 approved by the district attorney or other public agency enforcing the order for the repayment of the 8-14 amount owed pursuant to the order, the commissioner shall advise the applicant to contact the 8-15 district attorney or other public agency enforcing the order to determine the actions that the 8-16 applicant may take to satisfy the arrearage.

8-17 Sec. 16. 1. A license entitles a licensee to engage only in the activities authorized by this 8-18 chapter.

8-19 2. The provisions of this chapter do not prohibit a licensee from:

8-20 (a) Holding a license as a mortgage broker pursuant to chapter 645B of NRS; or

8-21 (b) Conducting the business of a mortgage company and the business of a mortgage broker in the 8-22 same office or place of business.

8-23 Sec. 17. 1. A mortgage company shall post each license in a conspicuous place in the office 8-24 for which the license has been issued.

8-25 2. A mortgage company may not transfer or assign a license to another person, unless the 8-26 commissioner gives his written approval.

8-27 Sec. 18. 1. The commissioner must be notified of a transfer of 5 percent or more of the 8-28 outstanding voting stock of a mortgage company and must approve a transfer of voting stock of a 8-29 mortgage company which constitutes a change of control.

8-30 2. The person who acquires stock resulting in a change of control of the mortgage company 8-31 shall apply to the commissioner for approval of the transfer. The application must contain 8-32 information which shows that the requirements of this chapter for obtaining a license will be 8-33 satisfied after the change of control. Except as otherwise provided in subsection 3, the commissioner 8-34 shall conduct an investigation to determine whether those requirements will be satisfied. If, after 8-35 the investigation, the commissioner denies the application, he may forbid the applicant from 8-36 participating in the business of the mortgage company.

9-1 3. A mortgage company may submit a written request to the commissioner to waive an 9-2 investigation pursuant to subsection 2. The commissioner may grant a waiver if the applicant has 9-3 undergone a similar investigation by a state or federal agency in connection with the licensing of or 9-4 his employment with a financial institution.

9-5 4. As used in this section, "change of control" means:

9-6 (a) A transfer of voting stock which results in giving a person, directly or indirectly, the power to 9-7 direct the management and policy of a mortgage company; or

9-8 (b) A transfer of at least 25 percent of the outstanding voting stock of a mortgage company.

9-9 Sec. 19. 1. Subject to the administrative control of the director of the department of business 9-10 and industry, the commissioner shall exercise general supervision and control over mortgage 9-11 companies doing business in this state.

9-12 2. In addition to the other duties imposed upon him by law, the commissioner shall:

9-13 (a) Adopt any regulations that are necessary to carry out the provisions of this chapter, except as 9-14 to loan fees.

9-15 (b) Conduct such investigations as may be necessary to determine whether any person has 9-16 violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of 9-17 the commissioner.

9-18 (c) Conduct an annual examination of each mortgage company doing business in this state.

9-19 (d) Conduct such other examinations, periodic or special audits, investigations and hearings as 9-20 may be necessary and proper for the efficient administration of the laws of this state regarding 9-21 mortgage companies.

9-22 (e) Classify as confidential certain records and information obtained by the division when those 9-23 matters are obtained from a governmental agency upon the express condition that they remain 9-24 confidential. This paragraph does not limit examination by the legislative auditor.

9-25 (f) Conduct such examinations and investigations as are necessary to ensure that mortgage 9-26 companies meet the requirements of this chapter for obtaining a license, both at the time of the 9-27 application for a license and thereafter on a continuing basis.

9-28 3. For each special audit, investigation or examination, a mortgage company shall pay a fee 9-29 based on the rate established pursuant to NRS 658.101.

9-30 Sec. 20. Each mortgage company shall pay the assessment levied pursuant to NRS 658.055 and 9-31 cooperate fully with the audits and examinations performed pursuant thereto.

10-1 Sec. 21. 1. In the conduct of any examination, periodic or special audit, investigation or 10-2 hearing, the commissioner may:

10-3 (a) Compel the attendance of any person by subpoena.

10-4 (b) Administer oaths.

10-5 (c) Examine any person under oath concerning the business and conduct of affairs of any person 10-6 subject to the provisions of this chapter and in connection therewith require the production of any 10-7 books, records or papers relevant to the inquiry.

10-8 2. Any person subpoenaed under the provisions of this section who willfully refuses or willfully 10-9 neglects to appear at the time and place named in the subpoena or to produce books, records or 10-10 papers required by the commissioner, or who refuses to be sworn or answer as a witness, is guilty of 10-11 a misdemeanor.

10-12 3. The commissioner may assess against and collect from a person all costs, including, without 10-13 limitation, reasonable attorney’s fees, that are attributable to any examination, periodic or special 10-14 audit, investigation or hearing that is conducted to examine or investigate the conduct, activities 10-15 or business of the person pursuant to this chapter.

10-16 Sec. 22. 1. Each mortgage company shall keep and maintain at all times at each location 10-17 where the mortgage company conducts business in this state complete and suitable records of all 10-18 mortgage transactions made by the mortgage company at that location. Each mortgage company 10-19 shall also keep and maintain at all times at each such location all original books, papers and data, or 10-20 copies thereof, clearly reflecting the financial condition of the business of the mortgage company.

10-21 2. Each mortgage company shall submit to the commissioner each month a report of the 10-22 mortgage company’s activity for the previous month. The report must:

10-23 (a) Specify the volume of loans made by the mortgage company for the month or state that no 10-24 loans were made in that month;

10-25 (b) Include any information required pursuant to the regulations adopted by the commissioner; 10-26 and

10-27 (c) Be submitted to the commissioner by the 15th day of the month following the month for 10-28 which the report is made.

10-29 3. The commissioner may adopt regulations prescribing accounting procedures for mortgage 10-30 companies handling trust accounts and the requirements for keeping records relating to such 10-31 accounts.

10-32 Sec. 23. 1. Except as otherwise provided in this section, not later than 60 days after the last 10-33 day of each fiscal year for a mortgage company, the mortgage company shall submit to the 10-34 commissioner a financial statement that:

10-35 (a) Is dated not earlier than the last day of the fiscal year; and

11-1 (b) Has been prepared from the books and records of the mortgage company by an independent 11-2 public accountant who holds a permit to engage in the practice of public accounting in this state 11-3 that has not been revoked or suspended.

11-4 2. The commissioner may grant a reasonable extension for the submission of a financial 11-5 statement pursuant to this section if a mortgage company requests such an extension before the date 11-6 on which the financial statement is due.

11-7 3. If a mortgage company maintains any accounts described in section 26 of this act, the 11-8 financial statement submitted pursuant to this section must be audited. The public accountant who 11-9 prepares the report of an audit shall submit a copy of the report to the commissioner at the same 11-10 time that he submits the report to the mortgage company.

11-11 4. The commissioner shall adopt regulations prescribing the scope of an audit conducted 11-12 pursuant to subsection 3.

11-13 Sec. 24. 1. Except as otherwise provided in this section or by specific statute, all papers, 11-14 documents, reports and other written instruments filed with the commissioner pursuant to this 11-15 chapter are open to public inspection.

11-16 2. The commissioner may withhold from public inspection or refuse to disclose to a person, for 11-17 such time as the commissioner considers necessary, any information that, in his judgment, 11-18 would:

11-19 (a) Impede or otherwise interfere with an investigation that is currently pending against a 11-20 mortgage company; or

11-21 (b) Have an undesirable effect on the welfare of the public or the welfare of any mortgage 11-22 company.

11-23 Sec. 25. 1. Except as otherwise provided in subsection 3, the amount of any advance fee, 11-24 salary, deposit or money paid to any mortgage company or other person to obtain a loan secured by a 11-25 lien on real property must be placed in escrow pending completion of the loan or a commitment 11-26 for the loan.

11-27 2. The amount held in escrow pursuant to subsection 1 must be released:

11-28 (a) Upon completion of the loan or commitment for the loan, to the mortgage company or other 11-29 person to whom the advance fee, salary, deposit or money was paid.

11-30 (b) If the loan or commitment for the loan fails, to the person who made the payment.

11-31 3. Advance payments to cover reasonably estimated costs paid to third persons are excluded 11-32 from the provisions of subsections 1 and 2 if the person making them first signs a written agreement 11-33 which specifies the estimated costs by item and the estimated aggregate cost, and which recites 11-34 that money advanced for costs will not be refunded. If an itemized

12-1 service is not performed and the estimated cost thereof is not refunded, the recipient of the 12-2 advance payment is subject to the penalties provided in section 39 of this act.

12-3 Sec. 26. 1. All money paid to a mortgage company for payment of taxes or insurance 12-4 premiums on real property which secures any loan made by the mortgage company must be 12-5 deposited in an insured depository financial institution and kept separate, distinct and apart from 12-6 money belonging to the mortgage company. Such money, when deposited, is to be designated as an 12-7 "impound trust account" or under some other appropriate name indicating that the accounts are 12-8 not the money of the mortgage company.

12-9 2. The mortgage company has a fiduciary duty to each debtor with respect to the money in an 12-10 impound trust account.

12-11 3. The mortgage company shall, upon reasonable notice, account to any debtor whose real 12-12 property secures a loan made by the mortgage company for any money which that person has paid to 12-13 the mortgage company for the payment of taxes or insurance premiums on the real property.

12-14 4. The mortgage company shall, upon reasonable notice, account to the commissioner for all 12-15 money in an impound trust account.

12-16 5. A mortgage company shall:

12-17 (a) Require contributions to an impound trust account in an amount reasonably necessary to 12-18 pay the obligations as they become due.

12-19 (b) Within 30 days after the completion of the annual review of an impound trust account, notify 12-20 the debtor:

12-21 (1) Of the amount by which the contributions exceed the amount reasonably necessary to pay 12-22 the annual obligations due from the account; and

12-23 (2) That the debtor may specify the disposition of the excess money within 20 days after receipt 12-24 of the notice. If the debtor fails to specify such a disposition within that time, the mortgage 12-25 company shall maintain the excess money in the account.

12-26 This subsection does not prohibit a mortgage company from requiring additional amounts to be 12-27 paid into an impound trust account to recover a deficiency that exists in the account.

12-28 6. A mortgage company shall not make payments from an impound trust account in a manner 12-29 that causes a policy of insurance to be canceled or causes property taxes or similar payments to 12-30 become delinquent.

12-31 Sec. 27. 1. Money in an impound trust account is not subject to execution or attachment on 12-32 any claim against the mortgage company.

12-33 2. It is unlawful for a mortgage company knowingly to keep or cause to be kept any money in a 12-34 depository financial institution under the

13-1 heading of "impound trust account" or any other name designating such money as belonging to 13-2 the debtors of the mortgage company, unless the money has been paid to the mortgage company by 13-3 a debtor pursuant to section 26 of this act and is being held in trust by the mortgage company 13-4 pursuant to the provisions of that section.

13-5 Sec. 28. 1. If a person is required to make a payment to a mortgage company pursuant to the 13-6 terms of a loan secured by a lien on real property, the mortgage company may not charge the 13-7 person a late fee, an additional amount of interest or any other penalty in connection with that 13-8 payment if the payment is delivered to the mortgage company before 5 p.m. on:

13-9 (a) The day that the payment is due pursuant to the terms of the loan, if an office of the mortgage 13-10 company is open to customers until 5 p.m. on that day; or

13-11 (b) The next day that an office of the mortgage company is open to customers until 5 p.m., if the 13-12 provisions of paragraph (a) do not otherwise apply.

13-13 2. A person and a mortgage company may not agree to alter or waive the provisions of this 13-14 section by contract or other agreement, and any such contract or agreement is void and must not be 13-15 given effect to the extent that it violates the provisions of this section.

13-16 Sec. 29. 1. Whether or not a complaint has been filed, the commissioner may investigate a 13-17 mortgage company or other person if, for any reason, it appears that:

13-18 (a) The mortgage company is conducting business in an unsafe and injurious manner or in 13-19 violation of any provision of this chapter, a regulation adopted pursuant to this chapter or an order 13-20 of the commissioner;

13-21 (b) The person is offering or providing any of the services of a mortgage company or otherwise 13-22 engaging in, carrying on or holding himself out as engaging in or carrying on the business of a 13-23 mortgage company without being licensed or exempt from licensing pursuant to the provisions of 13-24 this chapter; or

13-25 (c) The person is violating any other provision of this chapter, a regulation adopted pursuant to 13-26 this chapter or an order of the commissioner.

13-27 2. If, upon investigation, the commissioner has reasonable cause to believe that the mortgage 13-28 company or other person has engaged in any conduct or committed any violation described in 13-29 subsection 1, the commissioner may:

13-30 (a) Advise the district attorney of the county in which the conduct or violation occurred, and the 13-31 district attorney shall cause the appropriate legal action to be taken against the mortgage 13-32 company or other person to

14-1 enjoin the conduct or the operation of the business or prosecute the violation; and

14-2 (b) Bring a civil action to:

14-3 (1) Enjoin the mortgage company or other person from engaging in the conduct, operating the 14-4 business or committing the violation; and

14-5 (2) Enjoin any other person who has encouraged, facilitated, aided or participated in the 14-6 conduct, the operation of the business or the commission of the violation, or who is likely to engage 14-7 in such acts, from engaging in or continuing to engage in such acts.

14-8 3. If the commissioner brings a civil action pursuant to subsection 2, the district court of any 14-9 county of this state is hereby vested with the jurisdiction in equity to enjoin the conduct, the 14-10 operation of the business or the commission of the violation and may grant any injunctions that are 14-11 necessary to prevent and restrain the conduct, the operation of the business or the commission of 14-12 the violation. During the pendency of the proceedings before the district court:

14-13 (a) The court may issue any temporary restraining orders as may appear to be just and proper;

14-14 (b) The findings of the commissioner shall be deemed to be prima facie evidence and sufficient 14-15 grounds, in the discretion of the court, for the ex parte issuance of a temporary restraining order; 14-16 and

14-17 (c) The commissioner may apply for and on due showing is entitled to have issued the court’s 14-18 subpoena requiring forthwith the appearance of any person to:

14-19 (1) Produce any documents, books and records as may appear necessary for the hearing of the 14-20 petition; and

14-21 (2) Testify and give evidence concerning the conduct complained of in the petition.

14-22 Sec. 30. 1. In addition to any other action that is permitted pursuant to this chapter, if the 14-23 commissioner has reasonable cause to believe that:

14-24 (a) The assets or capital of a mortgage company are impaired; or

14-25 (b) A mortgage company is conducting business in an unsafe and injurious manner that may 14-26 result in danger to the public,

14-27 the commissioner may immediately take possession of all the property, business and assets of the 14-28 mortgage company that are located in this state and retain possession of them pending further 14-29 proceedings provided for in this chapter.

14-30 2. If the licensee, the board of directors or any officer or person in charge of the offices of the 14-31 mortgage company refuses to permit the commissioner to take possession of the property of the 14-32 mortgage company pursuant to subsection 1:

14-33 (a) The commissioner shall notify the attorney general; and

15-1 (b) The attorney general shall immediately bring such proceedings as may be necessary to place 15-2 the commissioner in immediate possession of the property of the mortgage company.

15-3 3. If the commissioner takes possession of the property of the mortgage company, the 15-4 commissioner shall:

15-5 (a) Make or have made an inventory of the assets and known liabilities of the mortgage company; 15-6 and

15-7 (b) File one copy of the inventory in his office and one copy in the office of the clerk of the 15-8 district court of the county in which the principal office of the mortgage company is located and 15-9 shall mail one copy to each stockholder, partner, officer, director or associate of the mortgage 15-10 company at his last known address.

15-11 4. The clerk of the court with which the copy of the inventory is filed shall file it as any other 15-12 case or proceeding pending in the court and shall give it a docket number.

15-13 Sec. 31. 1. If the commissioner takes possession of the property of a mortgage company 15-14 pursuant to section 30 of this act, the licensee, officers, directors, partners, associates or stockholders 15-15 of the mortgage company may, within 60 days after the date on which the commissioner takes 15-16 possession of the property, make good any deficit in the assets or capital of the mortgage company or 15-17 remedy any unsafe and injurious conditions or practices of the mortgage company.

15-18 2. At the expiration of the 60-day period, if the deficiency in assets or capital has not been made 15-19 good or the unsafe and injurious conditions or practices remedied, the commissioner may apply 15-20 to the court to be appointed receiver and proceed to liquidate the assets of the mortgage company 15-21 which are located in this state in the same manner as now provided by law for liquidation of a 15-22 private corporation in receivership.

15-23 3. No other person may be appointed receiver by any court without first giving the 15-24 commissioner ample notice of his application.

15-25 4. The inventory made by the commissioner and all claims filed by creditors are open at all 15-26 reasonable times for inspection, and any action taken by the receiver upon any of the claims is 15-27 subject to the approval of the court before which the cause is pending.

15-28 5. The expenses of the receiver and compensation of counsel, as well as all expenditures 15-29 required in the liquidation proceedings, must be fixed by the commissioner subject to the approval of 15-30 the court and, upon certification of the commissioner, must be paid out of the money in his hands 15-31 as the receiver.

15-32 Sec. 32. 1. For each violation committed by an applicant, whether or not he is issued a 15-33 license, the commissioner may impose upon the applicant an administrative fine of not more than 15-34 $10,000, if the applicant:

16-1 (a) Has knowingly made or caused to be made to the commissioner any false representation of 16-2 material fact;

16-3 (b) Has suppressed or withheld from the commissioner any information which the applicant 16-4 possesses and which, if submitted by him, would have rendered the applicant ineligible to be licensed 16-5 pursuant to the provisions of this chapter; or

16-6 (c) Has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an 16-7 order of the commissioner in completing and filing his application for a license or during the 16-8 course of the investigation of his application for a license.

16-9 2. For each violation committed by a licensee, the commissioner may impose upon the licensee 16-10 an administrative fine of not more than $10,000, may suspend, revoke or place conditions upon 16-11 his license, or may do both, if the licensee, whether or not acting as such:

16-12 (a) Is insolvent;

16-13 (b) Is grossly negligent or incompetent in performing any act for which he is required to be 16-14 licensed pursuant to the provisions of this chapter;

16-15 (c) Does not conduct his business in accordance with law or has violated any provision of this 16-16 chapter, a regulation adopted pursuant to this chapter or an order of the commissioner;

16-17 (d) Is in such financial condition that he cannot continue in business with safety to his 16-18 customers;

16-19 (e) Has made a material misrepresentation in connection with any transaction governed by this 16-20 chapter;

16-21 (f) Has suppressed or withheld from a client any material facts, data or other information 16-22 relating to any transaction governed by the provisions of this chapter which the licensee knew or, by 16-23 the exercise of reasonable diligence, should have known;

16-24 (g) Has knowingly made or caused to be made to the commissioner any false representation of 16-25 material fact or has suppressed or withheld from the commissioner any information which the 16-26 licensee possesses and which, if submitted by him, would have rendered the licensee ineligible to be 16-27 licensed pursuant to the provisions of this chapter;

16-28 (h) Has failed to account to persons interested for all money received for a trust account;

16-29 (i) Has refused to permit an examination by the commissioner of his books and affairs or has 16-30 refused or failed, within a reasonable time, to furnish any information or make any report that may 16-31 be required by the commissioner pursuant to the provisions of this chapter or a regulation 16-32 adopted pursuant to this chapter;

17-1 (j) Has been convicted of, or entered a plea of nolo contendere to, a felony or any crime involving 17-2 fraud, misrepresentation or moral turpitude;

17-3 (k) Has refused or failed to pay, within a reasonable time, any fees, assessments, costs or 17-4 expenses that the licensee is required to pay pursuant to this chapter or a regulation adopted 17-5 pursuant to this chapter;

17-6 (l) Has failed to satisfy a claim made by a client which has been reduced to judgment;

17-7 (m) Has failed to account for or to remit any money of a client within a reasonable time after a 17-8 request for an accounting or remittal;

17-9 (n) Has commingled the money or other property of a client with his own or has converted the 17-10 money or property of others to his own use; or

17-11 (o) Has engaged in any other conduct constituting a deceitful, fraudulent or dishonest business 17-12 practice.

17-13 Sec. 33. 1. If the commissioner receives a copy of a court order issued pursuant to NRS 17-14 425.540 that provides for the suspension of all professional, occupational and recreational licenses, 17-15 certificates and permits issued to a person who is the holder of a license as a mortgage company, 17-16 the commissioner shall deem the license issued to that person to be suspended at the end of the 17-17 30th day after the date on which the court order was issued unless the commissioner receives a letter 17-18 issued to the holder of the license by the district attorney or other public agency pursuant to NRS 17-19 425.550 stating that the holder of the license has complied with the subpoena or warrant or has 17-20 satisfied the arrearage pursuant to NRS 425.560.

17-21 2. The commissioner shall reinstate a license as a mortgage company that has been suspended 17-22 by a district court pursuant to NRS 425.540 if the commissioner receives a letter issued by the 17-23 district attorney or other public agency pursuant to NRS 425.550 to the person whose license was 17-24 suspended stating that the person whose license was suspended has complied with the subpoena or 17-25 warrant or has satisfied the arrearage pursuant to NRS 425.560.

17-26 Sec. 34. If a person is a partnership, corporation or unincorporated association, the 17-27 commissioner may take any disciplinary action set forth in this chapter against the person if any 17-28 member of the partnership or any officer or director of the corporation or unincorporated 17-29 association has committed any act or omission that would be cause for taking such disciplinary 17-30 action against a natural person.

17-31 Sec. 35. 1. If the commissioner enters an order taking any disciplinary action against a 17-32 person or denying a person’s application for a license, the commissioner shall cause written notice 17-33 of the order to be served personally or sent by certified mail or telegraph to the person.

18-1 2. Unless a hearing has already been conducted concerning the matter, the person, upon 18-2 application, is entitled to a hearing. If the person does not make such an application within 20 days 18-3 after the date of the initial order, the commissioner shall enter a final order concerning the 18-4 matter.

18-5 3. A person may appeal a final order of the commissioner in accordance with the provisions of 18-6 chapter 233B of NRS that apply to a contested case.

18-7 Sec. 36. It is unlawful for any person to offer or provide any of the services of a mortgage 18-8 company or otherwise to engage in, carry on or hold himself out as engaging in or carrying on the 18-9 business of a mortgage company without first obtaining a license as a mortgage company pursuant 18-10 to this chapter, unless the person:

18-11 1. Is exempt from the provisions of this chapter; and

18-12 2. Complies with the requirements for that exemption.

18-13 Sec. 37. It is unlawful for any foreign corporation, association or business trust to conduct any 18-14 business as a mortgage company within this state, unless it:

18-15 1. Qualifies under chapter 80 of NRS; and

18-16 2. Complies with the provisions of this chapter or, if it claims an exemption from the provisions 18-17 of this chapter, complies with the requirements for that exemption.

18-18 Sec. 38. Except as otherwise provided in section 39 of this act, a person, or any general 18-19 partner, director, officer, agent or employee of a person, who violates any provision of this chapter, a 18-20 regulation adopted pursuant to this chapter or an order of the commissioner is guilty of a 18-21 misdemeanor.

18-22 Sec. 39. A person, or any general partner, director, officer, agent or employee of a person, who 18-23 violates any provision of section 25, 26 or 27 of this act is guilty of:

18-24 1. A misdemeanor if the amount involved is less than $250;

18-25 2. A gross misdemeanor if the amount involved is $250 or more but less than $1,000; or

18-26 3. A category D felony if the amount involved is $1,000 or more, and shall be punished as 18-27 provided in NRS 193.130.

18-28 Sec. 40. Chapter 627 of NRS is hereby amended by adding thereto a new section to read as 18-29 follows:

18-30 1. As a substitute for the surety bond required by NRS 627.180, a construction control may, in 18-31 accordance with the provisions of this section, deposit with any bank or trust company authorized 18-32 to do business in this state, in a form approved by the state contractors’ board:

18-33 (a) An obligation of a bank, savings and loan association, thrift company or credit union 18-34 licensed to do business in this state;

19-1 (b) Bills, bonds, notes, debentures or other obligations of the United States or any agency or 19-2 instrumentality thereof, or guaranteed by the United States; or

19-3 (c) Any obligation of this state or any city, county, town, township, school district or other 19-4 instrumentality of this state, or guaranteed by this state.

19-5 2. The obligations of a bank, savings and loan association, thrift company or credit union must 19-6 be held to secure the same obligation as would the surety bond. With the approval of the state 19-7 contractors’ board, the depositor may substitute other suitable obligations for those deposited which 19-8 must be assigned to the State of Nevada and are negotiable only upon approval by the state 19-9 contractors’ board.

19-10 3. Any interest or dividends earned on the deposit accrue to the account of the depositor.

19-11 4. The deposit must be in an amount at least equal to the required surety bond and must state 19-12 that the amount may not be withdrawn except by direct and sole order of the state contractors’ 19-13 board. The value of any item deposited pursuant to this section must be based upon principal amount 19-14 or market value, whichever is lower.

19-15 Sec. 41. NRS 627.180 is hereby amended to read as follows:

19-16 627.180 1. [Except for savings] The provisions of this section do not apply to:

20-1 Bond No.

20-2 CONSTRUCTION CONTROL BOND

20-3 Know All Men by These Presents:

20-4 That I, ................................, having a principal place of business in ...................................................., 20-5 Nevada, as principal, and ................................, a corporation licensed to execute surety bonds under 20-6 the provisions of the Nevada Insurance Code, as surety, are held and firmly bound to the State of 20-7 Nevada, for the use of any person by whom funds are entrusted to the principal or to whom funds are 20-8 payable by the principal, in the sum of ................ Dollars, lawful money of the United States of 20-9 America, to be paid to the State of Nevada, for which payment well and truly to be made we bind 20-10 ourselves, our heirs, executors and successors, jointly and severally, firmly by these presents:

20-11 The Condition of the Above Obligation Is Such That:

20-12 Whereas, Under the Construction Control Law, certain duties,

20-13 obligations and requirements are imposed upon all persons, copartnerships,

20-14 associations or corporations acting as construction controls;

20-15 Now, Therefore, If the principal and its agents and employees shall

20-16 faithfully and in all respects conduct business as a construction control in

20-17 accordance with the provisions of the Construction Control Law, this

20-18 obligation shall be void, otherwise to remain in full force and effect;

20-19 Provided, However, That the surety or sureties may cancel this bond

20-20 and be relieved of further liability hereunder by delivering 30 days’ written

20-21 notice of cancellation to the principal; however, such cancellation shall not

20-22 affect any liability incurred or accrued hereunder prior to the termination

20-23 of such 30-day period;

20-24 Provided Further, That the total aggregate liability of the surety or

20-25 sureties herein for all claims which may arise under this bond shall be

20-26 limited to the payment of ................ Dollars.

20-27 In Witness Whereof, The principal and surety have hereunto set their

20-28 hands this ................................ day of ................................, 19.....

20-29

20-30 By

20-31 Principal

20-32 (Surety)

20-33 By

20-34 Attorney

20-35 Sec. 42. NRS 645A.030 is hereby amended to read as follows:

20-36 645A.030 1. Except as otherwise [authorized by] provided in NRS

20-38 agency [, the applicant] shall deposit with the commissioner a corporate

21-1 surety bond payable to the State of Nevada, in the amount of [$50,000,]

21-2 $250,000, which is executed by a corporate surety satisfactory to the

21-3 commissioner [, and naming] and which names as principals the

21-4 [applicant] escrow agency and all escrow agents employed by or

21-5 associated with the [applicant.] escrow agency.

21-6 2. At the time of filing an application for a license as an escrow agent,

21-7 the applicant shall file with the commissioner proof that the applicant is

21-8 named as a principal on the corporate surety bond deposited with the

21-9 commissioner by the escrow agency with whom he is associated or

21-10 employed.

21-11 3. The bond must be in substantially the following form:

21-12 Know All Men by These Presents, that ........................, as principal, and

21-13 ........................, as surety, are held and firmly bound unto the State of

21-14 Nevada for the use and benefit of any person who suffers damages because

21-15 of a violation of any of the provisions of chapter 645A of NRS, in the sum

21-16 of ............, lawful money of the United States, to be paid to the State of

21-17 Nevada for such use and benefit, for which payment well and truly to be

21-18 made, and that we bind ourselves, our heirs, executors, administrators,

21-19 successors and assigns, jointly and severally, firmly by these presents.

21-20 The condition of that obligation is such that: Whereas, the principal has

21-21 [made an application to] been issued a license as an escrow agency or

21-22 escrow agent by the commissioner of financial institutions of the

21-23 department of business and industry of the State of Nevada [for a license as

21-24 an escrow agent or agency] and is required to furnish a bond in the amount

21-25 of [$50,000] $250,000 conditioned as set forth in this bond:

21-26 Now, therefore, if the principal, his agents and employees, strictly,

21-27 honestly and faithfully comply with the provisions of chapter 645A of

21-28 NRS, and pay all damages suffered by any person because of a violation of

21-29 any of the provisions of chapter 645A of NRS, or by reason of any fraud,

21-30 dishonesty, misrepresentation or concealment of material facts growing out

21-31 of any transaction governed by the provisions of chapter 645A of NRS,

21-32 then this obligation is void; otherwise it remains in full force.

21-33 This bond becomes effective on the .......... day of ................, 19......, and

21-34 remains in force until the surety is released from liability by the

21-35 commissioner of financial institutions or until this bond is canceled by the

21-36 surety. The surety may cancel this bond and be relieved of further liability

21-37 hereunder by giving 60 days’ written notice to the principal and to the

21-38 commissioner of financial institutions of the department of business and

21-39 industry of the State of Nevada.

22-1 In Witness Whereof, the seal and signature of the principal hereto is

22-2 affixed, and the corporate seal and the name of the surety hereto is affixed

22-3 and attested by its authorized officers at ........................, Nevada, this

22-4 ................ day of ................, 19......

22-5 (Seal)

22-6 Principal

22-7 (Seal)

22-8 Surety

22-9 By

22-10 Attorney in fact

22-11

22-12 Licensed resident agent

22-13 Sec. 43. NRS 645A.031 is hereby amended to read as follows:

22-14 645A.031 1. As a substitute for the surety bond required by NRS

22-38 by direct and sole order of the commissioner. The value of any item

22-39 deposited pursuant to this section must be based upon principal amount

22-40 or market value, whichever is lower.

23-1 Sec. 44. NRS 645A.037 is hereby amended to read as follows:

23-2 645A.037 1. Except as otherwise provided in subsection 2, [no] a

23-19 trust accounts as provided by NRS 645B.175.]

23-20 (2) Does not conduct any business as a mortgage broker licensed

23-21 pursuant to chapter 645B of NRS in the office or place of business.

23-22 Sec. 45. Chapter 645B of NRS is hereby amended by adding thereto

23-23 the provisions set forth as sections 46 to 83, inclusive, of this act.

23-24 Sec. 46. "Applicant" means a person who applies for licensure as a

23-25 mortgage broker or mortgage agent pursuant to this chapter.

23-26 Sec. 47. "Commissioner" means the commissioner of financial

23-27 institutions.

23-28 Sec. 48. "Construction control" has the meaning ascribed to it in

23-29 NRS 627.050.

23-30 Sec. 49. "Depository financial institution" means a bank, savings

23-31 and loan association, thrift company or credit union.

23-32 Sec. 50. "Division" means the division of financial institutions of

23-33 the department of business and industry.

23-34 Sec. 51. "Escrow agency" has the meaning ascribed to it in NRS

23-35 645A.010.

23-36 Sec. 52. "Escrow agent" has the meaning ascribed to it in NRS

23-37 645A.010.

23-38 Sec. 53. "Escrow officer" has the meaning ascribed to it in NRS

23-39 692A.028.

23-40 Sec. 54. "Investor" means a person who wants to acquire or who

23-41 acquires ownership of or a beneficial interest in a loan secured by a lien

23-42 on real property.

24-1 Sec. 55. "Licensee" means a person who is licensed as a mortgage

24-2 broker or mortgage agent pursuant to this chapter.

24-3 Sec. 56. 1. "Mortgage agent" means a natural person who:

24-4 (a) Is an employee or independent contractor of a mortgage broker

24-5 who is required to be licensed pursuant to this chapter; and

24-6 (b) Is authorized by the mortgage broker to engage in, on behalf of

24-7 the mortgage broker, any activity that would require the person, if he

24-8 were not an employee or independent contractor of the mortgage broker,

24-9 to be licensed as a mortgage broker pursuant to this chapter.

24-10 2. The term does not include a person who:

24-11 (a) Is licensed as a mortgage broker;

24-12 (b) Is a general partner, officer or director of a mortgage broker; or

24-13 (c) Performs only clerical or ministerial tasks for a mortgage broker.

24-14 Sec. 57. 1. "Mortgage broker" means any person who, directly or

24-15 indirectly:

24-16 (a) Holds himself out for hire to serve as an agent for any person in

24-17 an attempt to obtain a loan which will be secured by a lien on real

24-18 property;

24-19 (b) Holds himself out for hire to serve as an agent for any person who

24-20 has money to lend, if the loan is or will be secured by a lien on real

24-21 property;

24-22 (c) Holds himself out as being able to make loans secured by liens on

24-23 real property;

24-24 (d) Holds himself out as being able to buy or sell notes secured by

24-25 liens on real property; or

24-26 (e) Offers for sale in this state any security which is exempt from

24-27 registration under state or federal law and purports to make investments

24-28 in promissory notes secured by liens on real property.

24-29 2. The term does not include a person who is licensed as a mortgage

24-30 company, as defined in section 8 of this act, unless the person is also

24-31 licensed as a mortgage broker pursuant to this chapter.

24-32 Sec. 58. "Policy of title insurance" has the meaning ascribed to it in

24-33 NRS 692A.035.

24-34 Sec. 59. "Relative" means a spouse or any other person who is

24-35 related within the second degree by blood or marriage.

24-36 Sec. 60. "Title agent" has the meaning ascribed to it in NRS

24-37 692A.060.

24-38 Sec. 61. "Title insurer" has the meaning ascribed to it in NRS

24-39 692A.070.

24-40 Sec. 62. Except as otherwise provided in section 78 of this act:

24-41 1. A person who claims an exemption from the provisions of this

24-42 chapter pursuant to subsection 1 or 6 of NRS 645B.015 must:

25-1 (a) File a written application for a certificate of exemption with the

25-2 office of the commissioner;

25-3 (b) Pay the fee required pursuant to NRS 645B.050; and

25-4 (c) Include with the written application satisfactory proof that the

25-5 person meets the requirements of subsection 1 or 6 of NRS 645B.015.

25-6 2. The commissioner may require a person who claims an exemption

25-7 from the provisions of this chapter pursuant to subsections 2 to 5,

25-8 inclusive, or 7 to 10, inclusive, of NRS 645B.015 to:

25-9 (a) File a written application for a certificate of exemption with the

25-10 office of the commissioner;

25-11 (b) Pay the fee required pursuant to NRS 645B.050; and

25-12 (c) Include with the written application satisfactory proof that the

25-13 person meets the requirements of at least one of those exemptions.

25-14 3. A certificate of exemption expires automatically if, at any time, the

25-15 person who claims the exemption no longer meets the requirements of at

25-16 least one exemption set forth in the provisions of NRS 645B.015.

25-17 4. If a certificate of exemption expires automatically pursuant to this

25-18 section, the person shall not provide any of the services of a mortgage

25-19 broker or mortgage agent or otherwise engage in, carry on or hold

25-20 himself out as engaging in or carrying on the business of a mortgage

25-21 broker or mortgage agent, unless the person applies for and is issued:

25-22 (a) A license as a mortgage broker or mortgage agent pursuant to this

25-23 chapter; or

25-24 (b) Another certificate of exemption.

25-25 5. The commissioner may impose upon a person who is required to

25-26 apply for a certificate of exemption or who holds a certificate of

25-27 exemption an administrative fine of not more than $10,000 for each

25-28 violation that he commits, if the person:

25-29 (a) Has knowingly made or caused to be made to the commissioner

25-30 any false representation of material fact;

25-31 (b) Has suppressed or withheld from the commissioner any

25-32 information which the person possesses and which, if submitted by him,

25-33 would have rendered the person ineligible to hold a certificate of

25-34 exemption; or

25-35 (c) Has violated any provision of this chapter, a regulation adopted

25-36 pursuant to this chapter or an order of the commissioner that applies to a

25-37 person who is required to apply for a certificate of exemption or who

25-38 holds a certificate of exemption.

25-39 Sec. 63. If a person is a partnership, corporation or unincorporated

25-40 association, the person:

25-41 1. May not be licensed as a mortgage agent; and

26-1 2. Shall not engage in any act or transaction that would require the

26-2 person, if it were a natural person, to be licensed as a mortgage agent

26-3 pursuant to this chapter.

26-4 Sec. 64. 1. If an applicant is a natural person, the commissioner

26-5 may refuse to issue a license to the applicant if the commissioner has

26-6 reasonable cause to believe that the applicant would be subject to control

26-7 by a relative who would be ineligible to be licensed pursuant to this

26-8 chapter.

26-9 2. If an applicant is a partnership, corporation or unincorporated

26-10 association, the commissioner may refuse to issue a license to the

26-11 applicant if:

26-12 (a) Any member of the partnership or any officer or director of the

26-13 corporation or unincorporated association has committed any act or

26-14 omission that would be cause for refusing to issue a license to a natural

26-15 person; or

26-16 (b) The commissioner has reasonable cause to believe that any

26-17 member of the partnership or any officer or director of the corporation

26-18 or unincorporated association would be subject to control by a relative

26-19 who would be ineligible to be licensed pursuant to this chapter.

26-20 Sec. 65. A mortgage broker shall:

26-21 1. Teach his mortgage agents the fundamentals of mortgage lending

26-22 and the ethics of the profession; and

26-23 2. Supervise the activities of his mortgage agents and the operation

26-24 of his business.

26-25 Sec. 66. 1. If a mortgage agent terminates his association or

26-26 employment with a mortgage broker for any reason, the mortgage broker

26-27 shall, not later than the end of the next business day following the date of

26-28 termination:

26-29 (a) Deliver to the mortgage agent or send by certified mail to the last

26-30 known residence address of the mortgage agent a written statement

26-31 which advises him that his license is being delivered or mailed to the

26-32 division; and

26-33 (b) Deliver or send by certified mail to the division:

26-34 (1) The license of the mortgage agent;

26-35 (2) A written statement of the circumstances surrounding the

26-36 termination; and

26-37 (3) A copy of the written statement that the mortgage broker

26-38 delivers or mails to the mortgage agent pursuant to paragraph (a).

26-39 2. A mortgage agent who terminates his association or employment

26-40 with a mortgage broker shall not, on or after the date on which the

26-41 division receives his license from the mortgage broker, engage in any

26-42 activity, directly or indirectly, for which a license as a mortgage agent is

26-43 required pursuant to this chapter, unless the mortgage agent is

27-1 specifically authorized by the commissioner to transfer his license to

27-2 another mortgage broker or he otherwise obtains a new license pursuant

27-3 to this chapter.

27-4 Sec. 67. 1. A license entitles a licensee to engage only in the

27-5 activities authorized by this chapter.

27-6 2. The provisions of this chapter do not prohibit a licensee who is

27-7 licensed as a mortgage broker from:

27-8 (a) Holding a license as a mortgage company pursuant to sections 2 to

27-9 39, inclusive, of this act; or

27-10 (b) Conducting the business of a mortgage company and the business

27-11 of a mortgage broker in the same office or place of business.

27-12 Sec. 68. 1. If a licensee or a relative of the licensee is licensed as,

27-13 conducts business as or holds a controlling interest or position in:

27-14 (a) A construction control;

27-15 (b) An escrow agency or escrow agent; or

27-16 (c) A title agent, a title insurer or an escrow officer of a title agent or

27-17 title insurer,

27-18 the licensee shall not act as, transact business with or use the services of

27-19 the construction control, escrow agency, escrow agent, title agent, title

27-20 insurer or escrow officer with respect to any act or transaction that

27-21 involves, directly or indirectly, any money of an investor who owns a

27-22 beneficial interest in a loan secured by a lien on real property that was

27-23 arranged by the licensee.

27-24 2. For the purposes of this section, a person shall be deemed to hold

27-25 a controlling interest or position if the person:

27-26 (a) Owns or controls a majority of the voting stock or holds any other

27-27 controlling interest, directly or indirectly, that gives him the power to

27-28 direct management or determine policy; or

27-29 (b) Is a partner, officer, director or trustee.

27-30 3. As used in this section, "licensee" means:

27-31 (a) A person who is licensed as a mortgage broker pursuant to this

27-32 chapter;

27-33 (b) Any general partner, officer or director of such a person; and

27-34 (c) Any mortgage agent associated with or employed by such a person.

27-35 Sec. 69. 1. Except as otherwise provided in this section, if a

27-36 mortgage broker:

27-37 (a) Is required to maintain any accounts described in NRS 645B.175,

27-38 the mortgage broker and his mortgage agents shall not engage in any

27-39 activity that is authorized pursuant to this chapter, unless the mortgage

27-40 broker maintains continuously a net worth of at least $250,000.

27-41 (b) Is not required to maintain any accounts described in NRS

27-42 645B.175, the mortgage broker and his mortgage agents shall not engage

28-1 in any activity that is authorized pursuant to this chapter, unless the

28-2 mortgage broker maintains continuously:

28-3 (1) Beginning on October 1, 1999, through September 30, 2000,

28-4 inclusive, a net worth of at least $25,000;

28-5 (2) Beginning on October 1, 2000, through September 30, 2001,

28-6 inclusive, a net worth of at least $50,000;

28-7 (3) Beginning on October 1, 2001, through September 30, 2002,

28-8 inclusive, a net worth of at least $75,000; and

28-9 (4) On or after October 1, 2002, a net worth of at least $100,000.

28-10 2. If a mortgage broker cannot maintain continuously the net worth

28-11 required pursuant to subsection 1, the commissioner may allow the

28-12 mortgage broker and his mortgage agents to engage in activities that are

28-13 authorized pursuant to this chapter if the mortgage broker remedies the

28-14 deficiency in his net worth by depositing with the commissioner cash, a

28-15 corporate surety bond or an irrevocable letter of credit, or any

28-16 combination thereof, in an aggregate amount that is equal to or exceeds

28-17 the deficiency in the net worth of the mortgage broker.

28-18 3. If requested by the commissioner, a mortgage broker and his

28-19 mortgage agents shall submit to the commissioner or allow the

28-20 commissioner to examine any documentation or other evidence that is

28-21 related to determining the net worth of the mortgage broker.

28-22 4. The commissioner:

28-23 (a) Shall adopt regulations prescribing standards for determining the

28-24 net worth of a mortgage broker; and

28-25 (b) May adopt any other regulations that are necessary to carry out

28-26 the provisions of this section.

28-27 Sec. 70. 1. Except as otherwise provided in this section, not later

28-28 than 60 days after the last day of each fiscal year for a mortgage broker,

28-29 the mortgage broker shall submit to the commissioner a financial

28-30 statement that:

28-31 (a) Is dated not earlier than the last day of the fiscal year; and

28-32 (b) Has been prepared from the books and records of the mortgage

28-33 broker by an independent public accountant who holds a permit to

28-34 engage in the practice of public accounting in this state that has not been

28-35 revoked or suspended.

28-36 2. The commissioner may grant a reasonable extension for the

28-37 submission of a financial statement pursuant to this section if a mortgage

28-38 broker requests such an extension before the date on which the financial

28-39 statement is due.

28-40 3. If a mortgage broker maintains any accounts described in

28-41 subsection 1 of NRS 645B.175, the financial statement submitted

28-42 pursuant to this section must be audited. If a mortgage broker maintains

28-43 any accounts described in subsection 4 of NRS 645B.175, those accounts

29-1 must be audited. The public accountant who prepares the report of an

29-2 audit shall submit a copy of the report to the commissioner at the same

29-3 time that he submits the report to the mortgage broker.

29-4 4. The commissioner shall adopt regulations prescribing the scope of

29-5 an audit conducted pursuant to subsection 3.

29-6 Sec. 71. 1. Except as otherwise provided in subsection 4, a

29-7 mortgage broker or mortgage agent shall not accept money from an

29-8 investor to acquire ownership of or a beneficial interest in a loan secured

29-9 by a lien on real property, unless the mortgage broker has obtained a

29-10 written appraisal of the real property securing the loan.

29-11 2. The written appraisal of the real property:

29-12 (a) Must be performed by an appraiser who is authorized to perform

29-13 appraisals in this state; and

29-14 (b) Must not be performed by the mortgage broker or a mortgage

29-15 agent, unless the mortgage broker or mortgage agent is certified or

29-16 licensed to perform such an appraisal pursuant to chapter 645C of NRS.

29-17 3. A copy of the written appraisal of the real property must be:

29-18 (a) Maintained at each office of the mortgage broker where money is

29-19 accepted from an investor to acquire ownership of or a beneficial interest

29-20 in a loan secured by a lien on the real property; and

29-21 (b) Made available during normal business hours for inspection by

29-22 each such investor and the commissioner.

29-23 4. A mortgage broker is not required to obtain a written appraisal of

29-24 the real property pursuant to this section if the mortgage broker obtains a

29-25 written waiver of the appraisal from each investor who acquires

29-26 ownership of or a beneficial interest in a loan secured by a lien on the

29-27 real property. A mortgage broker or mortgage agent shall not act as the

29-28 attorney in fact or the agent of an investor with respect to the giving of a

29-29 written waiver pursuant to this subsection.

29-30 5. As used in this section, "appraisal" has the meaning ascribed to it

29-31 in NRS 645C.030.

29-32 Sec. 72. 1. If money from an investor is released to a debtor or his

29-33 designee pursuant to subsection 2 of NRS 645B.175 upon completion of

29-34 a loan secured by a lien on real property, the mortgage broker that

29-35 arranged the loan shall, not later than 3 business days after the date on

29-36 which the mortgage broker receives a copy of the recorded deed of trust,

29-37 mail to the last known address of each investor who owns a beneficial

29-38 interest in the loan a copy of the recorded deed of trust.

29-39 2. If a deed of trust is recorded in connection with a loan that has

29-40 been funded, in whole or in part, by money from an investor, the

29-41 mortgage broker that arranged the loan and his mortgage agents shall

29-42 not engage in any act or transaction that subordinates the priority of the

30-1 deed of trust, as recorded, unless the mortgage broker, before such an act

30-2 or transaction:

30-3 (a) Obtains written approval for the subordination from each investor

30-4 who owns a beneficial interest in the loan; and

30-5 (b) Submits a copy of each such written approval to the commissioner.

30-6 3. A mortgage broker or mortgage agent shall not act as the attorney

30-7 in fact or the agent of an investor with respect to the giving of written

30-8 approval pursuant to subsection 2. An investor and a mortgage broker or

30-9 mortgage agent may not agree to alter or waive the provisions of

30-10 subsection 2 by contract or other agreement. Any such contract or

30-11 agreement is void and must not be given effect to the extent that it

30-12 violates the provisions of subsection 2.

30-13 Sec. 73. If a mortgage broker maintains any accounts described in

30-14 subsection 4 of NRS 645B.175 in which the mortgage broker deposits

30-15 payments from a debtor on a loan secured by a lien on real property and,

30-16 on the last day of any month, the debtor has failed to make two or more

30-17 consecutive payments in accordance with the terms of the loan, the

30-18 mortgage broker shall:

30-19 1. Include in the report that the mortgage broker submits to the

30-20 commissioner pursuant to subsection 2 of NRS 645B.080:

30-21 (a) The name, address and telephone number of the debtor;

30-22 (b) The total number of months and days that the debtor has failed to

30-23 make a payment;

30-24 (c) The outstanding balance of the loan and any accrued interest on

30-25 the last day of the month for which the report is submitted;

30-26 (d) A statement of whether the loan has been declared to be in default

30-27 and, if so, the nature of any actions that have been taken because of the

30-28 default; and

30-29 (e) Any other information required pursuant to the regulations

30-30 adopted by the commissioner;

30-31 2. Not later than 15 days after the last day of each such month, mail

30-32 a notice containing the information set forth in subsection 1 to the last

30-33 known address of each investor who owns a beneficial interest in the

30-34 loan; and

30-35 3. Comply with the provisions of this section each month on a

30-36 continuing basis until:

30-37 (a) The debtor or his designee remedies the delinquency in payments

30-38 and any default; or

30-39 (b) The lien securing the loan is extinguished.

30-40 Sec. 74. 1. If a person is required to make a payment to a

30-41 mortgage broker pursuant to the terms of a loan secured by a lien on real

30-42 property, the mortgage broker may not charge the person a late fee, an

30-43 additional amount of interest or any other penalty in connection with

31-1 that payment if the payment is delivered to the mortgage broker before
31-2 5 p.m. on:

31-3 (a) The day that the payment is due pursuant to the terms of the loan,

31-4 if an office of the mortgage broker is open to customers until 5 p.m. on

31-5 that day; or

31-6 (b) The next day that an office of the mortgage broker is open to

31-7 customers until 5 p.m., if the provisions of paragraph (a) do not

31-8 otherwise apply.

31-9 2. A person and a mortgage broker or mortgage agent may not agree

31-10 to alter or waive the provisions of this section by contract or other

31-11 agreement, and any such contract or agreement is void and must not be

31-12 given effect to the extent that it violates the provisions of this section.

31-13 Sec. 75. 1. A mortgage broker or mortgage agent shall not engage

31-14 in any act or transaction on behalf of an investor pursuant to a power of

31-15 attorney unless:

31-16 (a) The power of attorney is executed for the sole purpose of providing

31-17 services for not more than one loan in which the investor owns a

31-18 beneficial interest; and

31-19 (b) The provisions of the power of attorney:

31-20 (1) Have been approved by the commissioner; and

31-21 (2) Expressly prohibit the mortgage broker and his mortgage agents

31-22 from using or releasing any money in which the investor owns a

31-23 beneficial interest with regard to that loan for a purpose that is not

31-24 directly related to providing services for the loan or in any manner that

31-25 violates the provisions of NRS 645B.175.

31-26 2. A power of attorney which designates a mortgage broker or

31-27 mortgage agent as the attorney in fact or the agent of an investor and

31-28 which violates the provisions of this section is void and must not be given

31-29 effect with regard to any act or transaction that occurs on or after

31-30 October 1, 1999, whether or not the power of attorney is or has been