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

1-2 new chapter to consist of the provisions set forth as sections 2 to 36,

1-3 inclusive, of this act.

1-4 Sec. 2. As used in this chapter, unless the context otherwise requires,

1-5 the words and terms defined in sections 3 to 8, inclusive, of this act have

1-6 the meanings ascribed to them in those sections.

1-7 Sec. 3. "Applicant" means a person who applies for licensure as a

1-8 mortgage company pursuant to this chapter.

1-9 Sec. 4. "Commissioner" means the commissioner of financial

1-10 institutions.

1-11 Sec. 5. "Depository financial institution" means a bank, savings and

1-12 loan association, thrift company or credit union.

2-1 Sec. 6. "Division" means the division of financial institutions of the

2-2 department of business and industry.

2-3 Sec. 7. "Licensee" means a person who is licensed as a mortgage

2-4 company pursuant to this chapter.

2-5 Sec. 8. 1. "Mortgage company" means any person who, directly or

2-6 indirectly:

2-7 (a) Holds himself out as being able to:

2-8 (1) Buy or sell notes secured by liens on real property; or

2-9 (2) Make loans secured by liens on real property using his own

2-10 money; and

2-11 (b) Does not engage in any other act or transaction described in the

2-12 definition of "mortgage broker," as set forth in section 50 of this act,

2-13 unless he is also licensed as a mortgage broker pursuant to chapter 645B

2-14 of NRS.

2-15 2. For the purposes of this section, a person does not make a loan

2-16 secured by a lien on real property using his own money if any portion of

2-17 the money that is used to make the loan is provided by another person

2-18 who acquires ownership of or a beneficial interest in the loan.

2-19 Sec. 9. The provisions of this chapter do not:

2-20 1. Limit any statutory or common law right of a person to bring a

2-21 civil action against a mortgage company for any act or omission involved

2-22 in the transaction of business by or on behalf of the mortgage company;

2-23 2. Limit the right of the state to punish a person for the violation of

2-24 any law, ordinance or regulation; or

2-25 3. Establish a basis for a person to bring a civil action against the

2-26 state or its officers or employees for any act or omission in carrying out

2-27 the provisions of this chapter, including, without limitation, any act or

2-28 omission relating to the disclosure of information or the failure to

2-29 disclose information pursuant to the provisions of this chapter.

2-30 Sec. 10. Except as otherwise provided in section 11 of this act, the

2-31 provisions of this chapter do not apply to:

2-32 1. Any person doing business under the laws of this state, any other

2-33 state or the United States relating to banks, savings banks, trust

2-34 companies, savings and loan associations, consumer finance companies,

2-35 industrial loan companies, credit unions, thrift companies, independent

2-36 mortgage agencies or insurance companies, unless the business

2-37 conducted in this state is not subject to supervision by the regulatory

2-38 authority of the other jurisdiction, in which case licensing pursuant to

2-39 this chapter is required.

2-40 2. A real estate investment trust, as defined in 26 U.S.C. § 856,

2-41 unless the business conducted in this state is not subject to supervision by

2-42 the regulatory authority of the other jurisdiction, in which case licensing

2-43 pursuant to this chapter is required.

3-1 3. An employee benefit plan, as defined in 29 U.S.C. § 1002(3), if the

3-2 loan is made directly from money in the plan by the plan’s trustee.

3-3 4. An attorney at law rendering services in the performance of his

3-4 duties as an attorney at law.

3-5 5. A real estate broker rendering services in the performance of his

3-6 duties as a real estate broker.

3-7 6. Any person doing any act under an order of any court.

3-8 7. Any one natural person, or husband and wife, who provides

3-9 money for investment in loans secured by a lien on real property, on his

3-10 own account.

3-11 8. Agencies of the United States and of this state and its political

3-12 subdivisions, including the public employees’ retirement system.

3-13 9. A seller of real property who offers credit secured by a mortgage

3-14 of the property sold.

3-15 Sec. 11. 1. A person who claims an exemption from the provisions

3-16 of this chapter pursuant to subsection 1 of section 10 of this act must:

3-17 (a) File a written application for a certificate of exemption with the

3-18 office of the commissioner;

3-19 (b) Pay the fee required pursuant to section 15 of this act; and

3-20 (c) Include with the written application satisfactory proof that the

3-21 person meets the requirements of subsection 1 of section 10 of this act.

3-22 2. The commissioner may require a person who claims an exemption

3-23 from the provisions of this chapter pursuant to subsections 2 to 9,

3-24 inclusive, of section 10 of this act to:

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

3-26 office of the commissioner;

3-27 (b) Pay the fee required pursuant to section 15 of this act; and

3-28 (c) Include with the written application satisfactory proof that the

3-29 person meets the requirements of at least one of those exemptions.

3-30 3. A certificate of exemption expires automatically if, at any time, the

3-31 person who claims the exemption no longer meets the requirements of at

3-32 least one exemption set forth in the provisions of section 10 of this act.

3-33 4. If a certificate of exemption expires automatically pursuant to this

3-34 section, the person shall not provide any of the services of a mortgage

3-35 company or otherwise engage in, carry on or hold himself out as

3-36 engaging in or carrying on the business of a mortgage company, unless

3-37 the person applies for and is issued:

3-38 (a) A license as a mortgage company pursuant to this chapter; or

3-39 (b) Another certificate of exemption.

3-40 5. The commissioner may impose upon a person who is required to

3-41 apply for a certificate of exemption or who holds a certificate of

3-42 exemption an administrative fine of not more than $5,000 for each

3-43 violation that he commits, if the person:

4-1 (a) Has knowingly made or caused to be made to the commissioner

4-2 any false representation of material fact;

4-3 (b) Has suppressed or withheld from the commissioner any

4-4 information which the person possesses and which, if submitted by him,

4-5 would have rendered the person ineligible to hold a certificate of

4-6 exemption; or

4-7 (c) Has violated any provision of this chapter, a regulation adopted

4-8 pursuant to this chapter or an order of the commissioner that applies to a

4-9 person who is required to apply for a certificate of exemption or who

4-10 holds a certificate of exemption.

4-11 Sec. 12. 1. A person may apply to the commissioner for an

4-12 exemption from the provisions of this chapter governing the making of a

4-13 loan or a particular class of loans of money.

4-14 2. The commissioner may grant the exemption if he finds that:

4-15 (a) The making of the loan or the particular class of loans would not

4-16 be detrimental to the financial condition of the lenders or debtors who

4-17 would be involved in the loan or the particular class of loans;

4-18 (b) Such lenders or debtors have established a record of sound

4-19 performance, efficient management, financial responsibility and

4-20 integrity;

4-21 (c) The making of the loan or the particular class of loans is likely to

4-22 increase the availability of capital for a sector of the state economy; and

4-23 (d) The making of the loan or the particular class of loans is not

4-24 detrimental to the public interest.

4-25 3. The commissioner:

4-26 (a) May revoke an exemption unless a loan for which an exemption

4-27 was granted has been made; and

4-28 (b) Shall issue a written statement setting forth the reasons for his

4-29 decision to grant, deny or revoke an exemption.

4-30 Sec. 13. 1. A person who wishes to be licensed as a mortgage

4-31 company must file a written application for a license with the office of

4-32 the commissioner and pay the fee required pursuant to section 15 of this

4-33 act. An application for a license as a mortgage company must:

4-34 (a) Be verified.

4-35 (b) State the name, residence address and business address of the

4-36 applicant.

4-37 (c) State the location of each principal office and branch office at

4-38 which the mortgage company will conduct business within this state. If

4-39 the mortgage company will not maintain any offices within this state, the

4-40 applicant must include the name and address of the person within this

4-41 state who will serve as the resident agent for the mortgage company

4-42 pursuant to section 14 of this act.

5-1 (d) State the name under which the applicant will conduct business as

5-2 a mortgage company.

5-3 (e) If the applicant is not a natural person, list the name, residence

5-4 address and business address of each person who will have an interest in

5-5 the mortgage company as a principal, partner, officer, director, manager

5-6 or trustee, specifying the capacity and title of each such person.

5-7 (f) Indicate the general plan and character of the business.

5-8 (g) State the length of time the applicant has been engaged in the

5-9 mortgage company business.

5-10 (h) Include a financial statement of the applicant.

5-11 (i) Include any other information required pursuant to the regulations

5-12 adopted by the commissioner or an order of the commissioner.

5-13 2. If a mortgage company will conduct business at one or more

5-14 branch offices within this state, the mortgage company must apply for a

5-15 license for each such branch office.

5-16 3. Except as otherwise provided in this chapter, the commissioner

5-17 shall issue a license to an applicant as a mortgage company if:

5-18 (a) The application complies with the requirements of this chapter;

5-19 and

5-20 (b) The commissioner finds, after investigation, that the applicant and

5-21 each general partner, officer or director of the applicant, if the applicant

5-22 is a partnership, corporation or unincorporated association:

5-23 (1) Has a good reputation for honesty, trustworthiness and integrity

5-24 and displays competence to transact the business of a mortgage company

5-25 in a manner which safeguards the interests of the general public. The

5-26 applicant must submit satisfactory proof of these qualifications to the

5-27 commissioner.

5-28 (2) Has not been convicted of, or entered a plea of nolo contendere

5-29 to, a felony or any crime involving fraud, misrepresentation or moral

5-30 turpitude.

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

5-32 application.

5-33 (4) Has not had a license that was issued pursuant to the provisions

5-34 of this chapter or chapter 645B of NRS suspended or revoked within the

5-35 10 years immediately preceding the date of his application.

5-36 (5) Has not had a license that was issued in any other state, district

5-37 or territory of the United States or any foreign country suspended or

5-38 revoked within the 10 years immediately preceding the date of his

5-39 application.

5-40 (6) Has not violated any provision of this chapter or chapter 645B

5-41 of NRS, a regulation adopted pursuant thereto or an order of the

5-42 commissioner.

6-1 4. The commissioner shall not conduct an investigation of an

6-2 applicant pursuant to paragraph (b) of subsection 3 if the applicant is:

6-3 (a) Approved by the Federal National Mortgage Association as a

6-4 seller and servicer; and

6-5 (b) Approved by the Department of Housing and Urban Development

6-6 and the Department of Veterans Affairs.

6-7 5. If an applicant is a partnership, corporation or unincorporated

6-8 association, the commissioner may refuse to issue a license to the

6-9 applicant if any member of the partnership or any officer or director of

6-10 the corporation or unincorporated association has committed any act or

6-11 omission that would be cause for refusing to issue a license to a natural

6-12 person.

6-13 Sec. 14. 1. The commissioner shall not issue a license pursuant to

6-14 this chapter to an applicant who does not maintain an office in this state,

6-15 unless the applicant has executed a written statement that appoints a

6-16 person in this state as his resident agent for the service of process for any

6-17 action or proceeding filed against him in this state.

6-18 2. The statement of appointment must include a provision which

6-19 provides:

6-20 (a) That any process which is served on the resident agent shall be

6-21 deemed to have the same legal validity as if it had been served on the

6-22 applicant;

6-23 (b) That the appointment of the resident agent as his agent for the

6-24 service of process continues as long as any liability remains outstanding

6-25 against him in this state; and

6-26 (c) For venue in any judicial or administrative district in this state

6-27 without regard to the residence or principal place of business of the

6-28 applicant.

6-29 3. The statement of appointment must be signed by the applicant and

6-30 notarized. The applicant shall file a copy of the statement of appointment

6-31 with the commissioner. A copy of such a statement that is certified by the

6-32 commissioner shall be deemed sufficient evidence of the appointment.

6-33 4. If any process is served upon the resident agent pursuant to this

6-34 section, the resident agent shall mail the process by certified mail to the

6-35 last known address of the person holding the license. Service of process

6-36 shall be deemed complete upon service upon the resident agent. The

6-37 manner of the service of process described in this subsection does not

6-38 affect the validity of any other service of process authorized by law.

6-39 Sec. 15. 1. A license issued to a mortgage company pursuant to

6-40 this chapter expires each year on December 31, unless it is renewed. To

6-41 renew a license, the licensee must submit to the commissioner on or

6-42 before December 31 of each year:

7-1 (a) An application for renewal that complies with the requirements of

7-2 this chapter; and

7-3 (b) The fee required to renew the license pursuant to this section.

7-4 2. If the licensee fails to submit any item required pursuant to

7-5 subsection 1 to the commissioner on or before December 31 of any year,

7-6 the license is canceled. The commissioner may reinstate a canceled

7-7 license if the licensee submits to the commissioner:

7-8 (a) An application for renewal that complies with the requirements of

7-9 this chapter;

7-10 (b) The fee required to renew the license pursuant to this section; and

7-11 (c) A reinstatement fee of $200.

7-12 3. Except as otherwise provided in section 11 of this act, a certificate

7-13 of exemption issued pursuant to this chapter expires each year on

7-14 December 31, unless it is renewed. To renew a certificate of exemption, a

7-15 person must submit to the commissioner on or before December 31 of

7-16 each year:

7-17 (a) An application for renewal that complies with the requirements of

7-18 this chapter; and

7-19 (b) The fee required to renew the certificate of exemption.

7-20 4. If the person fails to submit any item required pursuant to

7-21 subsection 3 to the commissioner on or before December 31 of any year,

7-22 the certificate of exemption is canceled. Except as otherwise provided in

7-23 section 11 of this act, the commissioner may reinstate a canceled

7-24 certificate of exemption if the person submits to the commissioner:

7-25 (a) An application for renewal that complies with the requirements of

7-26 this chapter;

7-27 (b) The fee required to renew the certificate of exemption; and

7-28 (c) A reinstatement fee of $100.

7-29 5. A person must pay the following fees to apply for, to be issued or

7-30 to renew a license as a mortgage company pursuant to this chapter:

7-31 (a) To file an original application for a license, $1,500 for the

7-32 principal office and $40 for each branch office. The person must also

7-33 pay such additional expenses incurred in the process of investigation as

7-34 the commissioner deems necessary. All money received by the

7-35 commissioner pursuant to this paragraph must be placed in the

7-36 investigative account created by NRS 232.545.

7-37 (b) To be issued a license, $1,000 for the principal office and $60 for

7-38 each branch office.

7-39 (c) To renew a license, $500 for the principal office and $100 for each

7-40 branch office.

7-41 6. A person must pay the following fees to apply for or to renew a

7-42 certificate of exemption pursuant to this chapter:

7-43 (a) To file an application for a certificate of exemption, $200.

8-1 (b) To renew a certificate of exemption, $100.

8-2 7. To be issued a duplicate copy of any license or certificate of

8-3 exemption, a person must make a satisfactory showing of its loss and pay

8-4 a fee of $10.

8-5 8. Except as otherwise provided in this chapter, all fees received

8-6 pursuant to this chapter must be deposited in the state treasury for credit

8-7 to the state general fund.

8-8 Sec. 16. 1. In addition to the requirements set forth in sections 13

8-9 and 15 of this act, a natural person who applies for the issuance or

8-10 renewal of a license as a mortgage company shall submit to the

8-11 commissioner:

8-12 (a) In any application for issuance of a license, the social security

8-13 number of the applicant and the statement prescribed by the welfare

8-14 division of the department of human resources pursuant to NRS 425.520.

8-15 The statement must be completed and signed by the applicant.

8-16 (b) In any application for renewal of a license, the statement

8-17 prescribed by the welfare division of the department of human resources

8-18 pursuant to NRS 425.520. The statement must be completed and signed

8-19 by the applicant.

8-20 2. The commissioner shall include the statement required pursuant

8-21 to subsection 1 in:

8-22 (a) The application or any other forms that must be submitted for the

8-23 issuance or renewal of the license; or

8-24 (b) A separate form prescribed by the commissioner.

8-25 3. The commissioner shall not issue or renew a license as a mortgage

8-26 company if the applicant is a natural person who:

8-27 (a) Fails to submit the statement required pursuant to subsection 1; or

8-28 (b) Indicates on the statement submitted pursuant to subsection 1 that

8-29 he is subject to a court order for the support of a child and is not in

8-30 compliance with the order or a plan approved by the district attorney or

8-31 other public agency enforcing the order for the repayment of the amount

8-32 owed pursuant to the order.

8-33 4. If an applicant indicates on the statement submitted pursuant to

8-34 subsection 1 that he is subject to a court order for the support of a child

8-35 and is not in compliance with the order or a plan approved by the district

8-36 attorney or other public agency enforcing the order for the repayment of

8-37 the amount owed pursuant to the order, the commissioner shall advise

8-38 the applicant to contact the district attorney or other public agency

8-39 enforcing the order to determine the actions that the applicant may take

8-40 to satisfy the arrearage.

8-41 Sec. 17. 1. A license entitles a licensee to engage only in the

8-42 activities authorized by this chapter.

8-43 2. The provisions of this chapter do not prohibit a licensee from:

9-1 (a) Holding a license as a mortgage broker pursuant to chapter 645B

9-2 of NRS; or

9-3 (b) Conducting the business of a mortgage company and the business

9-4 of a mortgage broker in the same office.

9-5 Sec. 18. A mortgage company may not transfer or assign a license to

9-6 another person, unless the commissioner gives his written approval.

9-7 Sec. 19. 1. The commissioner must be notified of a transfer of 5

9-8 percent or more of the outstanding voting stock of a mortgage company

9-9 and must approve a transfer of voting stock of a mortgage company

9-10 which constitutes a change of control.

9-11 2. The person who acquires stock resulting in a change of control of

9-12 the mortgage company shall apply to the commissioner for approval of

9-13 the transfer. The application must contain information which shows that

9-14 the requirements of this chapter for obtaining a license will be satisfied

9-15 after the change of control. Except as otherwise provided in subsection 3,

9-16 the commissioner shall conduct an investigation to determine whether

9-17 those requirements will be satisfied. If, after the investigation, the

9-18 commissioner denies the application, he may forbid the applicant from

9-19 participating in the business of the mortgage company.

9-20 3. A mortgage company may submit a written request to the

9-21 commissioner to waive an investigation pursuant to subsection 2. The

9-22 commissioner may grant a waiver if the applicant:

9-23 (a) Has undergone a similar investigation by a state or federal agency

9-24 in connection with the licensing of or his employment with a financial

9-25 institution; or

9-26 (b) Satisfies the requirements of subsection 4 of section 13 of this act.

9-27 4. As used in this section, "change of control" means:

9-28 (a) A transfer of voting stock which results in giving a person, directly

9-29 or indirectly, the power to direct the management and policy of a

9-30 mortgage company; or

9-31 (b) A transfer of at least 25 percent of the outstanding voting stock of

9-32 a mortgage company.

9-33 Sec. 20. 1. Subject to the administrative control of the director of

9-34 the department of business and industry, the commissioner shall exercise

9-35 general supervision and control over mortgage companies doing business

9-36 in this state.

9-37 2. In addition to the other duties imposed upon him by law, the

9-38 commissioner shall:

9-39 (a) Adopt any regulations that are necessary to carry out the

9-40 provisions of this chapter, except as to loan fees.

9-41 (b) Conduct such investigations as may be necessary to determine

9-42 whether any person has violated any provision of this chapter, a

10-1 regulation adopted pursuant to this chapter or an order of the

10-2 commissioner.

10-3 (c) Conduct an annual examination of each mortgage company doing

10-4 business in this state unless, before the annual examination is conducted,

10-5 the mortgage company submits to the commissioner an audited financial

10-6 statement that has been prepared by a certified public accountant who is

10-7 authorized to perform public accounting in this state.

10-8 (d) Conduct such other examinations, periodic or special audits,

10-9 investigations and hearings as may be necessary and proper for the

10-10 efficient administration of the laws of this state regarding mortgage

10-11 companies.

10-12 (e) Classify as confidential certain records and information obtained

10-13 by the division when those matters are obtained from a governmental

10-14 agency upon the express condition that they remain confidential. This

10-15 paragraph does not limit examination by the legislative auditor.

10-16 (f) Conduct such examinations and investigations as are necessary to

10-17 ensure that mortgage companies meet the requirements of this chapter

10-18 for obtaining a license, both at the time of the application for a license

10-19 and thereafter on a continuing basis.

10-20 3. For each special audit, investigation or examination, a mortgage

10-21 company shall pay a fee based on the rate established pursuant to NRS

10-22 658.101.

10-23 Sec. 21. Each mortgage company shall pay the assessment levied

10-24 pursuant to NRS 658.055 and cooperate fully with the audits and

10-25 examinations performed pursuant thereto.

10-26 Sec. 22. 1. In the conduct of any examination, periodic or special

10-27 audit, investigation or hearing, the commissioner may:

10-28 (a) Compel the attendance of any person by subpoena.

10-29 (b) Administer oaths.

10-30 (c) Examine any person under oath concerning the business and

10-31 conduct of affairs of any person subject to the provisions of this chapter

10-32 and in connection therewith require the production of any books, records

10-33 or papers relevant to the inquiry.

10-34 2. Every person subpoenaed under the provisions of this section who

10-35 willfully refuses or willfully neglects to appear at the time and place

10-36 named in the subpoena or to produce books, records or papers required

10-37 by the commissioner, or who refuses to be sworn or answer as a witness,

10-38 is guilty of a misdemeanor.

10-39 3. The commissioner may assess against and collect from a person

10-40 all costs, including, without limitation, reasonable attorney’s fees, that

10-41 are attributable to any examination, periodic or special audit,

10-42 investigation or hearing that is conducted to examine or investigate the

10-43 conduct, activities or business of the person pursuant to this chapter.

11-1 Sec. 23. 1. Each mortgage company shall keep and maintain at all

11-2 times at each location where the mortgage company conducts business in

11-3 this state complete and suitable records of all mortgage transactions

11-4 made by the mortgage company at that location. Each mortgage

11-5 company shall also keep and maintain at all times at each such location

11-6 all original books, papers and data, or copies thereof, clearly reflecting

11-7 the financial condition of the business of the mortgage company.

11-8 2. Each mortgage company shall submit to the commissioner each

11-9 month a report of the mortgage company’s activity for the previous

11-10 month. The report must:

11-11 (a) Specify the volume of loans arranged by the mortgage company

11-12 for the month or state that no loans were arranged in that month;

11-13 (b) Include any information required pursuant to the regulations

11-14 adopted by the commissioner; and

11-15 (c) Be submitted to the commissioner by the 15th day of the month

11-16 following the month for which the report is made.

11-17 3. The commissioner may adopt regulations prescribing accounting

11-18 procedures for mortgage companies handling trust accounts and the

11-19 requirements for keeping records relating thereto.

11-20 Sec. 24. 1. Except as otherwise provided in this section, not later

11-21 than 60 days after the last day of each fiscal year for a mortgage

11-22 company, the mortgage company shall submit to the commissioner a

11-23 financial statement that:

11-24 (a) Is dated not earlier than the last day of the fiscal year; and

11-25 (b) Has been prepared from the books and records of the mortgage

11-26 company by an independent public accountant who holds a permit to

11-27 engage in the practice of public accounting in this state that has not been

11-28 revoked or suspended.

11-29 2. The commissioner may grant a reasonable extension for the

11-30 submission of a financial statement pursuant to this section if a mortgage

11-31 company requests such an extension before the date on which the

11-32 financial statement is due.

11-33 3. If a mortgage company maintains any accounts described in

11-34 section 27 of this act, the financial statement submitted pursuant to this

11-35 section must be audited. The public accountant who prepares the report

11-36 of an audit shall submit a copy of the report to the commissioner at the

11-37 same time that he submits the report to the mortgage company.

11-38 4. The commissioner shall adopt regulations prescribing the scope of

11-39 an audit conducted pursuant to subsection 3.

11-40 Sec. 25. 1. Except as otherwise provided in this section or by

11-41 specific statute, all papers, documents, reports and other written

11-42 instruments filed with the commissioner pursuant to this chapter are

11-43 open to public inspection.

12-1 2. The commissioner may withhold from public inspection or refuse

12-2 to disclose to a person, for such time as the commissioner considers

12-3 necessary, any information that, in his judgment, would:

12-4 (a) Impede or otherwise interfere with an investigation that is

12-5 currently pending against a mortgage company; or

12-6 (b) Have an undesirable effect on the welfare of the public or the

12-7 welfare of any mortgage company.

12-8 Sec. 26. 1. Except as otherwise provided in subsection 3, the

12-9 amount of any advance fee, salary, deposit or money paid to any

12-10 mortgage company or other person to obtain a loan secured by a lien on

12-11 real property must be placed in escrow pending completion of the loan or

12-12 a commitment for the loan.

12-13 2. The amount held in escrow pursuant to subsection 1 must be

12-14 released:

12-15 (a) Upon completion of the loan or commitment for the loan, to the

12-16 mortgage company or other person to whom the advance fee, salary,

12-17 deposit or money was paid.

12-18 (b) If the loan or commitment for the loan fails, to the person who

12-19 made the payment.

12-20 3. Advance payments to cover reasonably estimated costs paid to

12-21 third persons are excluded from the provisions of subsections 1 and 2 if

12-22 the person making them first signs a written agreement which specifies

12-23 the estimated costs by item and the estimated aggregate cost, and which

12-24 recites that money advanced for costs will not be refunded. If an itemized

12-25 service is not performed and the estimated cost thereof is not refunded,

12-26 the recipient of the advance payment is subject to the penalties provided

12-27 in section 36 of this act.

12-28 Sec. 27. 1. All money paid to the mortgage company for payment

12-29 of taxes or insurance premiums on real property which secures any loan

12-30 made by the mortgage company must be deposited in an insured

12-31 depository financial institution and kept separate, distinct and apart from

12-32 money belonging to the mortgage company. Such money, when

12-33 deposited, is to be designated as an "impound trust account" or under

12-34 some other appropriate name indicating that the accounts are not the

12-35 money of the mortgage company.

12-36 2. The mortgage company has a fiduciary duty to its debtors with

12-37 respect to the money in an impound trust account.

12-38 3. The mortgage company shall, upon reasonable notice, account to

12-39 any debtor whose real property secures a loan made by the mortgage

12-40 company for any money which that person has paid to the mortgage

12-41 company for the payment of taxes or insurance premiums on the real

12-42 property.

13-1 4. The mortgage company shall, upon reasonable notice, account to

13-2 the commissioner for all money in an impound trust account.

13-3 5. Except as otherwise provided in this section, a mortgage company

13-4 shall maintain an impound trust account in the same manner that an

13-5 escrow account must be maintained pursuant to section 10 of the Real

13-6 Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2609, as amended,

13-7 and the regulations adopted pursuant thereto.

13-8 6. A mortgage company shall not make payments from an impound

13-9 trust account in a manner that causes a policy of insurance to be

13-10 canceled or causes property taxes or similar payments to become

13-11 delinquent.

13-12 Sec. 28. 1. Money in an impound trust account is not subject to

13-13 execution or attachment on any claim against the mortgage company.

13-14 2. It is unlawful for a mortgage company knowingly to keep or cause

13-15 to be kept any money in a depository financial institution under the

13-16 heading of "impound trust account" or any other name designating such

13-17 money as belonging to the debtors of the mortgage company, unless the

13-18 money has been paid to the mortgage company by a debtor pursuant to

13-19 section 27 of this act and is being held in trust by the mortgage company

13-20 pursuant to the provisions of that section.

13-21 Sec. 29. 1. Whether or not a complaint has been filed, the

13-22 commissioner may investigate a mortgage company or other person if,

13-23 for any reason, it appears that:

13-24 (a) The mortgage company is conducting business in an unsafe and

13-25 injurious manner or in violation of any provision of this chapter, a

13-26 regulation adopted pursuant to this chapter or an order of the

13-27 commissioner;

13-28 (b) The person is offering or providing any of the services of a

13-29 mortgage company or otherwise engaging in, carrying on or holding

13-30 himself out as engaging in or carrying on the business of a mortgage

13-31 company without being licensed or exempt from licensing pursuant to the

13-32 provisions of this chapter; or

13-33 (c) The person is violating any other provision of this chapter, a

13-34 regulation adopted pursuant to this chapter or an order of the

13-35 commissioner.

13-36 2. If, upon investigation, the commissioner has reasonable cause to

13-37 believe that the mortgage company or other person has engaged in any

13-38 conduct or committed any violation described in subsection 1, the

13-39 commissioner may:

13-40 (a) Advise the district attorney of the county in which the conduct or

13-41 violation occurred, and the district attorney shall cause the appropriate

13-42 legal action to be taken against the mortgage company or other person to

14-1 enjoin the conduct or the operation of the business or prosecute the

14-2 violation; and

14-3 (b) Bring a civil action to:

14-4 (1) Enjoin the mortgage company or other person from engaging in

14-5 the conduct, operating the business or committing the violation; and

14-6 (2) Enjoin any other person who has encouraged, facilitated, aided

14-7 or participated in the conduct, the operation of the business or the

14-8 commission of the violation, or who is likely to engage in such acts, from

14-9 engaging in or continuing to engage in such acts.

14-10 3. If the commissioner brings a civil action pursuant to subsection 2,

14-11 the district court of any county of this state is hereby vested with the

14-12 jurisdiction in equity to enjoin the conduct, the operation of the business

14-13 or the commission of the violation and may grant any injunctions that

14-14 are necessary to prevent and restrain the conduct, the operation of the

14-15 business or the commission of the violation. During the pendency of the

14-16 proceedings before the district court:

14-17 (a) The court may issue any temporary restraining orders as may

14-18 appear to be just and proper;

14-19 (b) The findings of the commissioner shall be deemed to be prima

14-20 facie evidence and sufficient grounds, in the discretion of the court, for

14-21 the ex parte issuance of a temporary restraining order; and

14-22 (c) The commissioner may apply for and on due showing is entitled to

14-23 have issued the court’s subpoena requiring forthwith the appearance of

14-24 any person to:

14-25 (1) Produce any documents, books and records as may appear

14-26 necessary for the hearing of the petition; and

14-27 (2) Testify and give evidence concerning the conduct complained of

14-28 in the petition.

14-29 Sec. 30. 1. For each violation committed by an applicant, whether

14-30 or not he is issued a license, the commissioner may impose upon the

14-31 applicant an administrative fine of not more than $5,000, if the

14-32 applicant:

14-33 (a) Has knowingly made or caused to be made to the commissioner

14-34 any false representation of material fact;

14-35 (b) Has suppressed or withheld from the commissioner any

14-36 information which the applicant possesses and which, if submitted by

14-37 him, would have rendered the applicant ineligible to be licensed pursuant

14-38 to the provisions of this chapter; or

14-39 (c) Has violated any provision of this chapter, a regulation adopted

14-40 pursuant to this chapter or an order of the commissioner in completing

14-41 and filing his application for a license or during the course of the

14-42 investigation of his application for a license.

15-1 2. For each violation committed by a licensee, the commissioner may

15-2 impose upon the licensee an administrative fine of not more than $5,000,

15-3 may suspend, revoke or place conditions upon his license, or may do

15-4 both, if the licensee, whether or not acting as such:

15-5 (a) Is insolvent;

15-6 (b) Is grossly negligent or incompetent in performing any act for

15-7 which he is required to be licensed pursuant to the provisions of this

15-8 chapter;

15-9 (c) Does not conduct his business in accordance with law or has

15-10 violated any provision of this chapter, a regulation adopted pursuant to

15-11 this chapter or an order of the commissioner;

15-12 (d) Has made a material misrepresentation in connection with any

15-13 transaction governed by this chapter;

15-14 (e) Has suppressed or withheld from a debtor or prospective debtor

15-15 any material facts, data or other information relating to any transaction

15-16 governed by the provisions of this chapter which the licensee knew or, by

15-17 the exercise of reasonable diligence, should have known;

15-18 (f) Has knowingly made or caused to be made to the commissioner

15-19 any false representation of material fact or has suppressed or withheld

15-20 from the commissioner any information which the licensee possesses and

15-21 which, if submitted by him, would have rendered the licensee ineligible to

15-22 be licensed pursuant to the provisions of this chapter;

15-23 (g) Has failed to account to persons interested for all money received

15-24 for the impound trust account;

15-25 (h) Has refused to permit an examination by the commissioner of his

15-26 books and affairs or has refused or failed, within a reasonable time, to

15-27 furnish any information or make any report that may be required by the

15-28 commissioner pursuant to the provisions of this chapter or a regulation

15-29 adopted pursuant to this chapter;

15-30 (i) Has been convicted of, or entered a plea of nolo contendere to, a

15-31 felony or any crime involving fraud, misrepresentation or moral

15-32 turpitude;

15-33 (j) Has refused or failed to pay, within a reasonable time, any fees,

15-34 assessments, costs or expenses that the licensee is required to pay

15-35 pursuant to this chapter or a regulation adopted pursuant to this chapter;

15-36 (k) Has failed to satisfy a claim made by a debtor or prospective

15-37 debtor which has been reduced to judgment;

15-38 (l) Has failed to account for or to remit any money of a debtor or

15-39 prospective debtor within a reasonable time after a request for an

15-40 accounting or remittal;

15-41 (m) Has commingled the money or other property of a debtor or

15-42 prospective debtor with his own or has converted the money or property

15-43 of others to his own use; or

16-1 (n) Has engaged in any other conduct constituting a deceitful,

16-2 fraudulent or dishonest business practice.

16-3 Sec. 31. 1. If the commissioner receives a copy of a court order

16-4 issued pursuant to NRS 425.540 that provides for the suspension of all

16-5 professional, occupational and recreational licenses, certificates and

16-6 permits issued to a person who is the holder of a license as a mortgage

16-7 company, the commissioner shall deem the license issued to that person

16-8 to be suspended at the end of the 30th day after the date on which the

16-9 court order was issued unless the commissioner receives a letter issued to

16-10 the holder of the license by the district attorney or other public agency

16-11 pursuant to NRS 425.550 stating that the holder of the license has

16-12 complied with the subpoena or warrant or has satisfied the arrearage

16-13 pursuant to NRS 425.560.

16-14 2. The commissioner shall reinstate a license as a mortgage company

16-15 that has been suspended by a district court pursuant to NRS 425.540 if

16-16 the commissioner receives a letter issued by the district attorney or other

16-17 public agency pursuant to NRS 425.550 to the person whose license was

16-18 suspended stating that the person whose license was suspended has

16-19 complied with the subpoena or warrant or has satisfied the arrearage

16-20 pursuant to NRS 425.560.

16-21 Sec. 32. If a person is a partnership, corporation or unincorporated

16-22 association, the commissioner may take any disciplinary action set forth

16-23 in this chapter against the person if any member of the partnership or

16-24 any officer or director of the corporation or unincorporated association

16-25 has committed any act or omission that would be cause for taking such

16-26 disciplinary action against a natural person.

16-27 Sec. 33. 1. If the commissioner enters an order taking any

16-28 disciplinary action against a person or denying a person’s application for

16-29 a license, the commissioner shall cause written notice of the order to be

16-30 served personally or sent by certified mail or by telegraph to the person.

16-31 2. Unless a hearing has already been conducted concerning the

16-32 matter, the person, upon application, is entitled to a hearing. If the

16-33 person does not make such an application within 20 days after the date

16-34 of the initial order, the commissioner shall enter a final order concerning

16-35 the matter.

16-36 3. A person may appeal a final order of the commissioner in

16-37 accordance with the provisions of chapter 233B of NRS that apply to a

16-38 contested case.

16-39 Sec. 34. It is unlawful for any person to offer or provide any of the

16-40 services of a mortgage company or otherwise to engage in, carry on or

16-41 hold himself out as engaging in or carrying on the business of a

16-42 mortgage company without first obtaining a license as a mortgage

16-43 company pursuant to this chapter, unless the person:

17-1 1. Is exempt from the provisions of this chapter; and

17-2 2. Complies with the requirements for that exemption.

17-3 Sec. 35. Except as otherwise provided in section 36 of this act, a

17-4 person, or any general partner, director, officer, agent or employee of a

17-5 person, who violates any provision of this chapter is guilty of a

17-6 misdemeanor.

17-7 Sec. 36. A person, or any general partner, director, officer, agent or

17-8 employee of a person, who violates any provision of section 26, 27 or 28

17-9 of this act is guilty of:

17-10 1. A misdemeanor if the amount involved is less than $250;

17-11 2. A gross misdemeanor if the amount involved is $250 or more but

17-12 less than $1,000; or

17-13 3. A category D felony if the amount involved is $1,000 or more, and

17-14 shall be punished as provided in NRS 193.130.

17-15 Sec. 37. NRS 645A.037 is hereby amended to read as follows:

17-16 645A.037 1. Except as otherwise provided in subsection 2, no

17-35 pursuant to chapter 645B of NRS at the office or place of business.

17-36 Sec. 38. Chapter 645B of NRS is hereby amended by adding thereto

17-37 the provisions set forth as sections 39 to 66, inclusive, of this act.

17-38 Sec. 39. "Applicant" means a person who applies for licensure as a

17-39 mortgage broker or mortgage agent pursuant to this chapter.

17-40 Sec. 40. "Commissioner" means the commissioner of financial

17-41 institutions.

17-42 Sec. 41. "Construction control" has the meaning ascribed to it in

17-43 NRS 627.050.

18-1 Sec. 42. "Depository financial institution" means a bank, savings

18-2 and loan association, thrift company or credit union.

18-3 Sec. 43. "Division" means the division of financial institutions of

18-4 the department of business and industry.

18-5 Sec. 44. "Escrow agency" has the meaning ascribed to it in NRS

18-6 645A.010.

18-7 Sec. 45. "Escrow agent" has the meaning ascribed to it in NRS

18-8 645A.010.

18-9 Sec. 46. "Escrow officer" has the meaning ascribed to it in NRS

18-10 692A.028.

18-11 Sec. 47. "Investor" means a person who wants to acquire or who

18-12 acquires ownership of or a beneficial interest in a loan secured by a lien

18-13 on real property.

18-14 Sec. 48. "Licensee" means a person who is licensed as a mortgage

18-15 broker or mortgage agent pursuant to this chapter.

18-16 Sec. 49. 1. "Mortgage agent" means a natural person who:

18-17 (a) Is an employee or independent contractor of a mortgage broker

18-18 who is required to be licensed pursuant to this chapter; and

18-19 (b) Is authorized by the mortgage broker to engage in, on behalf of

18-20 the mortgage broker, any activity that would require the person, if he

18-21 were not an employee or independent contractor of the mortgage broker,

18-22 to be licensed as a mortgage broker pursuant to this chapter.

18-23 2. The term does not include a person who:

18-24 (a) Is licensed as a mortgage broker;

18-25 (b) Is a general partner, officer or director of a mortgage broker; or

18-26 (c) Performs only clerical or ministerial tasks for a mortgage broker.

18-27 Sec. 50. 1. "Mortgage broker" means any person who, directly or

18-28 indirectly:

18-29 (a) Holds himself out for hire to serve as an agent for any person in

18-30 an attempt to obtain a loan which will be secured by a lien on real

18-31 property;

18-32 (b) Holds himself out for hire to serve as an agent for any person who

18-33 has money to lend, if the loan is or will be secured by a lien on real

18-34 property;

18-35 (c) Holds himself out as being able to make loans secured by liens on

18-36 real property;

18-37 (d) Holds himself out as being able to buy or sell notes secured by

18-38 liens on real property; or

18-39 (e) Offers for sale in this state any security which is exempt from

18-40 registration under state or federal law and purports to make investments

18-41 in promissory notes secured by liens on real property.

19-1 2. The term does not include a person who is licensed as a mortgage

19-2 company, as defined in section 8 of this act, unless the person is also

19-3 licensed as a mortgage broker pursuant to this chapter.

19-4 Sec. 51. "Policy of title insurance" has the meaning ascribed to it in

19-5 NRS 692A.035.

19-6 Sec. 52. "Relative" means a spouse or any other person who is

19-7 related within the second degree by blood or marriage.

19-8 Sec. 53. "Title agent" has the meaning ascribed to it in NRS

19-9 692A.060.

19-10 Sec. 54. "Title insurer" has the meaning ascribed to it in NRS

19-11 692A.070.

19-12 Sec. 55. 1. A person may not be licensed as, conduct business as or

19-13 hold a controlling interest or position in a mortgage broker or be licensed

19-14 as or conduct business as a mortgage agent if the person or a relative of

19-15 the person is licensed as, conducts business as or holds a controlling

19-16 interest or position in:

19-17 (a) A construction control;

19-18 (b) An escrow agency, escrow agent or escrow officer;

19-19 (c) A title agent or title insurer; or

19-20 (d) Any other legal entity, regardless of its purpose, if the legal entity

19-21 holds a controlling interest or position in a legal entity described in

19-22 paragraph (a), (b) or (c).

19-23 2. For the purposes of this section, a person shall be deemed to hold

19-24 a controlling interest or position if the person:

19-25 (a) Owns or controls a majority of the voting stock or holds any other

19-26 controlling interest, directly or indirectly, that gives him the power to

19-27 direct management or determine policy; or

19-28 (b) Is a partner, officer, director or trustee.

19-29 Sec. 56. If a person is a partnership, corporation or unincorporated

19-30 association, the person:

19-31 1. May not be licensed as a mortgage agent; and

19-32 2. Shall not engage in any act or transaction that would require the

19-33 person, if it were a natural person, to be licensed as a mortgage agent

19-34 pursuant to this chapter.

19-35 Sec. 57. 1. A person who claims an exemption from the provisions

19-36 of this chapter pursuant to subsection 1 of NRS 645B.015 must:

19-37 (a) File a written application for a certificate of exemption with the

19-38 office of the commissioner;

19-39 (b) Pay the fee required pursuant to NRS 645B.050; and

19-40 (c) Include with the written application satisfactory proof that the

19-41 person meets the requirements of subsection 1 of NRS 645B.015.

20-1 2. The commissioner may require a person who claims an exemption

20-2 from the provisions of this chapter pursuant to subsections 2 to 9,

20-3 inclusive, of NRS 645B.015 to:

20-4 (a) File a written application for a certificate of exemption with the

20-5 office of the commissioner;

20-6 (b) Pay the fee required pursuant to NRS 645B.050; and

20-7 (c) Include with the written application satisfactory proof that the

20-8 person meets the requirements of at least one of those exemptions.

20-9 3. A certificate of exemption expires automatically if, at any time, the

20-10 person who claims the exemption no longer meets the requirements of at

20-11 least one exemption set forth in the provisions of NRS 645B.015.

20-12 4. If a certificate of exemption expires automatically pursuant to this

20-13 section, the person shall not provide any of the services of a mortgage

20-14 broker or mortgage agent or otherwise engage in, carry on or hold

20-15 himself out as engaging in or carrying on the business of a mortgage

20-16 broker or mortgage agent, unless the person applies for and is issued:

20-17 (a) A license as a mortgage broker or mortgage agent pursuant to this

20-18 chapter; or

20-19 (b) Another certificate of exemption.

20-20 5. The commissioner may impose upon a person who is required to

20-21 apply for a certificate of exemption or who holds a certificate of

20-22 exemption an administrative fine of not more than $5,000 for each

20-23 violation that he commits, if the person:

20-24 (a) Has knowingly made or caused to be made to the commissioner

20-25 any false representation of material fact;

20-26 (b) Has suppressed or withheld from the commissioner any

20-27 information which the person possesses and which, if submitted by him,

20-28 would have rendered the person ineligible to hold a certificate of

20-29 exemption; or

20-30 (c) Has violated any provision of this chapter, a regulation adopted

20-31 pursuant to this chapter or an order of the commissioner that applies to a

20-32 person who is required to apply for a certificate of exemption or who

20-33 holds a certificate of exemption.

20-34 Sec. 58. 1. If an applicant is a natural person, the commissioner

20-35 may refuse to issue a license to the applicant if it appears that the

20-36 applicant would be subject to control by a relative who would be

20-37 ineligible to be licensed pursuant to this chapter.

20-38 2. If an applicant is a partnership, corporation or unincorporated

20-39 association, the commissioner may refuse to issue a license to the

20-40 applicant if:

20-41 (a) Any member of the partnership or any officer or director of the

20-42 corporation or unincorporated association has committed any act or

21-1 omission that would be cause for refusing to issue a license to a natural

21-2 person; or

21-3 (b) It appears that any member of the partnership or any officer or

21-4 director of the corporation or unincorporated association would be

21-5 subject to control by a relative who would be ineligible to be licensed

21-6 pursuant to this chapter.

21-7 Sec. 59. 1. A license entitles a licensee to engage only in the

21-8 activities authorized by this chapter.

21-9 2. The provisions of this chapter do not prohibit a licensee who is

21-10 licensed as a mortgage broker from:

21-11 (a) Holding a license as a mortgage company pursuant to sections 2 to

21-12 36, inclusive, of this act; or

21-13 (b) Conducting the business of a mortgage company and the business

21-14 of a mortgage broker in the same office.

21-15 Sec. 60. 1. Except as otherwise provided in subsection 2, not later

21-16 than 60 days after the last day of each fiscal year for a mortgage broker,

21-17 the mortgage broker shall submit to the commissioner a financial

21-18 statement that:

21-19 (a) Is dated not earlier than the last day of the fiscal year; and

21-20 (b) Has been prepared from the books and records of the mortgage

21-21 broker by an independent public accountant who holds a permit to

21-22 engage in the practice of public accounting in this state that has not been

21-23 revoked or suspended.

21-24 2. The commissioner may grant a reasonable extension for the

21-25 submission of a financial statement pursuant to this section if a mortgage

21-26 broker requests such an extension before the date on which the financial

21-27 statement is due.

21-28 Sec. 61. A mortgage broker shall:

21-29 1. Teach his mortgage agents the fundamentals of mortgage lending

21-30 and the ethics of the profession; and

21-31 2. Supervise the activities of his mortgage agents and the operation

21-32 of his business.

21-33 Sec. 62. 1. If a mortgage agent terminates his association or

21-34 employment with a mortgage broker for any reason, the mortgage broker

21-35 shall, not later than the end of the next business day following the date of

21-36 termination:

21-37 (a) Deliver to the mortgage agent or send by certified mail to the last

21-38 known residence address of the mortgage agent a written statement

21-39 which advises him that his license is being delivered or mailed to the

21-40 division; and

21-41 (b) Deliver or send by certified mail to the division:

22-1 (1) The license of the mortgage agent;

22-2 (2) A written statement of the circumstances surrounding the

22-3 termination; and

22-4 (3) A copy of the written statement that the mortgage broker

22-5 delivers or mails to the mortgage agent pursuant to paragraph (a).

22-6 2. A mortgage agent who terminates his association or employment

22-7 with a mortgage broker shall not, on or after the date on which the

22-8 division receives his license from the mortgage broker, engage in any

22-9 activity, directly or indirectly, for which a license as a mortgage agent is

22-10 required pursuant to this chapter, unless the mortgage agent is

22-11 specifically authorized by the commissioner to transfer his license to

22-12 another mortgage broker or he otherwise obtains a new license pursuant

22-13 to this chapter.

22-14 Sec. 63. 1. If a deed of trust is recorded in connection with a loan

22-15 that has been funded, in whole or in part, by money from an investor, the

22-16 mortgage broker that arranged the loan and his mortgage agents shall

22-17 not engage in any act or transaction that subordinates the priority of the

22-18 deed of trust, as recorded, unless the mortgage broker, before such an act

22-19 or transaction, obtains written approval for the subordination from each

22-20 investor who owns a beneficial interest in the loan.

22-21 2. A mortgage broker or mortgage agent shall not act as the attorney