AB324_EN

Assembly Bill No. 324–Assemblymen Goldwater, Dini, Cegavske,
Parks, Manendo, Berman, Buckley, Freeman, Lee and Smith

CHAPTER..........

AN ACT relating to financial institutions; revising various provisions regarding the regulation of mortgage brokers and mortgage agents; requiring the holder of certain escrows to obtain certain information from mortgage brokers and mortgage companies; requiring mortgage brokers and mortgage agents to attend certain courses of continuing education; authorizing the commissioner of financial institutions to adopt regulations to increase certain fees for mortgage brokers in certain circumstances; revising provisions relating to certain advertisements and disclosures by mortgage brokers; revising provisions concerning certain powers of attorney; requiring mortgage brokers to register their mortgage agents with the division of financial institutions of the department of business and industry on an annual basis; requiring mortgage agents to pay an annual registration fee; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. NRS 645A.173 is hereby amended to read as follows:

645A.173 [At the time that]

1. If an escrow for the sale of real property is established, the holder of

the escrow shall , on the date of establishment of the escrow, record in

writing the number and the date of expiration of the:

[1.] (a) License issued pursuant to chapter 645 of NRS; or

[2.] (b) Certificate of cooperation issued pursuant to

NRS 645.605,

of any real estate broker, broker-salesman or salesman who will be paid

compensation from money held in the escrow for performing the services

of a real estate broker, broker-salesman or salesman in the transaction that

is the subject of the escrow. The holder of the escrow is not required to

verify independently the validity of the number of the license or

certificate.

2. If an escrow for the sale of real property is established and the

real property is or will be secured by a mortgage or deed of trust, the

holder of the escrow shall, on the date of establishment of the escrow,

record in writing the number and the date of expiration of the license

issued pursuant to chapter 645B or 645E of NRS of any mortgage

broker or mortgage company associated with the mortgage or deed of

trust. The holder of the escrow is not required to verify independently

the validity of the number of the license.

Sec. 2. Chapter 645B of NRS is hereby amended by adding thereto

the provisions set forth as sections 3 and 4 of this act.

Sec. 3. “Private investor” means:

1. An investor who is a natural person and who provides his own

money for investment in a loan secured by a lien on real property; and

2. Two or more investors who are relatives and who jointly provide

their own money for investment in a loan secured by a lien on real

property, unless the investors are acting on behalf of a partnership, a

corporation or some other separate legal entity.

Sec. 4. 1. In addition to the requirements set forth in NRS

645B.050, to renew a license:

(a) If the licensee is a natural person, the licensee must submit to the

commissioner satisfactory proof that the licensee attended at least 5

hours of certified courses of continuing education during the 12 months

immediately preceding the date on which the license expires.

(b) If the licensee is not a natural person, the licensee must submit to

the commissioner satisfactory proof that each natural person who

supervises the daily business of the licensee attended at least 5 hours of

certified courses of continuing education during the 12 months

immediately preceding the date on which the license expires.

2. As used in this section, “certified course of continuing education”

means a course of continuing education which relates to the mortgage

industry or mortgage transactions and which is:

(a) Certified by the National Association of Mortgage Brokers or any

successor in interest to that organization; or

(b) Certified in a manner established by the commissioner, if the

National Association of Mortgage Brokers or any successor in interest to

that organization ceases to exist.

Sec. 5. NRS 645B.010 is hereby amended to read as follows:

645B.010 As used in this chapter, unless the context otherwise

requires, the words and terms defined in NRS 645B.0103 to 645B.0135,

inclusive, and section 3 of this act have the meanings ascribed to them in

those sections.

Sec. 6. NRS 645B.020 is hereby amended to read as follows:

645B.020 1. A person who wishes to be licensed as a mortgage

broker must file a written application for a license with the office of the

commissioner and pay the fee required pursuant to NRS 645B.050. An

application for a license as a mortgage broker must:

(a) Be verified.

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

applicant and the location of each principal office and branch office at

which the mortgage broker will conduct business within this state.

mortgage broker.

(d) List the name, residence address and business address of each

person who will:

(1) If the applicant is not a natural person, have an interest in the

mortgage broker as a principal, partner, officer, director or trustee,

specifying the capacity and title of each such person.

(2) Be associated with or employed by the mortgage broker as a

mortgage agent.

(e) If the applicant is a natural person, include the social security

number of the applicant.

(f) Include a general business plan and a [manual for policies and

procedures for the mortgage broker and his mortgage agents that includes,

without limitation, the underwriting standards, restrictions and]

description of the policies and procedures that the mortgage broker and his

mortgage agents will follow to arrange and service loans and to conduct

business pursuant to this chapter.

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

business of a broker.

(h) Include a financial statement of the applicant and, if applicable,

satisfactory proof that the applicant will be able to maintain continuously

the net worth required pursuant to NRS 645B.115.

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

adopted by the commissioner or an order of the commissioner.

2. If a mortgage broker will conduct business at one or more branch

offices within this state, the mortgage broker must apply for a license for

each such branch office.

3. Except as otherwise provided in this chapter, the commissioner shall

issue a license to an applicant as a mortgage broker if:

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

(b) The applicant submits the statement required pursuant to NRS

645B.023, if the applicant is required to do so; and

applicant, if the applicant is a partnership, corporation or unincorporated

association:

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

and displays competence to transact the business of a mortgage broker in a

manner which safeguards the interests of the general public. The applicant

must submit satisfactory proof of these qualifications to the commissioner.

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

to, a felony or any crime involving fraud, misrepresentation or moral

turpitude.

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

(4) Has not had a license that was issued pursuant to the provisions of

this chapter or chapter 645E of NRS suspended or revoked within the 10

years immediately preceding the date of his application.

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

territory of the United States or any foreign country suspended or revoked

within the 10 years immediately preceding the date of his application.

(6) Has not violated any provision of this chapter or chapter 645E of

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

commissioner.

Sec. 7. NRS 645B.050 is hereby amended to read as follows:

645B.050 1. A license issued pursuant to this chapter expires each

year on June 30, unless it is renewed. To renew a license, the licensee

must submit to the commissioner on or before June 30 of each year:

(a) An application for renewal;

(b) The fee required to renew the license pursuant to this section; [and]

NRS 645B.023 [.] ; and

(d) The information required pursuant to section 4 of this act.

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

subsection 1 to the commissioner on or before June 30 of any year, the

license is canceled. The commissioner may reinstate a canceled license if

the licensee submits to the commissioner:

(a) An application for renewal;

(b) The fee required to renew the license pursuant to this section;

NRS 645B.023; [and

(d) A]

(d) The information required pursuant to section 4 of this act; and

(e) Except as otherwise provided in this section, a reinstatement fee of

$200.

3. Except as otherwise provided in NRS 645B.016, a certificate of

exemption issued pursuant to this chapter expires each year on December

31, unless it is renewed. To renew a certificate of exemption, a person

must submit to the commissioner on or before December 31 of each year:

(a) An application for renewal that includes satisfactory proof that the

person meets the requirements for an exemption from the provisions of

this chapter; and

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

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

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

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

NRS 645B.016, the commissioner may reinstate a canceled certificate of

exemption if the person submits to the commissioner:

(a) An application for renewal that includes satisfactory proof that the

person meets the requirements for an exemption from the provisions of

this chapter;

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

fee of $100.

5. [A] Except as otherwise provided in this section, a person must pay

the following fees to apply for, to be issued or to renew a license as a

mortgage broker pursuant to this chapter:

(a) To file an original application or a license, $1,500 for the principal

office and $40 for each branch office. The person must also pay such

additional expenses incurred in the process of investigation as the

commissioner deems necessary. All money received by the commissioner

pursuant to this paragraph must be placed in the investigative account

created by NRS 232.545.

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

each branch office.

branch office.

6. [A] Except as otherwise provided in this section, a person must pay

the following fees to apply for or to renew a certificate of exemption

pursuant to this chapter:

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

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

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

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

a fee of $10.

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

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

the state general fund.

9. The commissioner may, by regulation, increase any fee set forth in

this section if the commissioner determines that such an increase is

necessary for the commissioner to carry out his duties pursuant to this

chapter. The amount of any increase in a fee pursuant to this subsection

must not exceed the amount determined to be necessary for the

commissioner to carry out his duties pursuant to this chapter.

Sec. 8. NRS 645B.060 is hereby amended to read as follows:

645B.060 1. Subject to the administrative control of the director of

the department of business and industry, the commissioner shall exercise

general supervision and control over mortgage brokers doing business in

this state.

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

commissioner shall:

(a) Adopt any regulations [prescribing standards for determining

whether a mortgage broker has maintained adequate supervision of a

mortgage agent pursuant to this chapter.

(b) Adopt any other regulations] that are necessary to carry out the

provisions of this chapter, except as to loan brokerage fees.

[(c)] (b) Conduct such investigations as may be necessary to determine

whether any person has violated any provision of this chapter, a regulation

adopted pursuant to this chapter or an order of the commissioner.

[(d)] (c) Conduct an annual examination of each mortgage broker doing

business in this state.

[(e)] The annual examination must include, without limitation, a

formal exit review with the mortgage broker. The commissioner shall

adopt regulations prescribing:

(1) Standards for determining the rating of each mortgage broker

based upon the results of the annual examination; and

(2) Procedures for resolving any objections made by the mortgage

broker to the results of the annual examination. The results of the

annual examination may not be opened to public inspection pursuant to

NRS 645B.090 until any objections made by the mortgage broker have

been decided by the commissioner.

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

investigations and hearings as may be necessary and proper for the

efficient administration of the laws of this state regarding mortgage

brokers and mortgage agents. The commissioner shall adopt regulations

specifying the general guidelines that will be followed when a periodic or

special audit of a mortgage broker is conducted pursuant to this chapter.

[(f)] (e) Classify as confidential certain records and information

obtained by the division when those matters are obtained from a

governmental agency upon the express condition that they remain

confidential. This paragraph does not limit examination by the legislative

auditor.

[(g)] (f) Conduct such examinations and investigations as are necessary

to ensure that mortgage brokers meet the requirements of this chapter for

obtaining a license, both at the time of the application for a license and

thereafter on a continuing basis.

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

broker shall pay a fee based on the rate established pursuant to NRS

658.101.

Sec. 9. NRS 645B.085 is hereby amended to read as follows:

645B.085 1. Except as otherwise provided in this section, not later

than [60] 90 days after the last day of each fiscal year for a mortgage

broker, the mortgage broker shall submit to the commissioner a financial

statement that:

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

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

broker by an independent public accountant who holds a permit to engage

in the practice of public accounting in this state that has not been revoked

or suspended.

2. The commissioner may grant a reasonable extension for the

submission of a financial statement pursuant to this section if a mortgage

broker requests such an extension before the date on which the financial

statement is due.

3. If a mortgage broker maintains any accounts described in subsection

1 of NRS 645B.175, the financial statement submitted pursuant to this

section must be audited. If a mortgage broker maintains any accounts

described in subsection 4 of NRS 645B.175, those accounts must be

audited. The public accountant who prepares the report of an audit shall

submit a copy of the report to the commissioner at the same time that he

submits the report to the mortgage broker.

4. The commissioner shall adopt regulations prescribing the scope of

an audit conducted pursuant to subsection 3.

Sec. 10. NRS 645B.185 is hereby amended to read as follows:

645B.185 1. A mortgage broker or mortgage agent shall not accept

money from [an] a private investor to acquire ownership of or a beneficial

interest in a loan secured by a lien on real property unless:

(a) The private investor and the mortgage broker or mortgage agent sign

and date a disclosure form that complies with the provisions of this

section; and

(b) The mortgage broker or mortgage agent gives the private investor

the original disclosure form that has been signed and dated.

2. [An] A private investor and a mortgage broker or mortgage agent

must sign and date a separate disclosure form pursuant to subsection 1 for

each loan in which the private investor invests his money. A mortgage

broker or mortgage agent shall not act as the attorney in fact or the agent

of [an] a private investor with respect to the signing or dating of any

disclosure form.

3. In addition to the requirements of subsections 1 and 2, a mortgage

broker or mortgage agent shall not accept money from [an] a private

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

by a lien on real property, unless the mortgage broker or mortgage agent

gives the private investor a written form by which the private investor

may request that the mortgage broker authorize the commissioner to

release the mortgage broker’s financial statement to the private investor.

Such a form must be given to the private investor for each loan. If the

private investor, before giving money to the mortgage broker for the loan,

requests that the

mortgage broker authorize the release of a financial statement pursuant to

this subsection, the mortgage broker and his mortgage agents shall not

accept money from the private investor for that loan until the mortgage

broker receives notice from the commissioner that the financial statement

has been released to the private investor.

4. [An] A private investor and a mortgage broker or mortgage agent

may not agree to alter or waive the provisions of this section by contract or

other agreement. Any such contract or agreement is void and must not be

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

5. A mortgage broker shall retain a copy of each disclosure form that is

signed and dated pursuant to subsection 1 for the period that is prescribed

in the regulations adopted by the commissioner.

6. The standard provisions for each such disclosure form must include,

without limitation, statements:

(a) Explaining the risks of investing through the mortgage broker,

including, without limitation:

(1) The possibility that the debtor may default on the loan;

(2) The nature of the losses that may result through foreclosure;

(3) The fact that payments of principal and interest are not guaranteed

and that the private investor may lose the entire amount of principal that

he has invested;

(4) The fact that the mortgage broker is not a depository financial

institution and that the investment is not insured by any depository

insurance and is not otherwise insured or guaranteed by the federal or state

government; and

(5) Any other information required pursuant to the regulations

adopted by the commissioner; and

(b) Disclosing to the private investor the following information if the

information is known or, in light of all the surrounding facts and

circumstances, reasonably should be known to the mortgage broker:

(1) Whether the real property that will secure the loan is encumbered

by any other liens and, if so, the priority of each such lien, the amount of

debt secured by each such lien and the current status of that debt,

including, without limitation, whether the debt is being paid or is in

default;

(2) Whether the mortgage broker or any general partner, officer,

director or mortgage agent of the mortgage broker has any direct or

indirect interest in the debtor;

(3) Whether any disciplinary action has been taken by the

commissioner against the mortgage broker or any general partner, officer

or director of the mortgage broker within the immediately preceding 12

months, and the nature of any such disciplinary action;

(4) Whether the mortgage broker or any general partner, officer or

director of the mortgage broker has been convicted within the immediately

preceding 12 months for violating any law, ordinance or regulation that

involves fraud, misrepresentation or a deceitful, fraudulent or dishonest

business practice; and

(5) Any other information required pursuant to the regulations

adopted by the commissioner.

7. Whether or not a mortgage broker is required to disclose any

information to private investors through a disclosure form that complies

with the provisions of this section, the commissioner may order the

mortgage broker to disclose to private investors and other investors or to

the general public any information concerning the mortgage broker, any

general partner, officer, director or mortgage agent of the mortgage broker

or any loan in which the mortgage broker is or has been involved, if the

commissioner, in his judgment, believes that the information:

(a) Would be of material interest to a reasonable investor who is

deciding whether to invest money with the mortgage broker; or

(b) Is necessary to protect the welfare of the public.

8. In carrying out the provisions of subsection 7, the commissioner

may, without limitation, order a mortgage broker to include statements of

disclosure prescribed by the commissioner:

(a) In the disclosure form that must be given to private investors

pursuant to subsection 1;

(b) In additional disclosure forms that must be given to private

investors and other investors before or after they have invested money

through the mortgage broker; or

his business.

9. The commissioner:

(a) Shall adopt regulations prescribing the period for which a mortgage

broker must retain a copy of each disclosure form that is given to private

investors; and

(b) May adopt any other regulations that are necessary to carry out the

provisions of this section, including, without limitation, regulations

specifying the size of print and any required formatting or typesetting that

a mortgage broker must use in any form that is given to private investors.

Sec. 11. NRS 645B.189 is hereby amended to read as follows:

645B.189 1. [Each] If, in carrying on his business, a mortgage

broker uses an advertisement that is designed, intended or reasonably

likely to solicit money from private investors, the mortgage broker shall

include in each such advertisement [that the mortgage broker uses in

carrying on his business:

(a) A] a statement of disclosure in substantially the following form:

Money invested through a mortgage broker is not guaranteed to

earn any interest or return and is not insured.

[(b) Any other]

2. A mortgage broker shall include in each advertisement that the

mortgage broker uses in carrying on his business any statements of

disclosure required pursuant to the regulations adopted by the

commissioner or required pursuant to an order of the commissioner

entered in accordance with subsections 7 and 8 of NRS 645B.185.

[2.] 3. Each mortgage broker shall submit any proposed advertisement

that the mortgage broker intends to use in carrying on his business to the

commissioner for approval.

[3.] 4. In addition to the requirements set forth in this chapter, each

advertisement that a mortgage broker uses in carrying on his business must

comply with the requirements of:

(a) NRS 598.0903 to 598.0999, inclusive, concerning deceptive trade

practices; and

(b) Any applicable federal statute or regulation concerning deceptive

advertising and the advertising of interest rates.

[4.] 5. If a mortgage broker violates any provision of NRS 598.0903

to 598.0999, inclusive, concerning deceptive trade practices or any federal

statute or regulation concerning deceptive advertising or the advertising of

interest rates, in addition to any sanction or penalty imposed by state or

federal law upon the mortgage broker for the violation, the commissioner

may take any disciplinary action set forth in subsection 2 of NRS

645B.670 against the mortgage broker.

[5.] 6. The commissioner may adopt any regulations that are

necessary to carry out the provisions of this section.

Sec. 12. NRS 645B.330 is hereby amended to read as follows:

645B.330 1. A mortgage broker or mortgage agent shall not engage

in any act or transaction on behalf of [an] a private investor pursuant to a

power of attorney unless:

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

services for [loans] not more than one specific loan in which the private

investor owns a beneficial interest; and

(b) The provisions of the power of attorney:

(1) Have been approved by the commissioner;

(2) Expressly prohibit the mortgage broker and his mortgage agents

from engaging in any act or transaction that subordinates the priority of a

recorded deed of trust unless, before such an act or transaction, the

mortgage broker obtains written approval for the subordination from the

private investor;

(3) Expressly prohibit the mortgage broker and his mortgage agents

from using or releasing any money in which the private investor owns a

beneficial interest with regard to [a] the specific loan for a purpose that is

not directly related to providing services for the loan unless, before any

such money is used or released for another purpose, the mortgage broker

obtains written approval from the private investor to use or release the

money for the other purpose; and

(4) Expressly provide that the power of attorney is effective only for

[a period of not more than 6 months unless, before the date on which the

period expires, the mortgage broker obtains written approval from the

investor to extend the power of attorney for an additional period of not

more than 6 months. The mortgage broker may, on a continuing basis,

obtain written approval from the investor to extend the power of attorney

for one or more consecutive periods of not more than 6 months each,

except that the investor may execute only one written approval for an

extension during each such 6-month period.] the term of the specific loan

unless the mortgage broker obtains written approval from the private

investor to extend the term of the power of attorney to provide services

for not more than one other loan and the written approval:

(I) Identifies the loan for which the power of attorney was

executed; and

(II) Identifies the loan for which the written approval is being

given.

2. A mortgage broker or mortgage agent shall not act as the attorney in

fact or the agent of [an] a private investor with respect to the giving of

written approval pursuant to paragraph (b) of subsection 1. [An] A private

investor and a mortgage broker or mortgage agent may not agree to alter

or waive the provisions of this section by contract or other agreement. Any

such contract or agreement is void and must not be given effect to the

extent that it violates the provisions of this section.

3. [A] Except as otherwise provided in subsection 4, a power of

attorney which designates a mortgage broker or mortgage agent as the

attorney in fact or the agent of [an] a private investor and which violates

the provisions of this section is void and must not be given effect with

regard to any act or transaction that occurs on or after October 1, 1999,

whether or not the power of attorney is or has been executed by the private

investor before, on or after October 1, 1999.

4. The provisions of subsection 3 do not apply to a power of attorney

that designates a mortgage broker or mortgage agent as the attorney in

fact or the agent of a private investor if the power of attorney:

(a) Was executed before July 1, 2001; and

(b) Complied with the provisions of this section that were in effect on

October 1, 1999.

5. The provisions of this section do not limit the right of [an] a private

investor to include provisions in a power of attorney that are more

restrictive than the provisions set forth in subsection 1.

Sec. 13. NRS 645B.450 is hereby amended to read as follows:

645B.450 1. A person shall not act as or provide any of the services

of a mortgage agent or otherwise engage in, carry on or hold himself out

as engaging in or carrying on the activities of a mortgage agent if the

person:

(a) Has been convicted of, or entered a plea of nolo contendere to, a

felony or any crime involving fraud, misrepresentation or moral turpitude;

(b) Has had a financial services license or registration suspended or

revoked within the immediately preceding 10 years.

2. A mortgage agent may not be associated with or employed by more

than one mortgage broker at the same time.

3. A mortgage broker shall register with the division each person who

will be associated with or employed by the mortgage broker as a mortgage

agent. A mortgage broker shall register each such person with the

division when the person begins his association or employment with the

mortgage broker and annually thereafter. A registration expires 12

months after its effective date.

4. To register a person as a mortgage agent, a mortgage broker must:

(a) Submit to the division a registration form which is provided by the

division and which:

(1) States the name, residence address and business address of the

person;

(2) Is signed by the person;

(3) Includes a provision by which the person gives his written

consent to an investigation of his credit history, criminal history and

background; and

(4) Includes any other information or supporting materials required

by the regulations adopted by the commissioner. Such information or

supporting materials may include, without limitation, a complete set of

fingerprints from the person, the social security number of the person and

other forms of identification of the person . [; and

(b) Pay]

(b) For each initial registration, pay the actual costs and expenses

incurred by the division to investigate the credit history, criminal history

and background of the person. All money received pursuant to this

paragraph must be placed in the investigative account created by NRS

232.545.

[4.] (c) For each annual registration, submit to the division

satisfactory proof that the person attended at least 5 hours of certified

courses of continuing education during the 12 months immediately

preceding the date on which the registration expires.

5. Not later than the date on which the mortgage broker submits the

information for annual registration required by subsection 4, the person

being registered shall pay an annual registration fee of $125. If the

person does not pay the annual registration fee, the person shall be

deemed to be unregistered for the purposes of this chapter.

6. A mortgage broker shall not employ a person as a mortgage agent or

authorize a person to be associated with the mortgage broker as a

mortgage agent if the mortgage broker has not registered the person with

the division pursuant to [subsection 3] this section or if the person:

(a) Has been convicted of, or entered a plea of nolo contendere to, a

felony or any crime involving fraud, misrepresentation or moral turpitude;

(b) Has had a financial services license or registration suspended or

revoked within the immediately preceding 10 years.

[5.] 7. If a mortgage agent terminates his association or employment

with a mortgage broker for any reason, the mortgage broker shall, not later

than the [end of the next] third business day following the date of

termination:

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

known residence address of the mortgage agent a written statement which

advises him that his termination is being reported to the division; and

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

(1) A written statement of the circumstances surrounding the

termination; and

(2) A copy of the written statement that the mortgage broker delivers

or mails to the mortgage agent pursuant to paragraph (a).

8. As used in this section, “certified course of continuing education”

has the meaning ascribed to it in section 4 of this act.

Sec. 14. NRS 645B.460 is hereby amended to read as follows:

645B.460 1. A mortgage broker shall[:

1. Teach his mortgage agents the fundamentals of mortgage lending

and the ethics of the profession; and

2. ~~Supervise]~~ exercise reasonable supervision over the activities of his

mortgage agents . [and the operation of his business.] Such reasonable

supervision must include, as appropriate:

(a) The establishment of written or oral policies and procedures for

his mortgage agents; and

(b) The establishment of a system to review, oversee and inspect the

activities of his mortgage agents, including, without limitation:

(1) Transactions handled by his mortgage agents pursuant to this

chapter;

(2) Communications between his mortgage agents and a party to

such a transaction;

(3) Documents prepared by his mortgage agents that may have a

material effect upon the rights or obligations of a party to such a

transaction; and

(4) The handling by his mortgage agents of any fee, deposit or

money paid to the mortgage broker or his mortgage agents or held in

trust by the mortgage broker or his mortgage agents pursuant to this

chapter.

2. The commissioner shall allow a mortgage broker to take into

consideration the total number of mortgage agents associated with or

employed by the mortgage broker when the mortgage broker determines

the form and extent of the policies and procedures for those mortgage

agents and the system to review, oversee and inspect the activities of

those mortgage agents.

3. The commissioner may adopt regulations prescribing standards

for determining whether a mortgage broker has exercised reasonable

supervision over the activities of a mortgage agent pursuant to this

section.

Sec. 15. NRS 645B.600 is hereby amended to read as follows:

645B.600 1. A person may[, in accordance with the regulations

adopted pursuant to subsection 2,] file with the commissioner a complaint

[with the commissioner,] alleging that another person has violated a

provision of this chapter, a regulation adopted pursuant to this chapter or

an order of the commissioner.

2. [The commissioner shall adopt regulations prescribing:

(a) The form that such a complaint must take;

(b) The information that must be included in such a complaint; and

A complaint filed pursuant to this section must:

(a) Be in writing;

(b) Be signed by the person filing the complaint or the authorized

representative of the person filing the complaint;

the complaint or the authorized representative of the person filing the

complaint;

(d) Describe the nature of the alleged violation in as much detail as

possible;

(e) Include as exhibits copies of all documentation supporting the

complaint; and

(f) Include any other information or supporting materials required by

the regulations adopted by the commissioner or by an order of the

commissioner.

Sec. 16. NRS 645B.670 is hereby amended to read as follows:

645B.670 Except as otherwise provided in NRS 645B.690:

1. For each violation committed by an applicant, whether or not he is

issued a license, the commissioner may impose upon the applicant an

administrative fine of not more than $10,000, if the applicant:

(a) Has knowingly made or caused to be made to the commissioner any

false representation of material fact;

(b) Has suppressed or withheld from the commissioner any information

which the applicant possesses and which, if submitted by him, would have

rendered the applicant ineligible to be licensed pursuant to the provisions

of this chapter; or

pursuant to this chapter or an order of the commissioner in completing and

filing his application for a license or during the course of the investigation

of his application for a license.

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

impose upon the licensee an administrative fine of not more than $10,000,

may suspend, revoke or place conditions upon his license, or may do both,

if the licensee, whether or not acting as such:

(a) Is insolvent;

(b) Is grossly negligent or incompetent in performing any act for which

he is required to be licensed pursuant to the provisions of this chapter;

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

chapter or an order of the commissioner;

(d) Is in such financial condition that he cannot continue in business

with safety to his customers;

(e) Has made a material misrepresentation in connection with any

transaction governed by this chapter;

(f) Has suppressed or withheld from a client any material facts, data or

other information relating to any transaction governed by the provisions of

this chapter which the licensee knew or, by the exercise of reasonable

diligence, should have known;

(g) Has knowingly made or caused to be made to the commissioner any

false representation of material fact or has suppressed or withheld from the

commissioner any information which the licensee possesses and which, if

submitted by him, would have rendered the licensee ineligible to be

licensed pursuant to the provisions of this chapter;

(h) Has failed to account to persons interested for all money received

for a trust account;

(i) Has refused to permit an examination by the commissioner of his

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

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

commissioner pursuant to the provisions of this chapter or a regulation

adopted pursuant to this chapter;

(j) Has been convicted of, or entered a plea of nolo contendere to, a

felony or any crime involving fraud, misrepresentation or moral turpitude;

(k) Has refused or failed to pay, within a reasonable time, any fees,

assessments, costs or expenses that the licensee is required to pay pursuant

to this chapter or a regulation adopted pursuant to this chapter;

(l) Has failed to satisfy a claim made by a client which has been reduced

to judgment;

(m) Has failed to account for or to remit any money of a client within a

reasonable time after a request for an accounting or remittal;

(n) Has commingled the money or other property of a client with his

own or has converted the money or property of others to his own use;

(o) Has engaged in any other conduct constituting a deceitful,

fraudulent or dishonest business practice;

(p) Has repeatedly violated the policies and procedures of the mortgage

broker;

(q) Has failed to [maintain adequate] exercise reasonable supervision

over the activities of a mortgage agent [;] as required by NRS 645B.460;

(r) Has instructed a mortgage agent to commit an act that would be

cause for the revocation of the license of the mortgage broker, whether or

not the mortgage agent commits the act;

(s) Has employed a person as a mortgage agent or authorized a person

to be associated with the licensee as a mortgage agent at a time when the

licensee knew or, in light of all the surrounding facts and circumstances,

reasonably should have known that the person:

(1) Had been convicted of, or entered a plea of nolo contendere to, a

felony or any crime involving fraud, misrepresentation or moral turpitude;

(2) Had a financial services license or registration suspended or

revoked within the immediately preceding 10 years; or

(t) Has not conducted verifiable business as a mortgage broker for 12

consecutive months, except in the case of a new applicant. The

commissioner shall determine whether a mortgage broker is conducting

business by examining the monthly reports of activity submitted by the

licensee or by conducting an examination of the licensee.

Sec. 17. NRS 645B.700 is hereby amended to read as follows:

645B.700 1. Except as otherwise provided in subsection 2, for each

violation that may be committed by a person pursuant to this chapter or the

regulations adopted pursuant to this chapter, the commissioner [shall] may

adopt regulations:

(a) Categorizing the violation as a major violation or a minor violation;

and

(b) Specifying the disciplinary action that will be taken by the

commissioner pursuant to this chapter against a person who commits:

(1) A major violation. The disciplinary action taken by the

commissioner for a major violation [must] may include, without

limitation, suspension or revocation of the person’s license.

(2) More than two minor violations. The commissioner may establish

graduated sanctions for a person who commits more than two minor

violations based upon the number, the frequency and the severity of the

minor violations and whether the person previously has committed any

major violations.

2. The provisions of this section do not apply to a violation for which

the commissioner is required to take disciplinary action in accordance with

NRS 645B.690.

Sec. 18. Section 139 of chapter 646, Statutes of Nevada 1999, at page

3816, is hereby amended to read as follows:

Sec. 139. 1. This section and section 130.5 of this act become

effective upon passage and approval for the purpose of adopting any

regulations necessary to carry out the provisions of this act, and on

September 30, 1999, for all other purposes.

2. Sections 1 to 101, inclusive, 103, 105 to 117, inclusive, 119 to

130, inclusive, and 131 to 138, inclusive, of this act become effective

upon passage and approval for the purpose of adopting any

regulations necessary to carry out the provisions of this act, and on

October 1, 1999, for all other purposes.

3. Sections 102, 104 and 118 of this act become effective upon

passage and approval for the purpose of adopting any regulations

necessary to carry out the provisions of this act, and at 12:01 a.m. on

October 1, 1999, for all other purposes.

4. Sections 15 and 33 of this act expire by limitation on the date

on which the provisions of 42 U.S.C. § 666 requiring each state to

establish procedures under which the state has authority to withhold

or suspend, or to restrict the use of professional, occupational and

recreational licenses of persons who:

(a) Have failed to comply with a subpoena or warrant relating to a

procedure to determine the paternity of a child or to establish or

enforce an obligation for the support of a child; or

(b) Are in arrears in the payment for the support of one or more

children,

are repealed by the Congress of the United States.

[5. Section 78.5 of this act expires by limitation on October 1,

2001.]

Sec. 19. This act becomes effective on July 1, 2001.

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