REQUIRES TWO-THIRDS MAJORITY VOTE (§§ 7, 13)exempt

      (REPRINTED WITH ADOPTED AMENDMENTS)

 

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

 

March 12, 2001

____________

 

Referred to Committee on Commerce and Labor

 

SUMMARY—Revises various provisions regarding regulation of mortgage brokers and mortgage agents. (BDR 54‑491)

 

FISCAL NOTE:                     Effect on Local Government: No.

                                    Effect on the State: Yes.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

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:

 

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

1-2     645A.173  [At the time that]

1-3    1.  If an escrow for the sale of real property is established, the holder of

1-4  the escrow shall , on the date of establishment of the escrow, record in

1-5  writing the number and the date of expiration of the:

1-6    [1.] (a) License issued pursuant to chapter 645 of NRS; or

1-7    [2.] (b) Certificate of cooperation issued pursuant to

1-8  NRS 645.605,

1-9  of any real estate broker, broker-salesman or salesman who will be paid

1-10  compensation from money held in the escrow for performing the services

1-11  of a real estate broker, broker-salesman or salesman in the transaction that

2-1  is the subject of the escrow. The holder of the escrow is not required to

2-2  verify independently the validity of the number of the license or certificate.

2-3    2.  If an escrow for the sale of real property is established and the

2-4  real property is or will be secured by a mortgage or deed of trust, the

2-5  holder of the escrow shall, on the date of establishment of the escrow,

2-6  record in writing the number and the date of expiration of the license

2-7  issued pursuant to chapter 645B or 645E of NRS of any mortgage broker

2-8  or mortgage company associated with the mortgage or deed of trust. The

2-9  holder of the escrow is not required to verify independently the validity of

2-10  the number of the license.

2-11    Sec. 2. Chapter 645B of NRS is hereby amended by adding thereto

2-12  the provisions set forth as sections 3 and 4 of this act.

2-13    Sec. 3. “Private investor” means:

2-14    1.  An investor who is a natural person and who provides his own

2-15  money for investment in a loan secured by a lien on real property; and

2-16    2.  Two or more investors who are relatives and who jointly provide

2-17  their own money for investment in a loan secured by a lien on real

2-18  property, unless the investors are acting on behalf of a partnership, a

2-19  corporation or some other separate legal entity.

2-20    Sec. 4. 1.  In addition to the requirements set forth in NRS

2-21  645B.050, to renew a license:

2-22    (a) If the licensee is a natural person, the licensee must submit to the

2-23  commissioner satisfactory proof that the licensee attended at least 5

2-24  hours of certified courses of continuing education during the 12 months

2-25  immediately preceding the date on which the license expires.

2-26    (b) If the licensee is not a natural person, the licensee must submit to

2-27  the commissioner satisfactory proof that each natural person who

2-28  supervises the daily business of the licensee attended at least 5 hours of

2-29  certified courses of continuing education during the 12 months

2-30  immediately preceding the date on which the license expires.

2-31    2.  As used in this section, “certified course of continuing education”

2-32  means a course of continuing education which relates to the mortgage

2-33  industry or mortgage transactions and which is:

2-34    (a) Certified by the National Association of Mortgage Brokers or any

2-35  successor in interest to that organization; or

2-36    (b) Certified in a manner established by the commissioner, if the

2-37  National Association of Mortgage Brokers or any successor in interest to

2-38  that organization ceases to exist.

2-39    Sec. 5. NRS 645B.010 is hereby amended to read as follows:

2-40     645B.010  As used in this chapter, unless the context otherwise

2-41  requires, the words and terms defined in NRS 645B.0103 to 645B.0135,

2-42  inclusive, and section 3 of this act have the meanings ascribed to them in

2-43  those sections.

2-44    Sec. 6. NRS 645B.020 is hereby amended to read as follows:

2-45     645B.020  1.  A person who wishes to be licensed as a mortgage

2-46  broker must file a written application for a license with the office of the

2-47  commissioner and pay the fee required pursuant to NRS 645B.050. An

2-48  application for a license as a mortgage broker must:

2-49    (a) Be verified.

3-1    (b) State the name, residence address and business address of the

3-2  applicant and the location of each principal office and branch office at

3-3  which the mortgage broker will conduct business within this state.

3-4    (c) State the name under which the applicant will conduct business as a

3-5  mortgage broker.

3-6    (d) List the name, residence address and business address of each

3-7  person who will:

3-8       (1) If the applicant is not a natural person, have an interest in the

3-9  mortgage broker as a principal, partner, officer, director or trustee,

3-10  specifying the capacity and title of each such person.

3-11      (2) Be associated with or employed by the mortgage broker as a

3-12  mortgage agent.

3-13    (e) If the applicant is a natural person, include the social security

3-14  number of the applicant.

3-15    (f) Include a general business plan and a [manual for policies and

3-16  procedures for the mortgage broker and his mortgage agents that includes,

3-17  without limitation, the underwriting standards, restrictions and] description

3-18  of the policies and procedures that the mortgage broker and his mortgage

3-19  agents will follow to arrange and service loans and to conduct business

3-20  pursuant to this chapter.

3-21    (g) State the length of time the applicant has been engaged in the

3-22  business of a broker.

3-23    (h) Include a financial statement of the applicant and, if applicable,

3-24  satisfactory proof that the applicant will be able to maintain continuously

3-25  the net worth required pursuant to NRS 645B.115.

3-26    (i) Include any other information required pursuant to the regulations

3-27  adopted by the commissioner or an order of the commissioner.

3-28    2.  If a mortgage broker will conduct business at one or more branch

3-29  offices within this state, the mortgage broker must apply for a license for

3-30  each such branch office.

3-31    3.  Except as otherwise provided in this chapter, the commissioner shall

3-32  issue a license to an applicant as a mortgage broker if:

3-33    (a) The application complies with the requirements of this chapter;

3-34    (b) The applicant submits the statement required pursuant to NRS

3-35  645B.023, if the applicant is required to do so; and

3-36    (c) The applicant and each general partner, officer or director of the

3-37  applicant, if the applicant is a partnership, corporation or unincorporated

3-38  association:

3-39      (1) Has a good reputation for honesty, trustworthiness and integrity

3-40  and displays competence to transact the business of a mortgage broker in a

3-41  manner which safeguards the interests of the general public. The applicant

3-42  must submit satisfactory proof of these qualifications to the commissioner.

3-43      (2) Has not been convicted of, or entered a plea of nolo contendere

3-44  to, a felony or any crime involving fraud, misrepresentation or moral

3-45  turpitude.

3-46      (3) Has not made a false statement of material fact on his application.

3-47      (4) Has not had a license that was issued pursuant to the provisions of

3-48  this chapter or chapter 645E of NRS suspended or revoked within the 10

3-49  years immediately preceding the date of his application.

4-1       (5) Has not had a license that was issued in any other state, district or

4-2  territory of the United States or any foreign country suspended or revoked

4-3  within the 10 years immediately preceding the date of his application.

4-4       (6) Has not violated any provision of this chapter or chapter 645E of

4-5  NRS, a regulation adopted pursuant thereto or an order of the

4-6  commissioner.

4-7    Sec. 7. NRS 645B.050 is hereby amended to read as follows:

4-8     645B.050  1.  A license issued pursuant to this chapter expires each

4-9  year on June 30, unless it is renewed. To renew a license, the licensee must

4-10  submit to the commissioner on or before June 30 of each year:

4-11    (a) An application for renewal;

4-12    (b) The fee required to renew the license pursuant to this section; [and]

4-13    (c) If the licensee is a natural person, the statement required pursuant to

4-14  NRS 645B.023 [.] ; and

4-15    (d) The information required pursuant to section 4 of this act.

4-16    2.  If the licensee fails to submit any item required pursuant to

4-17  subsection 1 to the commissioner on or before June 30 of any year, the

4-18  license is canceled. The commissioner may reinstate a canceled license if

4-19  the licensee submits to the commissioner:

4-20    (a) An application for renewal;

4-21    (b) The fee required to renew the license pursuant to this section;

4-22    (c) If the licensee is a natural person, the statement required pursuant to

4-23  NRS 645B.023; [and

4-24    (d) A]

4-25    (d) The information required pursuant to section 4 of this act; and

4-26    (e) Except as otherwise provided in this section, a reinstatement fee of

4-27  $200.

4-28    3.  Except as otherwise provided in NRS 645B.016, a certificate of

4-29  exemption issued pursuant to this chapter expires each year on December

4-30  31, unless it is renewed. To renew a certificate of exemption, a person must

4-31  submit to the commissioner on or before December 31 of each year:

4-32    (a) An application for renewal that includes satisfactory proof that the

4-33  person meets the requirements for an exemption from the provisions of this

4-34  chapter; and

4-35    (b) The fee required to renew the certificate of exemption.

4-36    4.  If the person fails to submit any item required pursuant to

4-37  subsection 3 to the commissioner on or before December 31 of any year,

4-38  the certificate of exemption is canceled. Except as otherwise provided in

4-39  NRS 645B.016, the commissioner may reinstate a canceled certificate of

4-40  exemption if the person submits to the commissioner:

4-41    (a) An application for renewal that includes satisfactory proof that the

4-42  person meets the requirements for an exemption from the provisions of this

4-43  chapter;

4-44    (b) The fee required to renew the certificate of exemption; and

4-45    (c) [A] Except as otherwise provided in this section, a reinstatement

4-46  fee of $100.

4-47    5.  [A] Except as otherwise provided in this section, a person must pay

4-48  the following fees to apply for, to be issued or to renew a license as a

4-49  mortgage broker pursuant to this chapter:

5-1    (a) To file an original application or a license, $1,500 for the principal

5-2  office and $40 for each branch office. The person must also pay such

5-3  additional expenses incurred in the process of investigation as the

5-4  commissioner deems necessary. All money received by the commissioner

5-5  pursuant to this paragraph must be placed in the investigative account

5-6  created by NRS 232.545.

5-7    (b) To be issued a license, $1,000 for the principal office and $60 for

5-8  each branch office.

5-9    (c) To renew a license, $500 for the principal office and $100 for each

5-10  branch office.

5-11    6.  [A] Except as otherwise provided in this section, a person must pay

5-12  the following fees to apply for or to renew a certificate of exemption

5-13  pursuant to this chapter:

5-14    (a) To file an application for a certificate of exemption, $200.

5-15    (b) To renew a certificate of exemption, $100.

5-16    7.  To be issued a duplicate copy of any license or certificate of

5-17  exemption, a person must make a satisfactory showing of its loss and pay a

5-18  fee of $10.

5-19    8.  Except as otherwise provided in this chapter, all fees received

5-20  pursuant to this chapter must be deposited in the state treasury for credit to

5-21  the state general fund.

5-22    9.  The commissioner may, by regulation, increase any fee set forth in

5-23  this section if the commissioner determines that such an increase is

5-24  necessary for the commissioner to carry out his duties pursuant to this

5-25  chapter. The amount of any increase in a fee pursuant to this subsection

5-26  must not exceed the amount determined to be necessary for the

5-27  commissioner to carry out his duties pursuant to this chapter.

5-28    Sec. 8. NRS 645B.060 is hereby amended to read as follows:

5-29     645B.060  1.  Subject to the administrative control of the director of

5-30  the department of business and industry, the commissioner shall exercise

5-31  general supervision and control over mortgage brokers doing business in

5-32  this state.

5-33    2.  In addition to the other duties imposed upon him by law, the

5-34  commissioner shall:

5-35    (a) Adopt any regulations [prescribing standards for determining

5-36  whether a mortgage broker has maintained adequate supervision of a

5-37  mortgage agent pursuant to this chapter.

5-38    (b) Adopt any other regulations] that are necessary to carry out the

5-39  provisions of this chapter, except as to loan brokerage fees.

5-40    [(c)] (b) Conduct such investigations as may be necessary to determine

5-41  whether any person has violated any provision of this chapter, a regulation

5-42  adopted pursuant to this chapter or an order of the commissioner.

5-43    [(d)] (c) Conduct an annual examination of each mortgage broker doing

5-44  business in this state.

5-45    [(e)] The annual examination must include, without limitation, a

5-46  formal exit review with the mortgage broker. The commissioner shall

5-47  adopt regulations prescribing:

5-48      (1) Standards for determining the rating of each mortgage broker

5-49  based upon the results of the annual examination; and

6-1       (2) Procedures for resolving any objections made by the mortgage

6-2  broker to the results of the annual examination. The results of the

6-3  annual examination may not be opened to public inspection pursuant to

6-4  NRS 645B.090 until any objections made by the mortgage broker have

6-5  been decided by the commissioner.

6-6    (d) Conduct such other examinations, periodic or special audits,

6-7  investigations and hearings as may be necessary and proper for the

6-8  efficient administration of the laws of this state regarding mortgage brokers

6-9  and mortgage agents. The commissioner shall adopt regulations specifying

6-10  the general guidelines that will be followed when a periodic or special

6-11  audit of a mortgage broker is conducted pursuant to this chapter.

6-12    [(f)] (e) Classify as confidential certain records and information

6-13  obtained by the division when those matters are obtained from a

6-14  governmental agency upon the express condition that they remain

6-15  confidential. This paragraph does not limit examination by the legislative

6-16  auditor.

6-17    [(g)] (f) Conduct such examinations and investigations as are necessary

6-18  to ensure that mortgage brokers meet the requirements of this chapter for

6-19  obtaining a license, both at the time of the application for a license and

6-20  thereafter on a continuing basis.

6-21    3.  For each special audit, investigation or examination, a mortgage

6-22  broker shall pay a fee based on the rate established pursuant to NRS

6-23  658.101.

6-24    Sec. 9. NRS 645B.085 is hereby amended to read as follows:

6-25     645B.085  1.  Except as otherwise provided in this section, not later

6-26  than [60] 90 days after the last day of each fiscal year for a mortgage

6-27  broker, the mortgage broker shall submit to the commissioner a financial

6-28  statement that:

6-29    (a) Is dated not earlier than the last day of the fiscal year; and

6-30    (b) Has been prepared from the books and records of the mortgage

6-31  broker by an independent public accountant who holds a permit to engage

6-32  in the practice of public accounting in this state that has not been revoked

6-33  or suspended.

6-34    2.  The commissioner may grant a reasonable extension for the

6-35  submission of a financial statement pursuant to this section if a mortgage

6-36  broker requests such an extension before the date on which the financial

6-37  statement is due.

6-38    3.  If a mortgage broker maintains any accounts described in subsection

6-39  1 of NRS 645B.175, the financial statement submitted pursuant to this

6-40  section must be audited. If a mortgage broker maintains any accounts

6-41  described in subsection 4 of NRS 645B.175, those accounts must be

6-42  audited. The public accountant who prepares the report of an audit shall

6-43  submit a copy of the report to the commissioner at the same time that he

6-44  submits the report to the mortgage broker.

6-45    4.  The commissioner shall adopt regulations prescribing the scope of

6-46  an audit conducted pursuant to subsection 3.

 

 

 

7-1    Sec. 10. NRS 645B.185 is hereby amended to read as follows:

7-2     645B.185  1.  A mortgage broker or mortgage agent shall not accept

7-3  money from [an] a private investor to acquire ownership of or a beneficial

7-4  interest in a loan secured by a lien on real property unless:

7-5    (a) The private investor and the mortgage broker or mortgage agent sign

7-6  and date a disclosure form that complies with the provisions of this section;

7-7  and

7-8    (b) The mortgage broker or mortgage agent gives the private investor

7-9  the original disclosure form that has been signed and dated.

7-10    2.  [An] A private investor and a mortgage broker or mortgage agent

7-11  must sign and date a separate disclosure form pursuant to subsection 1 for

7-12  each loan in which the private investor invests his money. A mortgage

7-13  broker or mortgage agent shall not act as the attorney in fact or the agent of

7-14  [an] a private investor with respect to the signing or dating of any

7-15  disclosure form.

7-16    3.  In addition to the requirements of subsections 1 and 2, a mortgage

7-17  broker or mortgage agent shall not accept money from [an] a private

7-18  investor to acquire ownership of or a beneficial interest in a loan secured

7-19  by a lien on real property, unless the mortgage broker or mortgage agent

7-20  gives the private investor a written form by which the private investor may

7-21  request that the mortgage broker authorize the commissioner to release the

7-22  mortgage broker’s financial statement to the private investor. Such a form

7-23  must be given to the private investor for each loan. If the private investor,

7-24  before giving money to the mortgage broker for the loan, requests that the

7-25  mortgage broker authorize the release of a financial statement pursuant to

7-26  this subsection, the mortgage broker and his mortgage agents shall not

7-27  accept money from the private investor for that loan until the mortgage

7-28  broker receives notice from the commissioner that the financial statement

7-29  has been released to the private investor.

7-30    4.  [An] A private investor and a mortgage broker or mortgage agent

7-31  may not agree to alter or waive the provisions of this section by contract or

7-32  other agreement. Any such contract or agreement is void and must not be

7-33  given effect to the extent that it violates the provisions of this section.

7-34    5.  A mortgage broker shall retain a copy of each disclosure form that is

7-35  signed and dated pursuant to subsection 1 for the period that is prescribed

7-36  in the regulations adopted by the commissioner.

7-37    6.  The standard provisions for each such disclosure form must include,

7-38  without limitation, statements:

7-39    (a) Explaining the risks of investing through the mortgage broker,

7-40  including, without limitation:

7-41      (1) The possibility that the debtor may default on the loan;

7-42      (2) The nature of the losses that may result through foreclosure;

7-43      (3) The fact that payments of principal and interest are not guaranteed

7-44  and that the private investor may lose the entire amount of principal that he

7-45  has invested;

7-46      (4) The fact that the mortgage broker is not a depository financial

7-47  institution and that the investment is not insured by any depository

7-48  insurance and is not otherwise insured or guaranteed by the federal or state

7-49  government; and

8-1       (5) Any other information required pursuant to the regulations

8-2  adopted by the commissioner; and

8-3    (b) Disclosing to the private investor the following information if the

8-4  information is known or, in light of all the surrounding facts and

8-5  circumstances, reasonably should be known to the mortgage broker:

8-6       (1) Whether the real property that will secure the loan is encumbered

8-7  by any other liens and, if so, the priority of each such lien, the amount of

8-8  debt secured by each such lien and the current status of that debt,

8-9  including, without limitation, whether the debt is being paid or is in

8-10  default;

8-11      (2) Whether the mortgage broker or any general partner, officer,

8-12  director or mortgage agent of the mortgage broker has any direct or indirect

8-13  interest in the debtor;

8-14      (3) Whether any disciplinary action has been taken by the

8-15  commissioner against the mortgage broker or any general partner, officer

8-16  or director of the mortgage broker within the immediately preceding 12

8-17  months, and the nature of any such disciplinary action;

8-18      (4) Whether the mortgage broker or any general partner, officer or

8-19  director of the mortgage broker has been convicted within the immediately

8-20  preceding 12 months for violating any law, ordinance or regulation that

8-21  involves fraud, misrepresentation or a deceitful, fraudulent or dishonest

8-22  business practice; and

8-23      (5) Any other information required pursuant to the regulations

8-24  adopted by the commissioner.

8-25    7.  Whether or not a mortgage broker is required to disclose any

8-26  information to private investors through a disclosure form that complies

8-27  with the provisions of this section, the commissioner may order the

8-28  mortgage broker to disclose to private investors and other investors or to

8-29  the general public any information concerning the mortgage broker, any

8-30  general partner, officer, director or mortgage agent of the mortgage broker

8-31  or any loan in which the mortgage broker is or has been involved, if the

8-32  commissioner, in his judgment, believes that the information:

8-33    (a) Would be of material interest to a reasonable investor who is

8-34  deciding whether to invest money with the mortgage broker; or

8-35    (b) Is necessary to protect the welfare of the public.

8-36    8.  In carrying out the provisions of subsection 7, the commissioner

8-37  may, without limitation, order a mortgage broker to include statements of

8-38  disclosure prescribed by the commissioner:

8-39    (a) In the disclosure form that must be given to private investors

8-40  pursuant to subsection 1;

8-41    (b) In additional disclosure forms that must be given to private

8-42  investors and other investors before or after they have invested money

8-43  through the mortgage broker; or

8-44    (c) In any advertisement that the mortgage broker uses in carrying on

8-45  his business.

8-46    9.  The commissioner:

8-47    (a) Shall adopt regulations prescribing the period for which a mortgage

8-48  broker must retain a copy of each disclosure form that is given to private

8-49  investors; and

9-1    (b) May adopt any other regulations that are necessary to carry out the

9-2  provisions of this section, including, without limitation, regulations

9-3  specifying the size of print and any required formatting or typesetting that a

9-4  mortgage broker must use in any form that is given to private investors.

9-5    Sec. 11. NRS 645B.189 is hereby amended to read as follows:

9-6     645B.189  1.  [Each] If, in carrying on his business, a mortgage

9-7  broker uses an advertisement that is designed, intended or reasonably

9-8  likely to solicit money from private investors, the mortgage broker shall

9-9  include in each such advertisement [that the mortgage broker uses in

9-10  carrying on his business:

9-11    (a) A] a statement of disclosure in substantially the following form:

 

9-12  Money invested through a mortgage broker is not guaranteed to

9-13  earn any interest or return and is not insured.

 

9-14    [(b) Any other]

9-15    2.  A mortgage broker shall include in each advertisement that the

9-16  mortgage broker uses in carrying on his business any statements of

9-17  disclosure required pursuant to the regulations adopted by the

9-18  commissioner or required pursuant to an order of the commissioner entered

9-19  in accordance with subsections 7 and 8 of NRS 645B.185.

9-20    [2.] 3. Each mortgage broker shall submit any proposed advertisement

9-21  that the mortgage broker intends to use in carrying on his business to the

9-22  commissioner for approval.

9-23    [3.] 4. In addition to the requirements set forth in this chapter, each

9-24  advertisement that a mortgage broker uses in carrying on his business must

9-25  comply with the requirements of:

9-26    (a) NRS 598.0903 to 598.0999, inclusive, concerning deceptive trade

9-27  practices; and

9-28    (b) Any applicable federal statute or regulation concerning deceptive

9-29  advertising and the advertising of interest rates.

9-30    [4.] 5. If a mortgage broker violates any provision of NRS 598.0903

9-31  to 598.0999, inclusive, concerning deceptive trade practices or any federal

9-32  statute or regulation concerning deceptive advertising or the advertising of

9-33  interest rates, in addition to any sanction or penalty imposed by state or

9-34  federal law upon the mortgage broker for the violation, the commissioner

9-35  may take any disciplinary action set forth in subsection 2 of NRS 645B.670

9-36  against the mortgage broker.

9-37    [5.] 6. The commissioner may adopt any regulations that are

9-38  necessary to carry out the provisions of this section.

9-39    Sec. 12. NRS 645B.330 is hereby amended to read as follows:

9-40     645B.330  1.  A mortgage broker or mortgage agent shall not engage

9-41  in any act or transaction on behalf of [an] a private investor pursuant to a

9-42  power of attorney unless:

9-43    (a) The power of attorney is executed for the sole purpose of providing

9-44  services for [loans] not more than one specific loan in which the private

9-45  investor owns a beneficial interest; and

9-46    (b) The provisions of the power of attorney:

9-47      (1) Have been approved by the commissioner;

10-1      (2) Expressly prohibit the mortgage broker and his mortgage agents

10-2  from engaging in any act or transaction that subordinates the priority of a

10-3  recorded deed of trust unless, before such an act or transaction, the

10-4  mortgage broker obtains written approval for the subordination from the

10-5  private investor;

10-6      (3) Expressly prohibit the mortgage broker and his mortgage agents

10-7  from using or releasing any money in which the private investor owns a

10-8  beneficial interest with regard to [a] the specific loan for a purpose that is

10-9  not directly related to providing services for the loan unless, before any

10-10  such money is used or released for another purpose, the mortgage broker

10-11  obtains written approval from the private investor to use or release the

10-12  money for the other purpose; and

10-13     (4) Expressly provide that the power of attorney is effective only for

10-14  [a period of not more than 6 months unless, before the date on which the

10-15  period expires, the mortgage broker obtains written approval from the

10-16  investor to extend the power of attorney for an additional period of not

10-17  more than 6 months. The mortgage broker may, on a continuing basis,

10-18  obtain written approval from the investor to extend the power of attorney

10-19  for one or more consecutive periods of not more than 6 months each,

10-20  except that the investor may execute only one written approval for an

10-21  extension during each such 6-month period.] the term of the specific loan

10-22  unless the mortgage broker obtains written approval from the private

10-23  investor to extend the term of the power of attorney to provide services

10-24  for not more than one other loan and the written approval:

10-25        (I) Identifies the loan for which the power of attorney was

10-26  executed; and

10-27        (II) Identifies the loan for which the written approval is being

10-28  given.

10-29  2.  A mortgage broker or mortgage agent shall not act as the attorney in

10-30  fact or the agent of [an] a private investor with respect to the giving of

10-31  written approval pursuant to paragraph (b) of subsection 1. [An] A private

10-32  investor and a mortgage broker or mortgage agent may not agree to alter or

10-33  waive the provisions of this section by contract or other agreement. Any

10-34  such contract or agreement is void and must not be given effect to the

10-35  extent that it violates the provisions of this section.

10-36  3.  [A] Except as otherwise provided in subsection 4, a power of

10-37  attorney which designates a mortgage broker or mortgage agent as the

10-38  attorney in fact or the agent of [an] a private investor and which violates

10-39  the provisions of this section is void and must not be given effect with

10-40  regard to any act or transaction that occurs on or after October 1, 1999,

10-41  whether or not the power of attorney is or has been executed by the private

10-42  investor before, on or after October 1, 1999.

10-43  4.  The provisions of subsection 3 do not apply to a power of attorney

10-44  that designates a mortgage broker or mortgage agent as the attorney in

10-45  fact or the agent of a private investor if the power of attorney:

10-46  (a) Was executed before July 1, 2001; and

10-47  (b) Complied with the provisions of this section that were in effect on

10-48  October 1, 1999.

11-1    5.  The provisions of this section do not limit the right of [an] a private

11-2  investor to include provisions in a power of attorney that are more

11-3  restrictive than the provisions set forth in subsection 1.

11-4    Sec. 13. NRS 645B.450 is hereby amended to read as follows:

11-5     645B.450  1.  A person shall not act as or provide any of the services

11-6  of a mortgage agent or otherwise engage in, carry on or hold himself out as

11-7  engaging in or carrying on the activities of a mortgage agent if the person:

11-8    (a) Has been convicted of, or entered a plea of nolo contendere to, a

11-9  felony or any crime involving fraud, misrepresentation or moral turpitude;

11-10  or

11-11  (b) Has had a financial services license or registration suspended or

11-12  revoked within the immediately preceding 10 years.

11-13  2.  A mortgage agent may not be associated with or employed by more

11-14  than one mortgage broker at the same time.

11-15  3.  A mortgage broker shall register with the division each person who

11-16  will be associated with or employed by the mortgage broker as a mortgage

11-17  agent. A mortgage broker shall register each such person with the

11-18  division when the person begins his association or employment with the

11-19  mortgage broker and annually thereafter. A registration expires 12

11-20  months after its effective date.

11-21  4.  To register a person as a mortgage agent, a mortgage broker must:

11-22  (a) Submit to the division a registration form which is provided by the

11-23  division and which:

11-24     (1) States the name, residence address and business address of the

11-25  person;

11-26     (2) Is signed by the person;

11-27     (3) Includes a provision by which the person gives his written

11-28  consent to an investigation of his credit history, criminal history and

11-29  background; and

11-30     (4) Includes any other information or supporting materials required

11-31  by the regulations adopted by the commissioner. Such information or

11-32  supporting materials may include, without limitation, a complete set of

11-33  fingerprints from the person, the social security number of the person and

11-34  other forms of identification of the person . [; and

11-35  (b) Pay]

11-36  (b) For each initial registration, pay the actual costs and expenses

11-37  incurred by the division to investigate the credit history, criminal history

11-38  and background of the person. All money received pursuant to this

11-39  paragraph must be placed in the investigative account created by NRS

11-40  232.545.

11-41  [4.] (c) For each annual registration, submit to the division

11-42  satisfactory proof that the person attended at least 5 hours of certified

11-43  courses of continuing education during the 12 months immediately

11-44  preceding the date on which the registration expires.

11-45  5.  Not later than the date on which the mortgage broker submits the

11-46  information for annual registration required by subsection 4, the person

11-47  being registered shall pay an annual registration fee of $125. If the

11-48  person does not pay the annual registration fee, the person shall be

11-49  deemed to be unregistered for the purposes of this chapter.

12-1    6. A mortgage broker shall not employ a person as a mortgage agent or

12-2  authorize a person to be associated with the mortgage broker as a mortgage

12-3  agent if the mortgage broker has not registered the person with the division

12-4  pursuant to [subsection 3] this section or if the person:

12-5    (a) Has been convicted of, or entered a plea of nolo contendere to, a

12-6  felony or any crime involving fraud, misrepresentation or moral turpitude;

12-7  or

12-8    (b) Has had a financial services license or registration suspended or

12-9  revoked within the immediately preceding 10 years.

12-10  [5.] 7. If a mortgage agent terminates his association or employment

12-11  with a mortgage broker for any reason, the mortgage broker shall, not later

12-12  than the [end of the next] third business day following the date of

12-13  termination:

12-14  (a) Deliver to the mortgage agent or send by certified mail to the last

12-15  known residence address of the mortgage agent a written statement which

12-16  advises him that his termination is being reported to the division; and

12-17  (b) Deliver or send by certified mail to the division:

12-18     (1) A written statement of the circumstances surrounding the

12-19  termination; and

12-20     (2) A copy of the written statement that the mortgage broker delivers

12-21  or mails to the mortgage agent pursuant to paragraph (a).

12-22  8.  As used in this section, “certified course of continuing education”

12-23  has the meaning ascribed to it in section 4 of this act.

12-24  Sec. 14. NRS 645B.460 is hereby amended to read as follows:

12-25     645B.460  1.  A mortgage broker shall[:

12-26  1.  Teach his mortgage agents the fundamentals of mortgage lending

12-27  and the ethics of the profession; and

12-28  2.  Supervise] exercise reasonable supervision over the activities of his

12-29  mortgage agents . [and the operation of his business.] Such reasonable

12-30  supervision must include, as appropriate:

12-31  (a) The establishment of written or oral policies and procedures for

12-32  his mortgage agents; and

12-33  (b) The establishment of a system to review, oversee and inspect the

12-34  activities of his mortgage agents, including, without limitation:

12-35     (1) Transactions handled by his mortgage agents pursuant to this

12-36  chapter;

12-37     (2) Communications between his mortgage agents and a party to

12-38  such a transaction;

12-39     (3) Documents prepared by his mortgage agents that may have a

12-40  material effect upon the rights or obligations of a party to such a

12-41  transaction; and

12-42     (4) The handling by his mortgage agents of any fee, deposit or

12-43  money paid to the mortgage broker or his mortgage agents or held in

12-44  trust by the mortgage broker or his mortgage agents pursuant to this

12-45  chapter.

12-46  2.  The commissioner shall allow a mortgage broker to take into

12-47  consideration the total number of mortgage agents associated with or

12-48  employed by the mortgage broker when the mortgage broker determines

12-49  the form and extent of the policies and procedures for those mortgage

13-1  agents and the system to review, oversee and inspect the activities of

13-2  those mortgage agents.

13-3    3.  The commissioner may adopt regulations prescribing standards

13-4  for determining whether a mortgage broker has exercised reasonable

13-5  supervision over the activities of a mortgage agent pursuant to this

13-6  section.

13-7    Sec. 15.  NRS 645B.600 is hereby amended to read as follows:

13-8     645B.600  1.  A person may[, in accordance with the regulations

13-9  adopted pursuant to subsection 2,] file with the commissioner a complaint

13-10  [with the commissioner,] alleging that another person has violated a

13-11  provision of this chapter, a regulation adopted pursuant to this chapter or

13-12  an order of the commissioner.

13-13  2.  [The commissioner shall adopt regulations prescribing:

13-14  (a) The form that such a complaint must take;

13-15  (b) The information that must be included in such a complaint; and

13-16  (c) The procedures that a person must follow to file such a complaint.]

13-17  A complaint filed pursuant to this section must:

13-18  (a) Be in writing;

13-19  (b) Be signed by the person filing the complaint or the authorized

13-20  representative of the person filing the complaint;

13-21  (c) Contain an address and a telephone number for the person filing

13-22  the complaint or the authorized representative of the person filing the

13-23  complaint;

13-24  (d) Describe the nature of the alleged violation in as much detail as

13-25  possible;

13-26  (e) Include as exhibits copies of all documentation supporting the

13-27  complaint; and

13-28  (f) Include any other information or supporting materials required by

13-29  the regulations adopted by the commissioner or by an order of the

13-30  commissioner.

13-31  Sec. 16. NRS 645B.670 is hereby amended to read as follows:

13-32     645B.670  Except as otherwise provided in NRS 645B.690:

13-33  1.  For each violation committed by an applicant, whether or not he is

13-34  issued a license, the commissioner may impose upon the applicant an

13-35  administrative fine of not more than $10,000, if the applicant:

13-36  (a) Has knowingly made or caused to be made to the commissioner any

13-37  false representation of material fact;

13-38  (b) Has suppressed or withheld from the commissioner any information

13-39  which the applicant possesses and which, if submitted by him, would have

13-40  rendered the applicant ineligible to be licensed pursuant to the provisions

13-41  of this chapter; or

13-42  (c) Has violated any provision of this chapter, a regulation adopted

13-43  pursuant to this chapter or an order of the commissioner in completing and

13-44  filing his application for a license or during the course of the investigation

13-45  of his application for a license.

13-46  2.  For each violation committed by a licensee, the commissioner may

13-47  impose upon the licensee an administrative fine of not more than $10,000,

13-48  may suspend, revoke or place conditions upon his license, or may do both,

13-49  if the licensee, whether or not acting as such:

14-1    (a) Is insolvent;

14-2    (b) Is grossly negligent or incompetent in performing any act for which

14-3  he is required to be licensed pursuant to the provisions of this chapter;

14-4    (c) Does not conduct his business in accordance with law or has

14-5  violated any provision of this chapter, a regulation adopted pursuant to this

14-6  chapter or an order of the commissioner;

14-7    (d) Is in such financial condition that he cannot continue in business

14-8  with safety to his customers;

14-9    (e) Has made a material misrepresentation in connection with any

14-10  transaction governed by this chapter;

14-11  (f) Has suppressed or withheld from a client any material facts, data or

14-12  other information relating to any transaction governed by the provisions of

14-13  this chapter which the licensee knew or, by the exercise of reasonable

14-14  diligence, should have known;

14-15  (g) Has knowingly made or caused to be made to the commissioner any

14-16  false representation of material fact or has suppressed or withheld from the

14-17  commissioner any information which the licensee possesses and which, if

14-18  submitted by him, would have rendered the licensee ineligible to be

14-19  licensed pursuant to the provisions of this chapter;

14-20  (h) Has failed to account to persons interested for all money received

14-21  for a trust account;

14-22  (i) Has refused to permit an examination by the commissioner of his

14-23  books and affairs or has refused or failed, within a reasonable time, to

14-24  furnish any information or make any report that may be required by the

14-25  commissioner pursuant to the provisions of this chapter or a regulation

14-26  adopted pursuant to this chapter;

14-27  (j) Has been convicted of, or entered a plea of nolo contendere to, a

14-28  felony or any crime involving fraud, misrepresentation or moral turpitude;

14-29  (k) Has refused or failed to pay, within a reasonable time, any fees,

14-30  assessments, costs or expenses that the licensee is required to pay pursuant

14-31  to this chapter or a regulation adopted pursuant to this chapter;

14-32  (l) Has failed to satisfy a claim made by a client which has been reduced

14-33  to judgment;

14-34  (m) Has failed to account for or to remit any money of a client within a

14-35  reasonable time after a request for an accounting or remittal;

14-36  (n) Has commingled the money or other property of a client with his

14-37  own or has converted the money or property of others to his own use;

14-38  (o) Has engaged in any other conduct constituting a deceitful,

14-39  fraudulent or dishonest business practice;

14-40  (p) Has repeatedly violated the policies and procedures of the mortgage

14-41  broker;

14-42  (q) Has failed to [maintain adequate] exercise reasonable supervision

14-43  over the activities of a mortgage agent [;] as required by NRS 645B.460;

14-44  (r) Has instructed a mortgage agent to commit an act that would be

14-45  cause for the revocation of the license of the mortgage broker, whether or

14-46  not the mortgage agent commits the act;

14-47  (s) Has employed a person as a mortgage agent or authorized a person

14-48  to be associated with the licensee as a mortgage agent at a time when the

15-1  licensee knew or, in light of all the surrounding facts and circumstances,

15-2  reasonably should have known that the person:

15-3      (1) Had been convicted of, or entered a plea of nolo contendere to, a

15-4  felony or any crime involving fraud, misrepresentation or moral turpitude;

15-5  or

15-6      (2) Had a financial services license or registration suspended or

15-7  revoked within the immediately preceding 10 years; or

15-8    (t) Has not conducted verifiable business as a mortgage broker for 12

15-9  consecutive months, except in the case of a new applicant. The

15-10  commissioner shall determine whether a mortgage broker is conducting

15-11  business by examining the monthly reports of activity submitted by the

15-12  licensee or by conducting an examination of the licensee.

15-13  Sec. 17. NRS 645B.700 is hereby amended to read as follows:

15-14     645B.700  1.  Except as otherwise provided in subsection 2, for each

15-15  violation that may be committed by a person pursuant to this chapter or the

15-16  regulations adopted pursuant to this chapter, the commissioner [shall] may

15-17  adopt regulations:

15-18  (a) Categorizing the violation as a major violation or a minor violation;

15-19  and

15-20  (b) Specifying the disciplinary action that will be taken by the

15-21  commissioner pursuant to this chapter against a person who commits:

15-22     (1) A major violation. The disciplinary action taken by the

15-23  commissioner for a major violation [must] may include, without limitation,

15-24  suspension or revocation of the person’s license.

15-25     (2) More than two minor violations. The commissioner may establish

15-26  graduated sanctions for a person who commits more than two minor

15-27  violations based upon the number, the frequency and the severity of the

15-28  minor violations and whether the person previously has committed any

15-29  major violations.

15-30  2.  The provisions of this section do not apply to a violation for which

15-31  the commissioner is required to take disciplinary action in accordance with

15-32  NRS 645B.690.

15-33  Sec. 18. Section 139 of chapter 646, Statutes of Nevada 1999, at page

15-34  3816, is hereby amended to read as follows:

15-35  Sec. 139.  1.  This section and section 130.5 of this act become

15-36  effective upon passage and approval for the purpose of adopting any

15-37  regulations necessary to carry out the provisions of this act, and on

15-38  September 30, 1999, for all other purposes.

15-39  2.  Sections 1 to 101, inclusive, 103, 105 to 117, inclusive, 119 to

15-40  130, inclusive, and 131 to 138, inclusive, of this act become effective

15-41  upon passage and approval for the purpose of adopting any

15-42  regulations necessary to carry out the provisions of this act, and on

15-43  October 1, 1999, for all other purposes.

15-44  3.  Sections 102, 104 and 118 of this act become effective upon

15-45  passage and approval for the purpose of adopting any regulations

15-46  necessary to carry out the provisions of this act, and at 12:01 a.m. on

15-47  October 1, 1999, for all other purposes.

15-48  4.  Sections 15 and 33 of this act expire by limitation on the date

15-49  on which the provisions of 42 U.S.C. § 666 requiring each state to

16-1  establish procedures under which the state has authority to withhold

16-2  or suspend, or to restrict the use of professional, occupational and

16-3  recreational licenses of persons who:

16-4    (a) Have failed to comply with a subpoena or warrant relating to a

16-5  procedure to determine the paternity of a child or to establish or

16-6  enforce an obligation for the support of a child; or

16-7    (b) Are in arrears in the payment for the support of one or more

16-8  children,

16-9  are repealed by the Congress of the United States.

16-10  [5.  Section 78.5 of this act expires by limitation on October 1,

16-11  2001.]

16-12  Sec. 19. This act becomes effective on July 1, 2001.

 

16-13  H