Senate Bill No. 330–Senator Shaffer

 

March 13, 2001

____________

 

Referred to Committee on Commerce and Labor

 

SUMMARY—Makes various changes relating to financial businesses. (BDR 54‑748)

 

FISCAL NOTE:            Effect on Local Government: Yes.

                                    Effect on the State: No.

 

~

 

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

 

AN ACT relating to financial businesses; authorizing certain mortgage companies and lending businesses to be licensed to conduct business in this state from locations outside this state under certain circumstances; establishing certain procedures for a mortgage company to notify the commissioner of financial institutions of a change of address of its licensed place of business; changing the procedures for a lending business to notify the commissioner of financial institutions of a change of address of its licensed place of business; authorizing the commissioner of financial institutions to impose a fine on a mortgage company or lending business for failing to notify the commissioner of a proposed change of address; removing the requirement that the commissioner of financial institutions notify lending businesses of his receipt of an application for licensure of a lending business; providing a penalty; 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. Chapter 645E of NRS is hereby amended by adding thereto

1-2  a new section to read as follows:

1-3    1.  If a licensee desires to change the address of an office or other

1-4  place of business for which he has a license pursuant to this chapter, at

1-5  least 10 days before changing the address, the licensee must give written

1-6  notice of the proposed change to the commissioner on a form prescribed

1-7  by the commissioner.

1-8    2.  Upon receipt of a proposed change of address pursuant to

1-9  subsection 1, the commissioner shall:

1-10    (a) Decide whether to approve or disapprove the proposed change of

1-11  address; and

1-12    (b) Provide written notice of his decision to the licensee within 10 days

1-13  after receiving notice pursuant to subsection 1.

1-14    3.  If the commissioner notifies the licensee in accordance with

1-15  subsection 2 that the commissioner disapproves the proposed change, the

2-1  licensee shall not change the address of the office or other place of

2-2  business for which the notice relates.

2-3    4.  If a licensee fails to provide notice as required pursuant to

2-4  subsection 1, the commissioner may impose an administrative fine in an

2-5  amount not to exceed $500.

2-6    Sec. 2.  NRS 645E.130 is hereby amended to read as follows:

2-7    645E.130  The provisions of this chapter do not:

2-8    1.  Limit any statutory or common law right of a person to bring a civil

2-9  action against a mortgage company for any act or omission involved in the

2-10  transaction of business by or on behalf of the mortgage company;

2-11    2.  Limit the right of the state to punish a person for the violation of any

2-12  law, ordinance or regulation; [or]

2-13    3.  Establish a basis for a person to bring a civil action against the state

2-14  or its officers or employees for any act or omission in carrying out the

2-15  provisions of this chapter, including, without limitation, any act or

2-16  omission relating to the disclosure of information or the failure to disclose

2-17  information pursuant to the provisions of this chapter[.] ;

2-18    4.  Require a mortgage company which is located outside this state

2-19  and which does not conduct business in this state to be licensed pursuant

2-20  to this chapter; or

2-21    5.  Apply to transactions that are exclusively between a licensee

2-22  located outside this state and a person who is located outside this state.

2-23    Sec. 3.  NRS 645E.200 is hereby amended to read as follows:

2-24    645E.200  1.  A person who wishes to be licensed as a mortgage

2-25  company must file a written application for a license with the office of the

2-26  commissioner and pay the fee required pursuant to NRS 645E.280. An

2-27  application for a license as a mortgage company must:

2-28    (a) Be verified.

2-29    (b) State the name, residence address and business address of the

2-30  applicant and the location of each principal office and branch office at

2-31  which the mortgage company will conduct business [within] in this state[.]

2-32  , including, without limitation, any office or other place of business

2-33  located outside this state from which the mortgage company will conduct

2-34  business in this state.

2-35    (c) State the name under which the applicant will conduct business as a

2-36  mortgage company.

2-37    (d) If the applicant is not a natural person, list the name, residence

2-38  address and business address of each person who will have an interest in

2-39  the mortgage company as a principal, partner, officer, director or trustee,

2-40  specifying the capacity and title of each such person.

2-41    (e) Indicate the general plan and character of the business.

2-42    (f) State the length of time the applicant has been engaged in the

2-43  business of a mortgage company.

2-44    (g) Include a financial statement of the applicant.

2-45    (h) Include any other information required pursuant to the regulations

2-46  adopted by the commissioner or an order of the commissioner.

2-47    2.  If a mortgage company will conduct business in this state at one or

2-48  more branch offices , [within this state,] the mortgage company must apply

2-49  for a license for each such branch office.

3-1    3.  Except as otherwise provided in this chapter, the commissioner shall

3-2  issue a license to an applicant as a mortgage company if:

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

3-4    (b) The applicant and each general partner, officer or director of the

3-5  applicant, if the applicant is a partnership, corporation or unincorporated

3-6  association:

3-7       (1) Has a good reputation for honesty, trustworthiness and integrity

3-8  and displays competence to transact the business of a mortgage company in

3-9  a manner which safeguards the interests of the general public. The

3-10  applicant must submit satisfactory proof of these qualifications to the

3-11  commissioner.

3-12      (2) Has not been convicted of, or entered a plea of nolo contendere

3-13  to, a felony or any crime involving fraud, misrepresentation or moral

3-14  turpitude.

3-15      (3) Has not made a false statement of material fact on his application.

3-16      (4) Has not had a license that was issued pursuant to the provisions of

3-17  this chapter or chapter 645B of NRS suspended or revoked within the 10

3-18  years immediately preceding the date of his application.

3-19      (5) Has not had a license that was issued in any other state, district or

3-20  territory of the United States or any foreign country suspended or revoked

3-21  within the 10 years immediately preceding the date of his application.

3-22      (6) Has not violated any provision of this chapter or chapter 645B of

3-23  NRS, a regulation adopted pursuant thereto or an order of the

3-24  commissioner.

3-25    4.  If an applicant is a partnership, corporation or unincorporated

3-26  association, the commissioner may refuse to issue a license to the applicant

3-27  if any member of the partnership or any officer or director of the

3-28  corporation or unincorporated association has committed any act or

3-29  omission that would be cause for refusing to issue a license to a natural

3-30  person.

3-31    5.  A mortgage company that has a license for an office or other place

3-32  of business located within this state pursuant to this chapter may apply

3-33  for a license for an office or other place of business located outside this

3-34  state from which the mortgage company desires to conduct business in

3-35  this state if the applicant submits with the application for a license a

3-36  statement signed by the applicant which states that the applicant agrees

3-37  to:

3-38    (a) Make available at a location within this state the books, accounts,

3-39  papers, records and files of the office or place of business located outside

3-40  this state to the commissioner or a representative of the commissioner; or

3-41    (b) Pay the reasonable expenses for travel, meals and lodging of the

3-42  commissioner or a representative of the commissioner incurred during

3-43  any investigation or examination made at the office or place of business

3-44  located outside this state.

3-45  The applicant must be allowed to choose between paragraph (a) or (b) in

3-46  complying with the provisions of this subsection.

3-47    Sec. 4.  NRS 645E.350 is hereby amended to read as follows:

3-48    645E.350  1.  Each mortgage company shall keep and maintain at all

3-49  times at each location where the mortgage company conducts business in

4-1  this state complete and suitable records of all mortgage transactions made

4-2  by the mortgage company at that location. Each mortgage company shall

4-3  also keep and maintain at all times at each such location all original books,

4-4  papers and data, or copies thereof, clearly reflecting the financial condition

4-5  of the business of the mortgage company.

4-6    2.  Each mortgage company shall submit to the commissioner each

4-7  month a report of the mortgage company’s activity for the previous month.

4-8  The report must:

4-9    (a) Specify the volume of loans made by the mortgage company for the

4-10  month or state that no loans were made in that month;

4-11    (b) Include any information required pursuant to the regulations adopted

4-12  by the commissioner; and

4-13    (c) Be submitted to the commissioner by the 15th day of the month

4-14  following the month for which the report is made.

4-15    3.  The commissioner may adopt regulations prescribing accounting

4-16  procedures for mortgage companies handling trust accounts and the

4-17  requirements for keeping records relating to such accounts.

4-18    4.  A licensee who operates outside this state an office or other place

4-19  of business which is licensed pursuant to this chapter shall:

4-20    (a) Make available at a location within this state the books, accounts,

4-21  papers, records and files of the office or place of business located outside

4-22  this state to the commissioner or a representative of the commissioner; or

4-23    (b) Pay the reasonable expenses for travel, meals and lodging of the

4-24  commissioner or a representative of the commissioner incurred during

4-25  any investigation or examination made at the office or place of business

4-26  located outside this state.

4-27  The licensee must be allowed to choose between paragraph (a) or (b)

4-28  with which to comply.

4-29    Sec. 5.  NRS 675.040 is hereby amended to read as follows:

4-30    675.040  This chapter does not apply to:

4-31    1.  A person doing business under the authority of any law of this state

4-32  or of the United States relating to banks, savings banks, trust companies,

4-33  savings and loan associations, credit unions, development corporations,

4-34  mortgage brokers, mortgage companies, thrift companies, pawnbrokers or

4-35  insurance companies.

4-36    2.  A real estate investment trust, as defined in 26 U.S.C. § 856.

4-37    3.  An employee benefit plan, as defined in 29 U.S.C. § 1002(3), if the

4-38  loan is made directly from money in the plan by the plan’s trustee.

4-39    4.  An attorney at law rendering services in the performance of his

4-40  duties as an attorney at law if the loan is secured by real property.

4-41    5.  A real estate broker rendering services in the performance of his

4-42  duties as a real estate broker if the loan is secured by real property.

4-43    6.  Except as otherwise provided in this subsection, any firm or

4-44  corporation:

4-45    (a) Whose principal purpose or activity is lending money on real

4-46  property which is secured by a mortgage;

 

 

5-1    (b) Approved by the Federal National Mortgage Association as a seller

5-2  or servicer; and

5-3    (c) Approved by the Department of Housing and Urban Development

5-4  and the Department of Veterans Affairs.

5-5    7.  A person who provides money for investment in loans secured by a

5-6  lien on real property, on his own account.

5-7    8.  A seller of real property who offers credit secured by a mortgage of

5-8  the property sold.

5-9    9.  A person holding a nonrestricted state gaming license issued

5-10  pursuant to the provisions of chapter 463 of NRS.

5-11    10.  A person who engages in the business of lending but who does

5-12  not engage in the business of lending in this state.

5-13    11.  Transactions exclusively between a licensee located outside this

5-14  state and a person located outside this state.

5-15    Sec. 6.  NRS 675.060 is hereby amended to read as follows:

5-16    675.060  1.  No person may engage in the business of lending in this

5-17  state without first having obtained a license from the commissioner[.] for

5-18  each office or other place of business at which the person engages in

5-19  such business.

5-20    2.  For the purpose of this section, a person engages in the business of

5-21  lending in this state if he:

5-22    (a) Solicits loans in this state or makes loans to persons in this state,

5-23  unless these are isolated, incidental or occasional transactions; or

5-24    (b) Is located in this state and solicits loans outside of this state or

5-25  makes loans to persons located outside of this state, unless these are

5-26  isolated, incidental or occasional transactions.

5-27    Sec. 7.  NRS 675.090 is hereby amended to read as follows:

5-28    675.090  1.  Application for a license must be in writing, under oath,

5-29  and in the form prescribed by the commissioner.

5-30    2.  The application must:

5-31    (a) [Give the general location where the business is to be conducted.]

5-32  Provide the address of the office or other place of business for which the

5-33  application is submitted.

5-34    (b) Contain such further relevant information as the commissioner may

5-35  require, including the names and addresses of the partners, officers,

5-36  directors or trustees, and of such of the principal owners or members as

5-37  will provide the basis for the investigations and findings contemplated by

5-38  NRS 675.110 and 675.120.

5-39    3.  A person who has a license to engage in the business of lending at

5-40  an office or other place of business located within this state may apply

5-41  for a license for an office or other place of business located outside this

5-42  state from which he desires to conduct the business of lending in this

5-43  state if the person submits with the application for a license a statement

5-44  signed by the person which states that the person agrees to:

5-45    (a) Make available at a location within this state the books, accounts,

5-46  papers, records and files of the office or place of business located outside

5-47  this state to the commissioner or a representative of the commissioner; or

5-48    (b) Pay the reasonable expenses for travel, meals and lodging of the

5-49  commissioner or a representative of the commissioner incurred during

6-1  any investigation or examination made at the office or place of business

6-2  located outside this state.

6-3  The person must be allowed to choose between paragraph (a) or (b) in

6-4  complying with the provisions of this subsection.

6-5    Sec. 8.  NRS 675.110 is hereby amended to read as follows:

6-6    675.110  1.  Upon the filing of the application and the payment of the

6-7  fees, the commissioner shall investigate the facts concerning the

6-8  application and the requirements provided for in NRS 675.120.

6-9    2.  [At least 20 days before entering the order granting or denying the

6-10  application, he shall mail a notice of the receipt of the application to each

6-11  licensee having a place of business in the community where the applicant

6-12  proposes to do business and he may mail such a notice to such other

6-13  persons, associations and institutions as he may see fit.

6-14    3.] The commissioner may hold a hearing on the application at a time

6-15  not less than 30 days [from] after the date the application was filed nor

6-16  more than 60 days [from] after that date. The hearing must be held in the

6-17  office of the commissioner or such other place as he may designate. Notice

6-18  in writing of the hearing must be sent to the applicant and to any licensee

6-19  to which a notice of the application had been given and to such other

6-20  persons as the commissioner may see fit, at least 10 days before the date

6-21  set for the hearing.

6-22    [4.] 3.  The commissioner shall make his order granting or denying the

6-23  application within 10 days [from] after the date of the closing of the

6-24  hearing, unless the period is extended by written agreement between the

6-25  applicant and the commissioner.

6-26    Sec. 9.  NRS 675.120 is hereby amended to read as follows:

6-27    675.120  If the commissioner finds:

6-28    1.  That the financial responsibility, experience, character and general

6-29  fitness of the applicant are such as to command the confidence of the

6-30  public and to warrant belief that the business will be operated lawfully,

6-31  honestly, fairly and efficiently, within the purposes of this chapter; and

6-32    2.  [That allowing the applicant to engage in business will promote the

6-33  convenience and advantage of the community in which the licensed office

6-34  is to be located; and

6-35    3.] That the applicant, unless he will function solely as a loan broker,

6-36  has available for the operation of the business at the specified location

6-37  liquid assets of at least $50,000,

6-38  he shall thereupon enter an order granting the application, and file his

6-39  findings of fact together with the transcript of any hearing held under this

6-40  chapter, and forthwith issue and deliver a license to the applicant.

6-41    Sec. 10.  NRS 675.220 is hereby amended to read as follows:

6-42    675.220  1.  [No change in the place of business of a licensee to a

6-43  location outside of the original city or town may be permitted under the

6-44  same license.

6-45    2.  When] If a licensee wishes to change [his place of business within

6-46  the same city or town, he shall] the address of an office or other place of

6-47  business for which he has a license pursuant to this chapter, at least 10

6-48  days before changing the address, the licensee must give written notice

7-1  [thereof] of the proposed change to the commissioner[, who shall

7-2  investigate the facts. If] on a form prescribed by the commissioner . [finds:

7-3    (a) That allowing the licensee to engage in business in the proposed

7-4  location is not detrimental to the convenience and advantage of the

7-5  community; and

7-6    (b) That the proposed location is reasonably accessible to borrowers

7-7  under existing loan contracts,

7-8  he shall enter an order permitting the change and shall amend the license

7-9  accordingly.

7-10    3.  If the commissioner does not so find he shall enter an order denying

7-11  the licensee such permission in the manner specified in and subject to the

7-12  provisions of NRS 675.150.]

7-13    2.  Upon receipt of a proposed change of address pursuant to

7-14  subsection 1, the commissioner shall decide whether to approve or

7-15  disapprove the proposed change and provide the licensee with written

7-16  notice of his decision within 10 days after receiving notice pursuant to

7-17  subsection 1.

7-18    3.  If the commissioner notifies the licensee in accordance with

7-19  subsection 2 that the commissioner disapproves the proposed change, the

7-20  licensee shall not change the address of the office or place of business

7-21  for which the notice relates.

7-22    4.  If a licensee fails to provide notice as required pursuant to

7-23  subsection 1, the commissioner may impose a fine in an amount not to

7-24  exceed $500.

7-25    Sec. 11.  NRS 675.250 is hereby amended to read as follows:

7-26    675.250  1.  Each licensee shall keep and use in his business such

7-27  books and accounting records as are in accord with sound and accepted

7-28  accounting practices.

7-29    2.  Each licensee shall maintain a separate record or ledger card for the

7-30  account of each borrower and shall set forth separately the amount of cash

7-31  advance and the total amount of interest and charges , [;] but such a record

7-32  may set forth precomputed declining balances based on the scheduled

7-33  payments, without a separation of principal and charges.

7-34    3.  Each licensee shall preserve all such books and accounting records

7-35  for at least 2 years after making the final entry therein.

7-36    4.  Each licensee who operates outside this state an office or other

7-37  place of business that is licensed pursuant to this chapter shall:

7-38    (a) Make available at a location within this state the books, accounts,

7-39  papers, records and files of the office or place of business located outside

7-40  this state to the commissioner or a representative of the commissioner; or

7-41    (b) Pay the reasonable expenses for travel, meals and lodging of the

7-42  commissioner or a representative of the commissioner incurred during

7-43  any investigation or examination made at the office or place of business

7-44  located outside this state.

7-45  The licensee must be allowed to choose between paragraph (a) or (b) in

7-46  complying with the provisions of this subsection.

 

7-47  H