Nevada Adopts Mortgage Servicer Regulations
On January 6, 2016, Nevada has adopted license regulations for its mortgage servicers. These measures are in effect as of January 1, 2016.
Who must obtain a license?
The regulations require anyone who advertises, presents themselves or operates as a mortgage servicer to obtain a license issued according to NRS 645F and the Nevada Mortgage Servicer Regulations. If a servicer asserts an exception to this requirement, he or she has the burden to prove that they satisfy the requirements found in section 86.7 of Assembly Bill No. 480, chapter 477, Statues of Nevada 2015, at page 2807. Furthermore, commercial and residential mortgage brokers, mortgage agents, loan originators, mortgage bankers and any other professionals as defined by NRS 645B and 645E, must acquire a supplemental mortgage servicer license to conduct business in that capacity.
The Application
The application process requires the applicant to provide the following items to the Commissioner:
- An application fee
- A completed application
- Written consent to perform a background examination which includes: a credit report, a comprehensive criminal history, and information regarding any administrative/civil/criminal proceedings of which the applicant is or has been a party
- A set of fingerprints to be forwarded for further review
- Any other materials necessary to evaluate an applicant’s fitness
- A Social Security Number
- A statement as stipulated by the Division of Welfare and Supportive Services of the Department of Health and Human Services pursuant to NRS 425.520 which affirms whether or not the applicant is subject to and/or in compliance with any order for child support. A license will not be granted if this statement is not submitted or if the applicant and one will not be granted if the applicant is not in compliance a child support order.
Upon review of the applicant, a license will be issued if the servicer satisfies the requirements of NRS 645F unless, he or she has had a similar license revoked in the previous 10 years or has been convicted of a felony with in the past 7 years. A successful applicant should exhibit the “experience, financial responsibility, character and general fitness so as to command the confidence of the community and warrant a determination that the applicant and, if applicable, any control person of the applicant will operate honestly, fairly and efficiently for the purposes of chapter 645F of NRS and the Nevada Mortgage Servicer Regulations.” Also, an approved applicant must “have designated a qualified employee for each principal and branch office, if any, pursuant to section 24 of this regulation and each qualified employee has been approved by the Commissioner,” deposit a surety bond and provide required financial statements in accordance with the standards set by the regulations.
Principal Offices and Designated Qualified Person(s)
The applicant must obtain a license for its principal office and provide a list of all branches with their current contact information. Licensees should be aware that an additional license is required for any assumed names as a license only allows operation under its stated name. A prior written request must be made to the Commissioner for name and branch changes. Neither is effective until approved.
The servicer’s principal office and any branch locations are required appoint a designated qualified person who satisfies the following criteria:
- He or she has obtained 2 or more years of mortgage servicing experience within the last 5 years
- He or she is an employee based at the office where they are approved to serve as qualified person
- He or she has completed a background examination
- He or she has been approved by the Commissioner as the qualified employee for the office where they are located
Transfer or Assignment
Renewal
- An application form
- A renewal fee
- Proof of compliance with NRS 645F and the Nevada Mortgage Servicer Regulations
- Any other information requested by the Commissioner
Fees
- An initial application for a license for the principal office
- An initial application for a supplemental mortgage servicer license for the principal office
- A duplicate copy of a license
- The amendment of a business name or principal office address
- The transfer of ownership or control plus any costs associated with the subsequent examination
- Renewal of a license
- Reinstatement of a license
- Servicer and supplemental servicer supervision fees (unless the servicer’s annual volume is under $1,500,000)
- Expenses associated with an examination or investigation of the servicer
- An annual assessment fee
- A late penalty for untimely financial statements
Mortgage Servicer Supervision and Duties
Servicer Requirements
The regulations impose various requirements on servicers. For example, servicers must report any disciplinary, enforcement or bankruptcy proceedings and denials of applications for other licenses to the Commissioner. Also, servicers must maintain a minimum net worth and surety bond. When required, servicers must submit any applicable fees and independently audited financial statements to the Commissioner. If a mortgage servicer services loans for another party, they must maintain a written servicing agreement.
Servicers must maintain continuous business records of their transactions and make them available for the Commissioner to inspect at any time. These records include loan payment histories, copies of notes, mortgages, and assignments, names and addresses of lenders/brokers responsible for each loan, servicing agreements, disclosures provided to borrowers, bankruptcy plans filed by borrowers, communications with the borrowers, foreclosure notices, bank account documentation, escrow records, reports, audits, exams, inspections, reviews, and investigations completed by third parties. Servicers must keep these records for four years. Upon request, servicers must be able to inform the Commissioner of the number of loans they service, the dollar amount of the loans they service, the type of loans they service, the number of loans they service that are in default/days in default and the number of loans they service which are in foreclosure.
Finally, if a servicer wishes to give up his or her license they are required to return it to the Commissioner or a notarized affidavit of loss. If a servicer desires to return their license because they are closing their principal office, they must first return their original license to the Commissioner who must in turn approve the closure.
The Commissioner
In addition to application review, Commissioner has the power to conduct an investigation of any servicer and to issue appropriate discipline for a violation. Such discipline could include a denial of a license renewal, license revocation, license suspension, restitution or a fine. When appropriate, the Commissioner will give notice of his or her decision to discipline a servicer. It should be noted that even after a servicer’s license is suspended or revoked, any related investigation of that servicer may commence or continue.
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