Nevada Amends Various Provisions Regarding Mortgage Industry
by: Zachary Pearlstein, Esq.
The state of Nevada has revised a variety of provisions related to mortgage lending and brokering, effective immediately.
New definitions
For the purposes of the statutory provisions governing the licensing and regulation of mortgage brokers and mortgage agents:
– “Employee” means a natural person (1) whose manner and means of performance of work are subject to the right of control of, or are controlled by, another person, and (2) whose compensation for federal income tax purposes is reported, or required to be reported, on Form W-2 issued by the controlling person.
– “Licensee” means a person who is licensed or required to be licensed as a mortgage broker. The term does not include a person issued a license as a mortgage agent pursuant to NRS 645B.410. who is acting properly within the scope of that license.
– “Residential mortgage loan originator” means a natural person who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation. The term does not include: A loan processor, underwriter, or other natural person who performs clerical or ministerial tasks as an employee at the direction of and subject to the supervision and instruction of a person licensed or exempt from licensing.
Provisions exempting nonprofit agencies and organizations from the licensing requirements of mortgage brokers and mortgage agents
Existing law exempts certain nonprofit agencies and organizations from the statutory provisions governing mortgage brokers and mortgage agents. The revised law states that such nonprofit agencies and organizations must maintain tax exempt status under section 501(c)(3) of the Internal Revenue Code of 1986.
Clarification of employment, association, and sponsorship requirement, for mortgage agents
Under the revised law, 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 or herself out as engaging in the activities of a mortgage agent unless the person:
1. Has a license as a mortgage agent issued pursuant to NRS 645B.410; or
2. Is not a loan processor who is an independent contractor, an employee of a mortgage broker or mortgage banker; or an employee of or associated with a person who holds a certificate of exemption pursuant to NRS 645B.016; or
3. Is required to register with the Registry i.e. is an employee of and whose sponsorship has been entered with the Registry by a mortgage broker, mortgage banker, or person who holds a certificate of exemption pursuant to NRS 645B.016 as required by subsection 2 of NRS 645B.450; and is registered with and provides any identifying number issued by the Registry.
Revisions to provisions governing the renewal of a license as a mortgage agent
Under current law, a mortgage agent’s license expires each year on December 31st unless renewed. In order to renew a license, the agent must submit to the Commissioner on or before December 31st (1) An application for renewal, (2) Proof that the agent has attended at least 10 hours of certified courses and continuing education in the past year, and (3) A renewal fee set by the commissioner (not to exceed $170).
If a licensed mortgage agent fails to comply on or before December 31st, the license is cancelled as of December 31st. However, the commissioner may reinstate a cancelled license if the agent submits, on or before February 28th, an application for renewal, the standard renewal fee, and a reinstatement fee.
This section has been revised to clarify that it should not be construed as preventing the Commissioner from renewing the license of a mortgage agent who does not satisfy the criteria set forth in paragraph (e) of subsection 1 of NRS 645B.410 at the time of the application for renewal, meaning that at the time of renewal, a mortgage agent need not necessarily be:
1- Employed by, or have received an offer of employment from, a mortgage broker;
2- Employed by, or have received an offer of employment from, a mortgage banker
3- Associated with or employed by, or have received an offer of a contract with or an offer of employment from, a person who holds a certificate of exemption pursuant to NRS 645B.016; or
4- A loan processor who is not an employee and who is associated with, or has received an offer of a contract with, a mortgage broker, mortgage banker or person who holds a certificate of exemption pursuant to the rule.
Provisions prohibiting false acts and deceptive practices by mortgage brokers and mortgage agents
The revised law provides that mortgage agents are under the control, and not merely under the reasonable supervision, of the mortgage brokers and mortgage bankers who employ them. In addition, mortgage bankers and brokers may no longer create oral policies and procedures for their mortgage agents, and must instead establish written policies and procedures.
This section specifically does not prohibit the co-brokering of a commercial loan through the cooperation of two or more mortgage brokers so long as such a transaction is not inconsistent with any other provision governing mortgage brokers and mortgage agents.
Provisions exempting attorneys providing covered services from the licensing requirements of foreclosure consultants and foreclosure purchasers
Existing law exempts certain attorneys from being licensed as a foreclosure consultant or foreclosure purchaser. This regulation has been revised to provide that such attorneys must be licensed to practice law in the State of Nevada, and must not be engaged in a practice comprised primarily of providing a covered service to their clients.
The state of Nevada has made some changes regarding disbursements of money from escrow accounts, effective July 1, 2013.
Current law generally prohibits escrow agents, title insurers, title agents, or escrow officers from disbursing money from an escrow account on the same day that the money is deposited. However, there is an exception for certified checks that are payable in Nevada and drawn from a financial institution located in Nevada.
The state of Nevada has enacted the Revised Uniform Law on Notarial Acts, effective January 1, 2014.
The Uniform Law on Notarial Acts describes how notarial acts must be performed, and allows the Secretary of State to appoint electronic notaries public who may perform notarial acts on electronic records. A person must already be a notarial officer in Nevada and must successfully complete a course of study on electronic notarization, enter into a bond, pay an application fee, and take an oath, in order to become an electronic notary public.
Sections 10 and 33 of the Revised Uniform Law prohibit a notarial officer from performing a notarial act on a record if the officer or the officer’s spouse or domestic partner has a direct beneficial interest.
Under current law, a notary public must record each notarial act they perform in a journal, and must have the person whose signature they notarize sign the journal, unless they have performed a notarial act for the person in the past 6 months and have personal knowledge of the identity of the person. Section 34 of this bill adds that for this exemption to apply, the person must also be an employer or coworker of the notary public, and that the notarial act must relate to a transaction performed in the ordinary course of the person’s business.
Section 13 of the revised law establishes a standard for determining whether a notarial officer has personal knowledge of the identity of a person appearing before them. The test is whether “the person is personally known to the officer through dealings sufficient to provide reasonable certainty that the person has the identity claimed.”
Sections 35.3 authorizes notarial acts by those sanctioned to perform such acts under the law of a federally recognized Indian tribe or nation.
Finally, the revised law provides that if a person is physically unable to sign a document, they may direct a person other than the notarial officer to sign their name on the document, and the notarial officer shall insert “Signature affixed by (insert name of other person) at the direction of (insert name of person).”
The state of Nevada modified several provisions regarding deeds of trust, effective October 1, 2013.
Methods by which assumption fees for a change of parties to a deed of trust may be set
Current law provides that if a party to a deed of trust desires to charge an assumption fee for a change in parties to the deed of trust, the amount of such a fee must be clearly set forth at the time of execution. Section 3of this bill sets forth methods of determining assumption fees for a change of a party to a deed of trust. The charge may be set forth as: 1. A fixed sum; 2. A percentage of the amount secured by the deed of trust and remaining unpaid at the time of assumption; or 3. The lesser of, the greater of or some combination of the amounts determined by subsections 1 and 2.
Revised provisions relating to certain agreements to sell real property to a third party
Existing law prohibits a court from awarding a deficiency judgment to a creditor or beneficiary of a deed of trust who is a banking or other financial institution if certain circumstances exist; for example, when a debtor or grantor and the banking or other financial institution have entered into an agreement to sell real property secured by a mortgage or deed of trust to a third party for an amount less than the indebtedness secured by the mortgage or deed of trust, and the agreement:
(1) does not state the amount owed to the banking or other financial institution or does not authorize the banking or other financial institution to recover the amount owed; and (2) contains a statement signed by the debtor or grantor which provides that the banking or other financial institution has waived its right to recover the amount owed and sets forth the amount being waived. Section 4of this bill requires that such a statement also be signed by the banking or other financial institution.
Revised provisions concerning accounting for impound accounts for the payment of certain obligations relating to real property
Existing law provides that if a loan requires the deposit of money to an impound account for the payment of certain obligations, the lender must analyze the account annually. Current law also imposes certain duties upon a lender who requires a borrower to make advance contributions to an impound account for the payment of certain obligations. Section 5of this bill revises provisions concerning the accounting for impound accounts and the related duties of a lender.
For each loan requiring the deposit of money to an impound account for the payment of taxes, assessments, rental or leasehold payments, or fire, hazard or other insurance premiums, or other obligations related to the encumbered property, the lender shall require contributions in an amount reasonably necessary to pay the obligations as they become due, and unless money in the account is insufficient, the lender shall pay in a timely manner the obligations as they become due.
Except for payments made by a borrower for a lender to recover previous deficiencies in contributions to the account, the borrower is entitled to the amount by which the borrower’s contributions to the account exceed the amount reasonably necessary to pay the annual obligations due from the account, with interest.
The lender shall, not later than 30 days after completion of its annual review of the account, notify the borrower:
(a) Of the amount by which the contributions and interest earned exceed the amount reasonably necessary to pay the annual obligations due from the account; and
(b) That the borrower, may, not later than 20 days after receipt of the notice, specify that the lender:
(1) Repay the excess money and interest promptly to the borrower;
(2) Apply the excess money and interest to the outstanding principal balance ;
(3) Retain the excess money and interest in the account.
If the borrower fails to specify the disposition of the excess money and interest, the lender shall maintain the excess money and interest in the account. If any payment on the loan is delinquent at the time of the analysis, the lender shall retain any excess money and interest in the account and apply the excess money and interest in the account toward payment of the delinquency.
A lender who violates any provision of subsections 4, 5 and 6 is liable to the borrower for a civil penalty of not more than $1,000. The provisions of this section apply exclusively to a loan secured by a single family residence, and a unit in a common-interest community that is used exclusively for residential use.
About the Author:
Zachary Pearlstein is Associate Counsel and Compliance Specialist at Bankers Advisory. He is a graduate of Brandeis University and earned his Juris Doctor at Suffolk Law School. He is admitted to the Massachusetts Bar. Zachary can be reached at zachary@bankersadvisory.com
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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