NAC: CHAPTER 645E - MORTGAGE BANKERS

[Rev. 1/12/2009 9:43:18 AM]

CHAPTER 645E - MORTGAGE BANKERS

GENERAL PROVISIONS

645E.010 Definitions.

645E.015 “Affiliated business” defined.

645E.030 “Qualified employee” defined.

CERTIFICATE OF EXEMPTION

645E.100 Unexpired certificate.

LICENSING AND OPERATION

645E.200 Qualifications of applicant for license.

645E.210 Documentation required with application for license; compliance with requirements of letter of conditional approval.

645E.220 Branch office: Prerequisites and name for issuance of license; display of license; responsibilities of mortgage banker.

645E.225 Sharing office space with another business.

645E.231 Maintenance of permanent sign at each place of business.

645E.240 Use of fictitious name.

645E.250 Use of same name, confusingly similar name or name not approved by Division.

645E.260 Activity constituting verifiable business; submission of evidence of activity.

645E.270 Activity not constituting services as mortgage banker.

645E.280 Circumstances under which person is or is not considered to be making loan secured by lien on real property using his own money.

645E.285 Representation of activity as licensed; restrictions on advertising.

645E.290 Disclosures to borrowers by certain persons acting in dual capacity.

SUPERVISION BY COMMISSIONER

General Provisions

645E.310 Qualified employee: Designation and approval.

645E.315 Change in ownership, control, management or principal employees.

645E.320 Fee for supervision and related activities: Amount; collection; failure to pay; accounting of time billed.

Examinations, Audits and Investigations

645E.330 Assessment for costs related to audits and examinations.

645E.335 Authority of examiner, auditor or investigator.

645E.340 Rating of mortgage banker upon completion of examination.

645E.345 Results of examination: Preparation and review of draft report; final report; confidentiality; action by Commissioner.

Records and Reports

645E.350 Monthly reports.

645E.355 “Complete and suitable records” interpreted.

645E.360 Retention and maintenance of certain records.

APPRAISALS

645E.400 Preparation of appraisal submitted to lender.

ENFORCEMENT

645E.500 Referral of certain suspected violations for investigation and action; grounds for disciplinary action.

645E.510 Order to cease and desist from certain activities.

GENERAL PROVISIONS

NAC 645E.010 Definitions. (NRS 645E.300) As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 645E.020 to 645E.100, inclusive, and NAC 645E.015 and 645E.030 have the meanings ascribed to them in those sections.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.015 “Affiliated business” defined. (NRS 645E.300)

1. “Affiliated business” means a business which a mortgage banker or any general partner, officer, director or employee of the mortgage banker:

(a) Directly or indirectly owns or controls a controlling interest of the business;

(b) Is a partner, officer, director or trustee of the business; or

2. As used in this section, “controlling interest” means a majority of the voting stock of a business or any other interest in a business that gives the holder of the interest the power to direct the management or to determine the policy of the business.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

NAC 645E.030 “Qualified employee” defined. (NRS 645E.300) “Qualified employee” means:

1. A director, officer, member, partner, employee, manager or trustee of a partnership, corporation or limited-liability company designated by the partnership, corporation or limited-liability company pursuant to NAC 645E.310 to act on behalf of the partnership, corporation or limited-liability company; or

2. A person designated by a sole proprietorship who satisfies the requirements set forth in subsection 3 of NRS 645E.200 and NAC 645E.200.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000)—(Substituted in revision for part of NAC 645E.010)

CERTIFICATE OF EXEMPTION

NAC 645E.100 Unexpired certificate. (NRS 645E.300) A person who has an unexpired certificate of exemption issued pursuant to chapter 645B of NRS shall be deemed to have an unexpired certificate of exemption issued pursuant to chapter 645E of NRS.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000)

LICENSING AND OPERATION

NAC 645E.200 Qualifications of applicant for license. (NRS 645E.200, 645E.300) An applicant for a license as a mortgage banker must have:

1. At least 2 years of verifiable experience in lending money for real estate or mortgages; and

2. A knowledge of generally accepted accounting practices and bookkeeping procedures evidenced by verifiable experience in working in these areas or appropriate educational training.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.210 Documentation required with application for license; compliance with requirements of letter of conditional approval. (NRS 645E.200, 645E.300)

1. An applicant must submit with his application for a license pursuant to chapter 645E of NRS:

(a) A copy of his business license, when applicable, or his application for such a license if he has not obtained one.

(b) A copy of the certificate filed by the mortgage banker pursuant to chapter 602 of NRS indicating the fictitious name of the mortgage banker, if any.

(1) Its articles of incorporation and its bylaws;

(2) Its balance sheet and a statement of the profit and loss of the corporation for the 2 years immediately preceding the year of the application; and

(3) The most recent list of its officers and registered agents that is filed with the Secretary of State.

(d) If the applicant is a partnership or joint venture, a copy of the agreement of partnership or joint venture and the financial statements of the partners for the 2 years immediately preceding the year of the application.

(e) If the applicant is a corporation being organized, a copy of its proposed articles of incorporation and its bylaws.

(f) If the applicant is a limited-liability company, a copy of:

(1) Its articles of organization and operating agreement;

(2) A statement of the profit and loss of the limited-liability company for the 2 years immediately preceding the year of the application; and

(3) The most recent list of its members or managers, and registered agents, that is filed with the Secretary of State.

(g) A copy of the lease of the applicant or other document that includes the address of the place of business of the applicant.

(h) Documentation from the appropriate municipal or county authority which indicates that local ordinances allow permanent business signs to be maintained at the place of business of the applicant.

2. If an applicant has received a letter of conditional approval of his application from the Division which imposes additional requirements that the applicant must satisfy to obtain a license, the applicant must comply with those requirements within 30 days after the date on which the letter was issued by the Division. If the applicant does not satisfy all additional requirements set forth in the letter within the period prescribed in this subsection, the conditional approval of the application will be deemed to have expired and the applicant must reapply to obtain a license. The Commissioner may, for good cause, extend the 30-day period prescribed in this subsection.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.220 Branch office: Prerequisites and name for issuance of license; display of license; responsibilities of mortgage banker. (NRS 645E.200, 645E.300)

1. An applicant must submit with his application for a license for a branch office the name, residence address and telephone number of a qualified employee designated to manage the branch office.

2. The Commissioner will approve an application for a license for a branch office if:

(a) The principal office of the mortgage company has been examined by the Commissioner and has received at least a satisfactory rating during the preceding 12 months.

(b) The Commissioner approves the qualified employee designated to manage the branch office. The Commissioner will not approve a qualified employee to manage a branch office if the qualified employee manages or has been designated and approved to manage another office.

(c) The applicant provides documentation from the appropriate municipal or county authority which indicates that local ordinances allow permanent business signs to be maintained at the branch office.

3. The Commissioner may waive the requirements of subsection 2 upon good cause shown.

4. A license for a branch office may be issued only in the name in which the mortgage banker is licensed to conduct business at its principal office.

5. Each branch office must conspicuously display its license at the branch office.

6. A mortgage banker is responsible for and shall supervise:

(a) Each branch office of the mortgage banker; and

(b) Each qualified employee authorized to conduct mortgage lending activity at a branch office of the mortgage banker.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.225 Sharing office space with another business. (NRS 645E.300)

1. Except as otherwise provided in subsection 2, a mortgage banker may share office space with any other business if each business has a designated space within the office space and each business is separately identifiable by a sign or other method of identification within the office space.

2. A mortgage banker may share office space with a business licensed pursuant to chapter 645 of NRS if:

(a) Each business has separate and distinct office space and signs such that a reasonable customer would understand which business he is transacting with at all times;

(b) Each business operates as a separate legal entity;

(d) Each business maintains separate licenses; and

(e) The businesses are subsidiaries of the same parent corporation or are otherwise affiliated businesses.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

NAC 645E.231 Maintenance of permanent sign at each place of business. (NRS 645E.300) A mortgage banker shall maintain a permanent sign that includes the name of the mortgage banker at each place of business of the mortgage banker, including, but not limited to, each branch office of the mortgage banker. This sign must be:

1. Readable from the nearest public sidewalk, street or highway; or

2. If the place of business of the mortgage banker is an office building, posted on the building directory of the office building or near the entrance to the office building on the exterior of the building.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

NAC 645E.240 Use of fictitious name. (NRS 645E.200, 645E.300)

1. A mortgage banker shall not conduct business using a fictitious name unless the mortgage banker:

(a) Complies with the provisions of chapter 602 of NRS;

(b) Files with the Division a certified copy, issued by the appropriate county clerk, of the certificate filed by the mortgage banker pursuant to chapter 602 of NRS indicating the fictitious name; and

2. If a mortgage banker conducts business using a fictitious name pursuant to this section, the mortgage banker may conduct business using a new fictitious name only if the mortgage banker:

(a) Obtains a certified copy, issued by the appropriate county clerk, of the certificate filed by the mortgage banker pursuant to chapter 602 of NRS indicating the new fictitious name;

(b) Files with the Division, not later than 10 calendar days after obtaining the certified copy pursuant to paragraph (a):

(1) The certified copy obtained pursuant to paragraph (a); and

(2) The current license or certificate of exemption of the mortgage banker; and

3. A mortgage banker may conduct business using more than one fictitious name only if the mortgage banker obtains a separate license issued pursuant to chapter 645E of NRS for each fictitious name under which he intends to do business. A mortgage banker who conducts business in this State using more than one fictitious name is responsible for the conduct of each qualified employee, mortgage agent and other employee associated with the mortgage banker, regardless of the license or name under which the conduct takes place.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.250 Use of same name, confusingly similar name or name not approved by Division. (NRS 645E.300)

1. The Division will not issue a license or certificate of exemption with a name that is the same as or confusingly similar to a name on a license or certificate of exemption previously issued by the Division.

2. A mortgage banker shall not conduct business using a name other than the name approved by the Division and indicated on the license or certificate of exemption issued by the Division to the mortgage banker.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.260 Activity constituting verifiable business; submission of evidence of activity. (NRS 645E.300, 645E.350)

1. A person conducts verifiable business as a mortgage banker if he:

(a) Handles the arrangements between a borrower and a lender for a loan that is secured by a lien on real property and is consummated as a result of the arrangements; or

(b) Originates a loan secured by a lien on real property in the capacity of a lender or provider.

2. Evidence of activity described in subsection 1 must be submitted to the Commissioner in the monthly report of activity.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.270 Activity not constituting services as mortgage banker. (NRS 645E.300) A person does not hold himself out as being able to perform the services described in NRS 645E.100 if he only offers to provide money to invest in loans secured by an interest in real property to:

1. A mortgage banker licensed pursuant to chapter 645E of NRS; or

2. A person exempt from the provisions of chapter 645E of NRS.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.280 Circumstances under which person is or is not considered to be making loan secured by lien on real property using his own money. (NRS 645E.100, 645E.300)

1. A person makes a loan secured by a lien on real property using his own money if the loan is funded from one or more of the following sources:

(a) The person’s cash, corporate capital or warehouse credit lines at a depository financial institution or other sources that are liability items on the person’s financial statements.

(b) An affiliate’s cash, corporate capital or warehouse credit lines at a depository financial institution or other sources that are liability items on the affiliate’s financial statements for which the affiliate’s assets are pledged. As used in this paragraph, “affiliate” means another person who, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the person making the loan.

2. A person does not make a loan secured by a lien on real property using his own money if, after consummation of the loan, he sells the loan, or an interest in the loan, to a person from whom he would not be authorized to accept money initially to fund the loan.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000)

NAC 645E.285 Representation of activity as licensed; restrictions on advertising. (NRS 645E.300)

1. A mortgage banker shall not represent an activity which is not licensed pursuant to chapter 645E of NRS as being licensed pursuant to that chapter.

2. Except as otherwise provided in subsection 3, an advertisement for an activity which is licensed pursuant to chapter 645E of NRS must be separate and distinct from an advertisement for an activity which is not licensed pursuant to that chapter.

3. A mortgage banker may advertise jointly with a company licensed pursuant to chapter 624 or 645 of NRS if each business is disclosed separately in the advertisement and each business incurs a pro rata share of the cost associated with the advertisement.

4. A mortgage banker must include in his advertisements, including any advertising material available on the Internet:

(a) The complete name of the mortgage banker or the complete name under which the mortgage banker does business.

(b) The address and telephone number that the mortgage banker has on file with the Division. Additional telephone or cellular phone numbers of the mortgage banker may also be included.

5. A mortgage banker shall not use advertising material that simulates the appearance of a check, a communication from a government entity, or an envelope containing a check or a communication from a government entity, unless:

(a) The words “THIS IS NOT A CHECK,” “NOT NEGOTIABLE” or “THIS IS NOT A GOVERNMENT ENTITY,” as appropriate, appear prominently on the envelope and any material that simulates the appearance of a check or a communication from a government entity; and

(b) If the material simulates the appearance of a check, the material does not contain an American Bankers Association number, microencoding or any other marks intended to create the appearance that the material is a negotiable check.

6. In addition to the requirements of this chapter, each advertisement used in carrying on the business of a mortgage banker must comply with:

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

(b) All applicable federal statutes and regulations concerning deceptive advertising and advertising of interest rates.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)—(Substituted in revision for NAC 645E.450)

NAC 645E.290 Disclosures to borrowers by certain persons acting in dual capacity. (NRS 645E.300)

1. A mortgage banker, loan officer or qualified employee who is also licensed as a real estate broker or real estate salesman and who acts in both capacities in a single transaction must make to the borrower the disclosures set forth on the form prescribed by the Division pursuant to subsection 2, including, but not limited to:

(a) Whether the mortgage banker, loan officer or qualified employee will be receiving compensation for acting as a mortgage banker, loan officer or qualified employee and as a real estate broker or real estate salesman in the same transaction;

(b) That the borrower is under no obligation to allow the real estate broker or real estate salesman to submit the loan package of the borrower to a mortgage banker, loan officer or qualified employee; and

(c) That the borrower may contact other mortgage bankers, loan officers or qualified employees to determine if the borrower is receiving the best services related to the loan and the best prices for those services.

2. The mortgage banker, loan officer or qualified employee shall provide the disclosures required pursuant to subsection 1 to the borrower at the time of application for a loan and in the following format:

(At least 14-point font)

BORROWER(S)

ACKNOWLEDGMENT AND AGREEMENT CONCERNING

DUAL CAPACITY AS REAL ESTATE SALES AGENT AND MORTGAGE LOAN AGENT

(At least 12-point bold font)

Borrower(s) are under no obligation whatsoever to allow their real estate sales agent to initiate or submit the borrower(s) loan package to any mortgage lender, broker, banker or investor. Mortgage brokers and other loan originators cannot offer loans from all funding sources and cannot guarantee the lowest price or best terms available in the market.

There may be other mortgage loan providers available with similar services and lower rates and/or fees. You are free and encouraged to contact various lenders to determine that you are receiving the best service and rates and lowest fees for those services. A comparative analysis of providers’ services, rates and fees is recommended prior to making a decision on which lender to use.

(At least 10-point font)

Borrower(s) are hereby informed and expressly acknowledge the following:

· Real estate sales agent _________________, hereinafter referred to as “agent,” is also associated with _____________________ (mortgage broker/banker) and is acting in the dual capacity as both mortgage loan agent and real estate sales agent and shall receive compensation from the real estate sales transaction and separate compensation for arranging the mortgage loan.

· Real estate company _____________________________ (check one of the following):

__________ Does have a business relationship with the licensed mortgage broker/banker or exempt company to which your loan is referred. Because of this relationship, this referral may provide the real estate company named above a financial or other benefit.

Describe the nature of the relationship including percentage of ownership interest, if applicable.

_________ Does not have a business relationship with the licensed mortgage broker/banker or exempt company to which your loan is referred.

The mortgage broker/banker must provide you with a Good Faith Estimate disclosing all estimated costs of the loan, including the yield spread premium (YSP.) The YSP is income paid to a mortgage broker upon delivery of a mortgage loan to a lender at a premium interest rate.

By signing I/we confirm my/our understanding of the information provided herein.

BORROWER BORROWER

_________________________________________ _________________________________________

By signing this form, the mortgage loan agent agrees that any fees paid to the mortgage broker/banker/agent as referred to above will not increase the cost of the borrower(s) loan beyond the normal and customary charges typically collected by mortgage lenders, brokers or investors.

MORTGAGE BROKER/QUALIFIED EMPLOYEE/AGENT

_________________________________________

If you have any questions regarding your mortgage loan agent or loan, please visit the Division of Mortgage Lending website at <http://www.mld.nv.gov> or call 702.486.0780 in Las Vegas or 775.684.7060 in Northern Nevada.

3. As used in this section:

(a) “Real estate broker” has the meaning ascribed to it in NRS 645.030; and

(b) “Real estate salesman” has the meaning ascribed to it in NRS 645.040.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

SUPERVISION BY COMMISSIONER

General Provisions

NAC 645E.310 Qualified employee: Designation and approval. (NRS 645E.300)

1. Every partnership, corporation or limited-liability company doing business as a mortgage banker in this State shall designate a qualified employee who may, upon approval by the Commissioner, act on behalf of the partnership, corporation or limited-liability company.

2. The Commissioner will approve the qualified employee designated pursuant to subsection 1 if the qualified employee meets the requirements of an applicant for a license as a mortgage banker pursuant to chapter 645E of NRS.

3. The approval issued by the Commissioner entitles the qualified employee to act pursuant to the terms and conditions of the license issued to the partnership, corporation or limited-liability company by the Commissioner pursuant to chapter 645E of NRS, but only as a qualified employee of the partnership, corporation or limited-liability company, and not on his own behalf.

4. If the qualified employee designated pursuant to subsection 1 is not approved by the Commissioner pursuant to subsection 2 or ceases to be a qualified employee as defined in NAC 645E.030, the partnership, corporation or limited-liability company shall designate another qualified employee pursuant to subsection 1 not later than:

(a) Thirty calendar days after the date that:

(1) The Commissioner notifies the partnership, corporation or limited-liability company that the initial qualified employee designated pursuant to subsection 1 is not approved; or

(2) The qualified employee ceases to be a qualified employee as defined in NAC 645E.030; or

(b) A date after the date described in paragraph (a) if agreed to by the Commissioner.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.315 Change in ownership, control, management or principal employees. (NRS 645E.300, 645E.390)

1. Any material change in the ownership, management or principal employees of a mortgage banker at its principal office or a branch office must be reported to the Commissioner not later than 30 calendar days after the change.

2. If a person acquires stock or ownership in a mortgage banker as a result of a transfer that constitutes a change of control pursuant to NRS 645E.390:

(a) A financial statement or personal interrogatory of the prospective owner, partner, corporate shareholder, manager or employee must be submitted to the Commissioner for his consideration;

(b) The person may not participate in the management of the mortgage banker until the Commissioner has approved the transfer; and

(c) The mortgage banker may not change the location of its principal office or a branch office until the Commissioner has approved the transfer.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)—(Substituted in revision for NAC 645E.230)

NAC 645E.320 Fee for supervision and related activities: Amount; collection; failure to pay; accounting of time billed. (NRS 645E.300, 645E.310, 645E.280)

1. Except as otherwise provided in this subsection, the Commissioner will charge and collect a fee of $60 per hour from each mortgage banker for any supervision, examination, audit, investigation or hearing conducted pursuant to chapter 645E of NRS. The Commissioner may charge a fee equivalent to the estimated or actual fee charged to the Division for the time of an attorney required in any examination, investigation or hearing conducted pursuant to chapter 645E of NRS.

2. The Commissioner will bill each mortgage banker upon the completion of the activity for the fee established in subsection 1. The fee must be paid not later than 30 calendar days after the date the bill is received. Except as otherwise provided in this subsection, any payment received after that date must include a penalty of 10 percent of the fee plus an additional 1 percent of the fee for each complete month, or portion of the last month, that the fee is not paid. The Commissioner may waive the penalty for good cause.

3. Upon written request by a mortgage banker, the Division will provide an accounting of the time billed to the mortgage banker pursuant to this section.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

Examinations, Audits and Investigations

NAC 645E.330 Assessment for costs related to audits and examinations. (NRS 645E.300, 645E.320)

1. Each mortgage banker shall pay to the Division an annual assessment as required pursuant to NRS 645F.180 to cover the costs related to the employment of a certified public accountant and the performance of audits and examinations by the Division.

2. The Division will bill each mortgage banker for the assessment. The assessment must be paid within 30 calendar days after the date the bill is received.

3. A charge of 10 percent of the assessment will be imposed on any mortgage banker whose assessment is received by the Division after the date on which the assessment is due. The Commissioner may waive the penalty for good cause.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.335 Authority of examiner, auditor or investigator. (NRS 645E.300) An examiner, auditor or investigator conducting an examination, periodic or special audit, or investigation pursuant to paragraph (b), (c) or (d) of subsection 2 of NRS 645E.300 may:

1. Require the mortgage banker to produce, for the purposes of the examination, audit or investigation, all documents:

(a) Relating to business conducted by the mortgage banker pursuant to this chapter or chapter 645E of NRS;

(b) Required to be kept by the mortgage banker pursuant to any federal or state law or regulation; and

(c) Related to the operation of the business of the mortgage banker or any affiliated business that conducts business activities which are directly related to the business of the mortgage banker.

2. Inspect and copy any documents that are in the possession, control or custody of the mortgage banker and related to business conducted by the mortgage banker pursuant to this chapter or chapter 645E of NRS.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

NAC 645E.340 Rating of mortgage banker upon completion of examination. (NRS 645E.300) Upon completion of an examination of a mortgage banker, the examiner shall rate the mortgage banker on a scale of “1” to “5,” as follows:

1. A rating of “1” indicates that the mortgage banker and the management of the mortgage banker have demonstrated a high degree of compliance with applicable laws and regulations. A rating of “1” may be given if there is a minor violation or deficiency and the mortgage banker acted to correct the violation or deficiency immediately and the action taken by the mortgage banker is likely to prevent future violations or deficiencies.

2. A rating of “2” indicates that the mortgage banker and the management of the mortgage banker have demonstrated substantial compliance with applicable laws and regulations and that any violations or deficiencies noted in the report made by the examiner pursuant to NAC 645E.345 can be corrected by the mortgage banker with a minimum of regulatory supervision. A rating of “2” may be given if there are minor violations or deficiencies and the mortgage banker acted to correct the violations or deficiencies immediately and the action taken by the mortgage banker is likely to prevent future violations or deficiencies.

3. A rating of “3” indicates that the mortgage banker and the management of the mortgage banker have demonstrated less than satisfactory compliance with applicable laws and regulations and that regulatory supervision is required for the correction of the violations and deficiencies noted in the report made by the examiner pursuant to NAC 645E.345. A rating of “3” may be given if there were previous minor violations or deficiencies that were not corrected.

4. A rating of “4” indicates that the mortgage banker and the management of the mortgage banker have demonstrated substantial lack of compliance with applicable laws and regulations and that immediate remedial action is required for the correction of the violations and deficiencies noted in the report made by the examiner pursuant to NAC 645E.345. The mortgage banker will be subject to close regulatory supervision and the examiner will recommend disciplinary action against the mortgage banker to the Commissioner.

5. A rating of “5” indicates that the mortgage banker and the management of the mortgage banker have demonstrated unsatisfactory compliance with applicable laws and regulations and that immediate remedial action is required for the correction of the violations and deficiencies noted in the report made by the examiner pursuant to NAC 645E.345 and may include action by the Commissioner to take possession of the business and assets of the mortgage banker. The examiner will recommend disciplinary action against the mortgage banker to the Commissioner.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

NAC 645E.345 Results of examination: Preparation and review of draft report; final report; confidentiality; action by Commissioner. (NRS 645E.300, 645E.310, 645E.370)

1. Not more than 30 days after the completion of an examination of a mortgage banker, the examiner that performed the examination shall prepare a draft report of the examination and provide the draft report to appropriate personnel of the Division. The draft report must include only:

(a) Facts that are contained in the files, books, records or other documents of the mortgage banker that were examined by the examiner;

(b) Facts that are contained in statements made by officers or agents of the mortgage banker or other persons that the examiner interviewed concerning the mortgage banker; and

(c) Conclusions and recommendations that are reasonably supported by the facts that are included in the report, including, but not limited to, the rating given to the mortgage banker by the examiner pursuant to NAC 645E.340.

2. Not more than 15 days after the draft report of an examination is received by the Division, the Commissioner or his designee will deliver to the mortgage banker that was examined:

(a) A copy of the draft report; and

(b) Notice that the mortgage banker has not more than 30 days, unless the Commissioner, for good cause, allows a longer period, to review the draft report and submit to the Commissioner, in writing, any comments regarding or objections to matters contained in the draft report.

3. If a mortgage banker received a rating of “3,” “4” or “5” on an examination pursuant to NAC 645E.340 and submitted written comments or objections within the period specified in subsection 2, the Commissioner or his designee will:

(a) Not more than 15 days after the last day on which the mortgage banker could submit written comments or objections pursuant to subsection 2, hold an informal meeting with the mortgage banker regarding the draft report; and

(b) Review the draft report, together with the written comments or objections submitted by the mortgage banker and any relevant portions of the working papers of the examiner, and, not more than 15 days after the date on which the informal meeting was held pursuant to paragraph (a):

(1) Adopt the draft report as filed;

(2) Adopt the draft report with modifications;

(3) Provide the mortgage banker with an opportunity for a formal hearing; or

(4) Direct the examiner to reopen the examination to obtain additional data, documents or information and, if necessary, file a new draft report pursuant to subsection 1. If the findings of the initial draft report are supported by the findings of the examiner after the completion of the reopened examination, the mortgage banker shall be responsible for the costs attributable to the reopened examination pursuant to NRS 645E.310.

4. If a mortgage banker:

(a) Received a rating of “1” or “2” on an examination pursuant to NAC 645E.340 and submitted written comments or objections within the period specified in subsection 2; or

(b) Did not file a written comment or objection to a draft report within the period specified in subsection 2,

Ê the draft report will be deemed to be the final report of the examination.

5. Pursuant to NRS 645E.370, the results of an examination are not open to public inspection until the requirements set forth in subsection 3 are completed.

6. If the examination and report reveal that a mortgage banker is operating in violation of this chapter, chapter 645E of NRS or a previous order of the Commissioner, the Commissioner may order the mortgage banker to take any action the Commissioner deems necessary or appropriate to correct the violation. The Commissioner may also take disciplinary action pursuant to NRS 645E.670.

7. The Commissioner may, for good cause, extend any period specified in this section that is applicable to an examiner, the Commissioner or his designee for an additional period of not more than 15 days.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

Records and Reports

NAC 645E.350 Monthly reports. (NRS 645E.300, 645E.350)

1. Each mortgage banker shall submit, for each month, on a form approved by the Commissioner, a report on the volume of loans arranged by the mortgage banker in that month. The monthly report must be submitted to the Commissioner by the 15th day of the month following the month for which the report was made. If no loans were arranged in that month, the report must state that fact.

2. The Commissioner may refuse to renew the license of a mortgage banker that has not submitted a monthly report as required by subsection 1 for 1 or more of the preceding 12 months.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.355 “Complete and suitable records” interpreted. (NRS 645E.300, 645E.350) As used in NRS 645E.350, the Commissioner interprets “complete and suitable records” to mean:

1. For residential mortgage loans, a file that includes, but is not limited to, the following documents, if applicable to the type and purpose of the loan:

(a) The real estate sales contract;

(b) Escrow instructions;

(d) The loan application, including, but not limited to, any attachments or supplements;

(e) An appraisal report;

(f) Any verification of representations made by the consumer on the application for the loan;

(g) A credit report;

(h) A good faith estimate of closing costs and any disclosures required pursuant to the federal Truth in Lending Act, 15 U.S.C. §§ 1601 et seq.;

(i) The Uniform Settlement Statement, as described pursuant to 12 U.S.C. § 2603;

(j) Any commitments made by the lender to the consumer, including, but not limited to, a commitment to guarantee the consumer a certain interest rate and a commitment to fund the loan;

(k) A recorded or confirmed deed of trust;

(l) The title insurance policy;

(m) The note;

(n) Any subsequent assignment of the loan to institutional investors; and

(o) The hazard insurance policy.

2. For commercial mortgage loans that are funded by the mortgage banker, a file that includes, if applicable, the items required pursuant to paragraphs (a) to (j), inclusive, of subsection 1.

3. Any additional books and records that must be maintained or readily accessible at each place of business of the mortgage banker, including, but not limited to:

(a) Any book or record that evidences compliance with applicable federal and state laws and regulations;

(b) A copy of each item of advertising material that was published or distributed by or on behalf of the mortgage banker, in the format in which the material was published or distributed;

(c) A copy of any written complaint received by the mortgage banker, together with all correspondence, notes, responses and other documentation related to the disposition of the complaint;

(d) All checkbooks, check registers, bank statements, deposit slips, withdrawal slips, cancelled checks and other records that relate to the business of the mortgage banker;

(e) Copies of all federal tax withholding forms, reports of income for federal taxation and evidence of payments to all employees, independent contractors and other persons that worked for the mortgage banker;

(f) Copies of all documents evidencing a contractual relationship between the mortgage banker and any third-party provider of services related to mortgages, including, but not limited to, contracts, invoices, billings and remittances to the provider by or on behalf of the mortgage banker;

(g) Copies of all material correspondence related to the business of the mortgage banker, including, but not limited to, electronic messages; and

(h) Copies of all reports, audits, examinations, inspections, reviews, investigations or other similar activities relating to the business of the mortgage banker performed by any third party, including, but not limited to, any regulatory or supervisory authority.

(Added to NAC by Comm’r of Mortgage Lending by R088-04, eff. 8-25-2004)

NAC 645E.360 Retention and maintenance of certain records. (NRS 645E.300, 645E.350)

1. Each mortgage banker shall retain records of all its completed mortgage transactions for a period of at least 4 years after the date of the last activity relating to the transaction. After a record has been retained for 2 or more years, the mortgage banker may cause the original record to be reproduced by the microphotographic process, optical disc imaging or any other equivalent technique designed to ensure an accurate reproduction of the original record. A record reproduced as authorized by this section must be considered by the Commissioner to be the same as the original record. Upon completion of the reproduction of a record as authorized by this section, the original record may be destroyed.

2. Each mortgage banker shall retain applications for mortgages that were denied or withdrawn for a period of at least 1 year or as otherwise required by federal law.

3. Each mortgage banker shall maintain records of completed mortgage transactions at the location at which the mortgage loan was made for at least 1 year after the date of closing of the loan. After expiration of the 1-year period required pursuant to this subsection, any such record may be maintained for the minimum period prescribed in subsection 1 at another location if the record can be provided not later than 24 hours after a request for the record. The Commissioner, for good cause shown, may allow a longer period to provide records.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

APPRAISALS

NAC 645E.400 Preparation of appraisal submitted to lender. (NRS 645E.300) An appraisal submitted to a lender by a mortgage banker must not be prepared by the mortgage banker and must:

1. If the appraised property is located in this State, be prepared by an appraiser who holds the appropriate license, certificate or permit issued by the Real Estate Division of the Department of Business and Industry; or

2. If the appraised property is located outside this State, be prepared by an appraiser who is authorized to perform the appraisal by the appropriate agency of the state in which the property is located.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

ENFORCEMENT

NAC 645E.500 Referral of certain suspected violations for investigation and action; grounds for disciplinary action. (NRS 645E.300, 645E.670)

1. The Commissioner may refer to the appropriate federal or state agency for investigation and appropriate action each suspected violation of:

(a) The Truth in Lending Act, 15 U.S.C. §§ 1601 to 1667f, inclusive, including, without limitation, the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1639, or Regulation Z, 12 C.F.R. Part 226.

(b) The Equal Credit Opportunity Act, 15 U.S.C. §§ 1691 to 1691f, inclusive, or Regulation B, 12 C.F.R. Part 202.

(c) The Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 to 2617, inclusive, or Regulation X, 24 C.F.R. Part 3500.

2. For the purposes of NRS 645E.670, a mortgage banker commits a violation if the mortgage banker:

(a) Engages in a deceptive trade practice as defined in chapter 598 of NRS;

(b) Fails to refund any fees collected in excess of the actual cost the mortgage banker incurs or pays for any appraisal, credit report or any other product or service provided by a third party in connection with the making of a loan; or

(1) The Truth in Lending Act, 15 U.S.C. §§ 1601 to 1667f, inclusive, including, without limitation, the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1639, or Regulation Z, 12 C.F.R. Part 226.

(2) The Equal Credit Opportunity Act, 15 U.S.C. §§ 1691 to 1691f, inclusive, or Regulation B, 12 C.F.R. Part 202.

(3) The Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 to 2617, inclusive, or Regulation X, 24 C.F.R. Part 3500.

(4) Any other applicable federal or state law or regulation related to mortgage transactions.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000; A by Comm’r of Mortgage Lending by R088-04, 8-25-2004)

NAC 645E.510 Order to cease and desist from certain activities. (NRS 645E.300)

1. If a person engages in an activity in violation of the provisions of this chapter or chapter 645E of NRS, the Commissioner may issue an order to the person directing the person to cease and desist from engaging in the activity.

2. The order to cease and desist must be in writing and must state that, in the opinion of the Commissioner, the person has engaged in an activity:

(a) For which the person has not received a license or certificate of exemption as required by chapter 645E of NRS; or

(b) In a manner that violates the provisions of this chapter or chapter 645E of NRS.

3. A person who receives an order to cease and desist pursuant to this section shall not engage in any activity governed by chapter 645E of NRS after he receives the order unless the order is suspended or rescinded.

4. Not later than 30 calendar days after receiving an order pursuant to this section, the person who receives the order may file a verified petition with the Commissioner to request a hearing. Upon receipt of the verified petition, the Commissioner may, for good cause shown, suspend the order pending the hearing. The Commissioner will hold the hearing on a date not later than 30 calendar days after the date the petition is filed unless the Commissioner and the person agree to another date. The order to cease and desist is rescinded if the Commissioner fails to:

(a) Hold the hearing:

(1) Not later than 30 calendar days after the date the petition is filed; or

(2) On a date agreed to by the Commissioner and the person; or

(b) Render a written decision within 45 calendar days after the date the hearing is concluded.

5. The decision of the Commissioner after the hearing is a final decision of the Division for the purposes of judicial review.

(Added to NAC by Comm’r of Financial Institutions by R046-00, eff. 9-5-2000)—(Substituted in revision for NAC 645E.300)