[Rev. 11/21/2013 12:31:28 PM--2013]

CHAPTER 598D - UNFAIR LENDING PRACTICES

NRS 598D.010        Definitions.

NRS 598D.020        “Borrower” defined.

NRS 598D.030        “Home” defined.

NRS 598D.040        “Home loan” defined.

NRS 598D.050        “Lender” defined.

NRS 598D.100        Unfair lending practices.

NRS 598D.110        Criminal and civil penalties; borrower’s defense against unpaid obligation.

NRS 598D.120        Repurchase of home loan by lender who sold home loan.

NRS 598D.130        Required provisions in instrument that secures certain home loans.

NRS 598D.150        Enforcement by Attorney General; local regulation prohibited.

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      NRS 598D.010  Definitions.  As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 598D.020 to 598D.050, inclusive, have the meanings ascribed to them in those sections.

      (Added to NRS by 2003, 2890)

      NRS 598D.020  “Borrower” defined.  “Borrower” means a natural person who is a mortgagor, grantor of a deed of trust or other debtor of a home loan.

      (Added to NRS by 2003, 2890)

      NRS 598D.030  “Home” defined.  “Home” means a dwelling or dwellings for not more than four families, the principal use of which is for residential purposes. The term includes, without limitation:

      1.  A dwelling on a farm.

      2.  A dwelling unit of a cooperative housing corporation.

      3.  A mobile home, as defined in NRS 489.120, with the wheels removed and skirting added, when set on a foundation located on land that the owner of the mobile home owns or occupies pursuant to a tenancy with a term of 40 years or more.

      (Added to NRS by 2003, 2890)

      NRS 598D.040  “Home loan” defined.  “Home loan” means a consumer credit transaction that is secured by a mortgage loan which involves real property located within this State and includes, without limitation, a consumer credit transaction that constitutes a mortgage under § 152 of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1602(aa), and the regulations adopted by the Board of Governors of the Federal Reserve System pursuant thereto, including, without limitation, 12 C.F.R. § 226.32.

      (Added to NRS by 2003, 2890; A 2007, 2846)

      NRS 598D.050  “Lender” defined.  “Lender” means a mortgagee, beneficiary of a deed of trust or other creditor who holds a mortgage, deed of trust or other instrument that encumbers home property as security for the repayment of a home loan.

      (Added to NRS by 2003, 2890)

      NRS 598D.100  Unfair lending practices.

      1.  It is an unfair lending practice for a lender to:

      (a) Require a borrower, as a condition of obtaining or maintaining a home loan secured by home property, to provide property insurance on improvements to home property in an amount that exceeds the reasonable replacement value of the improvements.

      (b) Knowingly or intentionally make a home loan, other than a reverse mortgage, to a borrower, including, without limitation, a low-document home loan, no-document home loan or stated-document home loan, without determining, using any commercially reasonable means or mechanism, that the borrower has the ability to repay the home loan.

      (c) Finance a prepayment fee or penalty in connection with the refinancing by the original borrower of a home loan owned by the lender or an affiliate of the lender.

      (d) Finance, directly or indirectly in connection with a home loan, any credit insurance.

      2.  As used in this section:

      (a) “Credit insurance” has the meaning ascribed to it in NRS 690A.015.

      (b) “Low-document home loan” means a home loan:

             (1) Whose terms allow a borrower to establish his or her ability to repay the home loan by providing only limited verification of his or her income and other assets; or

             (2) Which is evidenced only by a deed transferring some or all of the interest of the borrower in the home property to the creditor.

      (c) “No-document home loan” means a home loan whose terms allow a borrower to establish his or her ability to repay the home loan without providing any verification of his or her income and other assets.

      (d) “Prepayment fee or penalty” means any fee or penalty imposed by a lender if a borrower repays the balance of a loan or otherwise makes a payment on a loan before the regularly scheduled time for repayment.

      (e) “Stated-document home loan” means a home loan whose terms allow a borrower to establish his or her ability to repay the home loan by providing only his or her own statement of verification of his or her income and other assets.

      (Added to NRS by 2003, 2890; A 2007, 2846)

      NRS 598D.110  Criminal and civil penalties; borrower’s defense against unpaid obligation.

      1.  A lender who willfully engages in an unfair lending practice described in this chapter is guilty of a misdemeanor.

      2.  If a lender willfully engages in any unfair lending practice described in this chapter in connection with a home loan, the lender is liable to the borrower in an amount equal to the sum of:

      (a) Three times the amount of any actual damages sustained by the borrower; and

      (b) If the borrower brings an action and is successful in enforcing the liability imposed by paragraph (a) in the action, the costs of bringing the action and reasonable attorney’s fees as determined by the court.

      3.  The borrower has a defense against the unpaid obligation of the home loan to the extent of any amount awarded by a court pursuant to paragraph (a) of subsection 2, and the court, in addition to any other legal or equitable remedy, may cure any existing default of the home loan and cancel any pending foreclosure sale, trustee’s sale or other sale to enforce the home loan.

      (Added to NRS by 2003, 2891)

      NRS 598D.120  Repurchase of home loan by lender who sold home loan.

      1.  If an action has been filed in a court of competent jurisdiction claiming an unfair lending practice in connection with a home loan, the lender who holds the home loan may sell the home loan and recover damages and costs as provided in this section if the lender did not:

      (a) Originate the home loan; and

      (b) Willfully engage in any unfair lending practice described in this chapter in connection with the home loan.

      2.  The lender described in subsection 1 may require the person from whom the lender purchased the home loan described in subsection 1 to:

      (a) Repurchase the home loan for the amount the lender paid for the home loan; and

      (b) Pay to the lender all damages and reasonable costs incurred by the lender that are related to:

             (1) The purchase of the home loan by the lender from the person;

             (2) Any damages awarded in the action described in subsection 1;

             (3) Any costs related to the action described in subsection 1;

             (4) The repurchase of the home loan by the lender if the lender was required to repurchase the home loan from another lender pursuant to this section; and

             (5) The repurchase of the home loan from the lender by the person pursuant to this section.

      3.  The person described in subsection 2:

      (a) Shall repurchase the home loan and pay the damages and costs as described in subsection 2; and

      (b) After repurchasing the home loan, may sell the home loan and recover damages and costs as provided in this section if he or she is a lender described in subsection 1.

      (Added to NRS by 2003, 2891)

      NRS 598D.130  Required provisions in instrument that secures certain home loans.  If:

      1.  A mortgage, deed of trust or other instrument encumbers home property as security for repayment of a home loan; and

      2.  The home loan is subject to the provisions of § 152 of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1602(aa), and the regulations adopted by the Board of Governors of the Federal Reserve System pursuant thereto, including, without limitation, 12 C.F.R. § 226.32,

Ę the mortgage, deed of trust or other instrument must expressly indicate in writing in a size equal to at least 14-point bold type on the front page of the mortgage, deed of trust or other instrument that the home loan is a home loan as defined in NRS 598D.040 and is subject to the provisions of § 152 of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. § 1602(aa), and the regulations adopted by the Board of Governors of the Federal Reserve System pursuant thereto, including, without limitation, 12 C.F.R. § 226.32.

      (Added to NRS by 2003, 2892; A 2005, 1710; 2009, 1895)

      NRS 598D.150  Enforcement by Attorney General; local regulation prohibited.

      1.  The Attorney General has primary jurisdiction to investigate and prosecute violations of this chapter.

      2.  When acting pursuant to this section, the Attorney General may commence his or her investigation and file a criminal action without leave of court, and he or she has exclusive charge of the conduct of the prosecution.

      3.  A local government shall not regulate any activity to which the provisions of this chapter apply.

      (Added to NRS by 2003, 2892)