NAC: CHAPTER 675 - INSTALLMENT LOANS

[Rev. 9/25/2018 2:01:54 PM]

[NAC-675 Revised Date: 9-18]

CHAPTER 675 - INSTALLMENT LOANS

675.005 “Licensee” defined.

675.010 Advertising.

675.020 Credit life insurance and credit health or disability insurance.

675.030 Requests for payment; ledger cards.

675.060 Conduct of loan business with sales finance business.

675.065 Conduct of business with a licensed mortgage banker.

675.070 Collection of loans made outside Nevada.

675.080 Fee for supervision and related activities: Amount; collection; failure to pay.

675.090 Fees: Application for license.

675.100 Fees: Renewal of license; reinstatement of expired license.

675.110 Annual assessments to cover costs related to performance of audits and examinations.

675.120 Prerequisites to engaging in business.

675.130 Revocation or suspension of license.

675.140 Inspection of documents filed with Division of Financial Institutions.

675.150 Complaints: Failure to respond in timely manner; confidentiality.

NAC 675.005 “Licensee” defined. (NRS 675.170) As used in this chapter, unless the context otherwise requires, “licensee” means a person to whom one or more licenses have been issued pursuant to this chapter and chapter 675 of NRS.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.010 Advertising. (NRS 675.170, 675.280)

1. No licensee may advertise in any manner that may tend to confuse the identity of the licensee with any other unrelated licensee.

2. No licensee may advertise in any manner that a loan of a prospective borrower with another licensee will be paid or increased if the loan is transferred to the advertising licensee.

3. No unethical advertising by licensees will be permitted and the Commissioner of Financial Institutions reserves the right to require all licensees to submit proposed advertising for approval before its dissemination through the press, by radio or television.

[Banking Div., Installment Loan Reg. No. 1, eff. 5-22-72] — (NAC A by Admstr. of Financial Institutions, eff. 6-29-84)

NAC 675.020 Credit life insurance and credit health or disability insurance. (NRS 675.170, 675.300)

1. As used in this section, “credit insurance” means both credit life insurance and credit health or disability insurance.

2. If a licensee provides, obtains or arranges any credit insurance as security for a loan, the premium or cost of such insurance to the borrower must not exceed the rate or rates established by the Commissioner of Insurance pursuant to the insurance laws. The insurance is subject to the laws and regulations of the Division of Insurance of the Department of Business and Industry.

3. If a loan on which credit insurance has been obtained, arranged or provided by the licensee is prepaid in full, a refund of a portion of the insurance premium or cost must be made to the borrower, unless such prepayment in full was by death claim. If the insurance refund plus interest refund together amount to less than $1, no refund need be made.

4. When a loan is prepaid in full by a death claim payment, the unearned portion of credit health or disability insurance premium must be refunded as of the date of death, but no refund may be made as to premiums paid for credit life insurance.

5. Only one party obligated on the loan may be covered by such credit insurance, and the premium or insurance cost may only be collected with respect to that party.

6. No statement, direct or implied, may be made to any borrower which would lead the borrower to believe that the granting of a loan was contingent upon his or her obtaining credit insurance as security for the loan.

7. Licensees shall post in each loan interview position a sign with the following language clearly printed in 3/8-inch print: “The purchase of credit life or accident and health insurance is not required as a condition for the granting of a loan.”

8. If an insured borrower dies during the term of the loan contract, the credit life insurance must be sufficient at least to pay an amount which will discharge the loan completely at the date of death, without any exception, reservation or limitation.

9. If the premium or insurance cost is computed on the principal amount of loan and not also on interest and service fee contracted to be paid, the entire proceeds of any death claim to the extent provided in subsection 8 must be payable to the licensee.

10. If the premium or insurance cost is computed on the total original amount of the note (principal plus interest and service fee), the proceeds of any death claim must not be less than the greater of the following:

(a) The unpaid balance of the face amount of the note, principal plus the combined interest and service fee, which under the contract is scheduled to be outstanding at the date of death (also referred to as the scheduled balance); or

(b) The actual unpaid amount of the loan, which is the unpaid balance of the face amount of the note less the required refund of interest and service fee, which refund must be computed as at the date of death (referred to as the net balance).

11. Whenever the amount of any death claim is in excess of the net balance due at the date of death, the excess must be paid by the licensee to the estate of the borrower, the surviving spouse or the next of kin and this must be an obligation of the licensee. Licensees also are required to see that insurance policies arranged in connection with loans provide for death claims to be paid in accordance with this section. The licensee’s records must reflect accurately the amount of the death claim, the amount, if any, in excess of the net balance and the person to whom the excess was paid.

[Banking Div., Installment Loan Reg. No. 4, eff. 5-22-72] — (NAC A by Comm’r of Insurance, 5-27-92)

NAC 675.030 Requests for payment; ledger cards. (NRS 675.170, 675.250)

1. Requests for payment must be made only to those obligated on the loan contract.

2. Collection attempts through written or printed communication, sent by mail, must be enclosed in a sealed envelope.

3. The ledger card must indicate when an account has been placed for collection or legal action taken. It must also indicate whether judgment was obtained, together with the date and the amount of the judgment.

4. On prepaid accounts, the ledger card must clearly indicate the amount rebated, both for interest and for insurance.

5. Adequate records which will enable the Commissioner of Financial Institutions to reconcile outstanding balances must be maintained in each licensed office.

6. If there no longer is an outstanding indebtedness from the borrower to the licensee, there must be delivered to the borrower by the licensee a termination statement as required by the Uniform Commercial Code (chapter 104 of NRS). Such delivery is necessary even though the Uniform Commercial Code under such circumstances does not require delivery of a termination statement unless the borrower makes a written demand upon the secured party for a termination statement.

7. If ledger cards or similar records for loan accounts and installment sale contract accounts are commingled in a licensee’s files, there must be a system by which such cards may be readily identified one from the other, such as being of different colors or having corners of different colors. All of such cards must bear the date of the contract and must identify the type of transaction reflected on them.

[Banking Div., Installment Loan Reg. No. 2, eff. 5-22-72] — (NAC A by Admstr. of Financial Institutions, eff. 6-29-84)

NAC 675.060 Conduct of loan business with sales finance business. (NRS 675.170, 675.230) Licensees may conduct the business of making loans in the same office or place of business where the licensee, an affiliate or associate also conducts a sales finance business (the purchase of time paper representing the sale of goods or services) if in the conduct of such other business in the office of the licensee, the following is observed:

1. The sales finance business which is subject to chapter 97 of NRS must be carried on in compliance with that chapter.

2. Charges in connection with a retail installment contract subject to chapter 97 of NRS must be made only as expressly authorized by chapter 97 of NRS. No charge may be collected from the debtor on such a contract on the basis of or by reason of the assignment of the contract to the licensee.

3. The validity of any such contract must be determined by the law of the state where it actually is made.

4. Retail installment contracts created pursuant to chapter 97 of NRS are not subject to any maximum term or period of contract, and all such contracts may be purchased by licensees.

5. Default charges, attorney fees, collection costs and similar items which may be collected on such contracts are limited to those expressly provided for in chapter 97 of NRS.

[Banking Div., Installment Loan Reg. No. 3 § 3, eff. 5-22-72] — (NAC A by Comm’r of Financial Institutions, 5-19-88)

NAC 675.065 Conduct of business with a licensed mortgage banker. (NRS 675.170, 675.230)

1. A licensee may conduct business in the same office or place of business with a licensed mortgage banker if:

(a) The licensee and the mortgage banker maintain separate licenses;

(b) Each company is operated as a separate legal entity;

(d) The licensee and the mortgage banker are subsidiaries of the same parent corporation or otherwise have the same ownership; and

(e) The mortgage banker does not maintain trust accounts as those described in NRS 645B.175.

2. Each application for approval to conduct business pursuant to subsection 1 must be written and on a form prescribed by the Commissioner of Financial Institutions.

(Added to NAC by Admstr. of Financial Institutions, eff. 5-1-86; A by Comm’r of Financial Institutions, eff. 3-30-94)

NAC 675.070 Collection of loans made outside Nevada. (NRS 675.170, 675.310) Any loan made in another state and purchased by a licensee in this State, regardless of the original amount of the loan or the unpaid balance, may be collected or otherwise enforced at the rate shown in the contract and in accordance with its terms, if the loan was lawfully made in accordance with the laws of the state where it was made.

[Banking Div., Installment Loan Reg. No. 7, eff. 5-22-72]

NAC 675.080 Fee for supervision and related activities: Amount; collection; failure to pay. (NRS 658.101, 675.170, 675.400)

1. The Commissioner of Financial Institutions will charge and collect a fee of $75 per hour from each installment loan company for any supervision, examination, audit, investigation or hearing conducted pursuant to chapter 675 of NRS.

2. The Commissioner will bill each installment loan company upon the completion of the activity for the fee established in subsection 1. The fee must be paid within 30 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 month, or portion of a month, that the fee is not paid. The Commissioner may waive the penalty for good cause.

3. Failure of an installment loan company to pay the fee required by subsection 1 as provided in this section constitutes grounds for revocation of its license.

(Added to NAC by Comm’r of Financial Institutions, eff. 4-20-88; A 11-27-89, eff. 7-1-89; R054-16, 9-9-2016)

NAC 675.090 Fees: Application for license. (NRS 675.100, 675.170) An application submitted pursuant to NRS 675.095 must be accompanied by:

1. A nonrefundable fee of $750; and

2. A fee of $800, prorated by the Commissioner of Financial Institutions.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.100 Fees: Renewal of license; reinstatement of expired license. (NRS 675.140, 675.170)

1. A licensee shall pay annually to the Division of Financial Institutions of the Department of Business and Industry a fee of $750 for the renewal of a license.

2. If the Commissioner of Financial Institutions reinstates an expired license, the licensee shall pay a reinstatement fee of $400 in addition to the renewal fee prescribed in subsection 1.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.110 Annual assessments to cover costs related to performance of audits and examinations. (NRS 658.055, 675.170, 675.380)

1. Except as otherwise provided in NAC 658.030, each licensee shall pay to the Division of Financial Institutions of the Department of Business and Industry an annual assessment of $300 to cover the costs related to the employment of a certified public accountant and the performance of audits and examinations conducted by the Division.

2. The Division of Financial Institutions of the Department of Business and Industry will bill each licensee for the assessment. The assessment must be paid within 30 days after the date the bill is received.

3. A charge of 10 percent of the assessment will be imposed on any licensee whose assessment is received by the Division of Financial Institutions of the Department of Business and Industry after the date on which the assessment is due.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.120 Prerequisites to engaging in business. (NRS 675.170) A person shall not engage in the business of lending in this State unless:

1. The person possesses each license, certificate and permit required by this chapter, chapter 675 of NRS and a local governmental entity; and

2. The location of the business complies with any applicable planning and zoning ordinances.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.130 Revocation or suspension of license. (NRS 675.170, 675.440) The Commissioner of Financial Institutions may revoke or suspend a license in accordance with NRS 675.370 to 675.450, inclusive, if a licensee violates any provision of this chapter or chapter 675 of NRS, including, without limitation, a provision that imposes a fee or assessment on a licensee.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.140 Inspection of documents filed with Division of Financial Institutions. (NRS 675.170) Except as otherwise provided in NAC 675.150 or by specific statute, all papers, documents, reports and other written instruments filed with the Division of Financial Institutions of the Department of Business and Industry pursuant to this chapter and chapter 675 of NRS are open to public inspection unless the Commissioner of Financial Institutions determines that the information is required to be withheld to protect the public welfare or the welfare of a licensee.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)

NAC 675.150 Complaints: Failure to respond in timely manner; confidentiality. (NRS 675.170)

1. If a licensee, or an authorized representative of that licensee, fails to respond to the Commissioner of Financial Institutions within 20 business days after receipt of a written notice that a complaint has been filed against the licensee, the licensee is deemed to have admitted to the allegations contained in the complaint.

2. Subject to the discretion of the Commissioner of Financial Institutions and except as otherwise provided by specific statute, a complaint filed with the Division of Financial Institutions of the Department of Business and Industry, any documents filed with the complaint, and any report or information resulting from an investigation of the complaint are confidential.

(Added to NAC by Comm’r of Financial Institutions by R109-06, eff. 6-28-2006)