Assembly Bill 152

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Assembly Bill No. 152–Assemblymen Conklin, Bobzien,
Oceguera, Spiegel, McClain; Aizley, Dondero Loop and
Mastroluca
Joint Sponsor: Senator Parks
CHAPTER……….
AN ACT relating to mortgage lending; defining the term “loan
modification consultant”; requiring certain mortgage lending
professionals to be licensed; establishing certain requirements
for the provision of services by certain mortgage lending
professionals; establishing provisions governing
compensation of certain mortgage lending professionals;
establishing certain powers of the Commissioner of Mortgage
Lending; revising provisions relating to the imposition of
certain fees and assessments on certain mortgage lending
professionals; revising the definition of “homeowner” as it
applies to services performed by certain mortgage lending
professionals; revising provisions governing the applicability
of requirements regarding foreclosure consultants and loan
modification consultants; and providing other matters
properly relating thereto.
Legislative Counsel’s Digest:
Section 2 of this bill defines the term “loan modification consultant.”
Existing law does not currently require a foreclosure consultant to be licensed.
(NRS 645F.300-645F.450) Section 3 of this bill requires the Commissioner of
Mortgage Lending to adopt separate regulations for the licensing of a person who
performs any of a variety of specified services for compensation, a foreclosure
consultant and a loan modification consultant.
Section 3.1 of this bill requires such persons to execute a written contract with
a homeowner before providing certain services for compensation. Section 3.1 also
requires the Commissioner to adopt regulations describing the information that
must be contained in such a written contract.
Sections 3.3 and 6.5 of this bill require a person who performs certain services
for compensation, a foreclosure consultant and a loan modification consultant to
deposit any money received as compensation for the performance of certain
services in a trust account. Section 3.3 also requires such persons to maintain
certain records regarding such trust accounts and prohibits withdrawals from such
trust accounts until the completion of certain services as agreed upon in a written
contract for the performance of such services. Section 3.3 further authorizes the
Commissioner or his authorized agents to inspect and audit the records associated
with the trust accounts.
Section 3.5 of this bill grants certain additional powers to the Commissioner
with regard to the conduct of any examination, periodic or special audit,
investigation or hearing.
Section 3.7 of this bill requires the Commissioner to adopt regulations to
establish rates to be paid by a person who performs certain services for
compensation, a foreclosure consultant and a loan modification consultant for
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supervision and examinations by the Commissioner or the Division of Mortgage
Lending of the Department of Business and Industry. (NRS 645F.280) Section 3.9
of this bill requires the Commissioner to collect an assessment from such persons
for deposit in the Fund for Mortgage Lending. (NRS 645F.290)
Section 5 of this bill revises the definition of “homeowner” as it applies to
services performed by foreclosure consultants by expanding the definition to
include any record owner of residence, rather than only the record owner of a
residence in foreclosure at the time the notice of the pendency of an action for
foreclosure is recorded or the notice of default and election to sell is recorded.
(NRS 645F.360)
Section 6 of this bill provides that an attorney at law is exempt from the
provisions governing a person who performs any covered service for compensation,
a loan modification consultant, a foreclosure consultant or a foreclosure purchaser
unless the services rendered by the attorney are performed in the course and scope
of his employment by or other affiliation with a mortgage broker or mortgage
agent. (NRS 645F.380)
Section 6.5 of this bill provides that the violation of certain provisions by such
persons shall be deemed to constitute mortgage lending fraud, as that term is
described in NRS 205.372. (NRS 645F.400)
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. Chapter 645F of NRS is hereby amended by adding
thereto the provisions set forth as sections 2 to 3.5, inclusive, of this
act.
Sec. 2. “Loan modification consultant” means a person who,
directly or indirectly, makes any solicitation, representation or
offer to a homeowner to perform for compensation, or who, for
compensation, performs any act that the person represents will
adjust the terms of a mortgage loan in a manner not provided for
in the original or previously modified mortgage loan. Such an
adjustment includes, without limitation:
1. A change in the payment amount;
2. A change in the loan amount;
3. A loan forbearance;
4. A change in the loan maturity; and
5. A change in the interest rate.
Sec. 3. 1. The Commissioner shall adopt separate
regulations for the licensing of:
(a) A person who performs any covered service for
compensation;
(b) A foreclosure consultant; and
(c) A loan modification consultant.
2. The regulations must prescribe, without limitation:
(a) The method and form of application for a license;
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(b) The method and form of the issuance, denial or renewal of
a license;
(c) The grounds and procedures for the revocation, suspension
or nonrenewal of a license; and
(d) The imposition of reasonable fees for application and
licensure.
Sec. 3.1. 1. A person who performs any covered service for
compensation, a foreclosure consultant and a loan modification
consultant shall execute a written contract with a homeowner
before providing any covered service.
2. The Commissioner shall adopt regulations describing the
information that must be contained in a written contract for
covered services.
Sec. 3.3. 1. All money paid to a person who performs any
covered service for compensation, a foreclosure consultant or a
loan modification consultant by a person in full or partial payment
of covered services to be performed:
(a) Must be deposited in a separate checking account located
in a federally insured depository financial institution or credit
union in this State which must be designated a trust account;
(b) Must be kept separate from money belonging to the person
who performs any covered service for compensation, the
foreclosure consultant or the loan modification consultant; and
(c) Must not be withdrawn by the person who performs any
covered service for compensation, foreclosure consultant or loan
modification consultant until the completion of every covered
service as agreed upon in the contract for covered services.
2. The person who performs any covered service for
compensation, the foreclosure consultant or the loan modification
consultant shall keep records of all money deposited in a trust
account pursuant to subsection 1. The records must clearly
indicate the date and from whom he received money, the date
deposited, the dates of withdrawals, and other pertinent
information concerning the transaction, and must show clearly for
whose account the money is deposited and to whom the money
belongs. The person who performs any covered service for
compensation, the foreclosure consultant or the loan modification
consultant shall balance each separate trust account at least
monthly and provide to the Commissioner, on a form provided by
the Commissioner, an annual accounting which shows an annual
reconciliation of each separate trust account. All such records and
money are subject to inspection and audit by the Commissioner
and his authorized representatives.
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3. Each person who performs any covered service for
compensation, each foreclosure consultant and each loan
modification consultant shall notify the Commissioner of the
names of the banks and credit unions in which he maintains trust
accounts and specify the names of the accounts on forms provided
by the Commissioner.
4. As used in this section, “completion of every covered
service” means:
(a) Successful results with respect to what the performance of
each covered service was intended to yield for the homeowner, as
described in the contract for covered services; or
(b) If the performance of one or more covered service has an
unsuccessful result with respect to what the performance of that
covered service was intended to yield for the homeowner, a
showing that every reasonable effort was made, under the
particular circumstances, to obtain successful results,

as verified in a written statement provided to the homeowner.
Sec. 3.5. 1. In the conduct of any examination, periodic or
special audit, investigation or hearing, the Commissioner may:
(a) Compel the attendance of any person by subpoena.
(b) Administer oaths.
(c) Examine any person under oath concerning the business
and conduct of affairs of any person subject to the provisions of
this chapter and in connection therewith require the production of
any books, records or papers relevant to the inquiry.
2. Any person subpoenaed under the provisions of this
section who willfully refuses or willfully neglects to appear at the
time and place named in the subpoena or to produce books,
records or papers required by the Commissioner, or who refuses to
be sworn or answer as a witness, is guilty of a misdemeanor.
3. In addition to the authority to recover attorney’s fees and
costs pursuant to any other statute, the Commissioner may assess
against and collect from a person all costs, including, without
limitation, reasonable attorney’s fees, that are attributable to any
examination, periodic or special audit, investigation or hearing
that is conducted to examine or investigate the conduct, activities
or business of the person pursuant to this chapter.
Sec. 3.7. NRS 645F.280 is hereby amended to read as follows:
645F.280 1. The Commissioner shall establish by regulation
rates to be paid by escrow agencies, mortgage agents, mortgage
brokers , [and] mortgage bankers , persons who perform any
covered service for compensation, foreclosure consultants and
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loan modification consultants for supervision and examinations by
the Commissioner or the Division.
2. In establishing a rate pursuant to subsection 1, the
Commissioner shall consider:
(a) The complexity of the various examinations to which the rate
applies;
(b) The skill required to conduct the examinations;
(c) The expenses associated with conducting the examination
and preparing a report; and
(d) Any other factors the Commissioner deems relevant.
Sec. 3.9. NRS 645F.290 is hereby amended to read as follows:
645F.290 1. The Commissioner shall collect an assessment
pursuant to this section from each:
(a) Escrow agency that is supervised pursuant to chapter 645A
of NRS;
(b) Mortgage broker that is supervised pursuant to chapter 645B
of NRS; [and]
(c) Mortgage banker that is supervised pursuant to chapter 645E
of NRS [.] ; and
(d) Person who performs any covered service for
compensation, each foreclosure consultant and each loan
modification consultant that is supervised pursuant to this
chapter.
2. The Commissioner shall determine the total amount of all
assessments to be collected from the entities identified in subsection
1, but that amount must not exceed the amount necessary to recover
the cost of legal services provided by the Attorney General to the
Commissioner and to the Division. The total amount of all
assessments collected must be reduced by any amounts collected by
the Commissioner from an entity for the recovery of the costs of
legal services provided by the Attorney General in a specific case.
3. The Commissioner shall collect from each entity identified
in subsection 1 an assessment that is based on:
(a) An equal basis; or
(b) Any other reasonable basis adopted by the Commissioner.
4. The assessment required by this section is in addition to any
other assessment, fee or cost required by law to be paid by an entity
identified in subsection 1.
5. Money collected by the Commissioner pursuant to this
section must be deposited in the Fund for Mortgage Lending created
by NRS 645F.270.
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Sec. 4. NRS 645F.300 is hereby amended to read as follows:
645F.300 As used in NRS 645F.300 to 645F.450, inclusive,
and sections 2 to 3.5, inclusive, of this act, unless the context
otherwise requires, the words and terms defined in NRS 645F.310 to
645F.370, inclusive, and section 2 of this act have the meanings
ascribed to them in those sections.
Sec. 5. NRS 645F.360 is hereby amended to read as follows:
645F.360 “Homeowner” means the record owner of a
residence , including, without limitation, the record owner of a
residence in foreclosure at the time the notice of the pendency of an
action for foreclosure is recorded pursuant to NRS 14.010 or the
notice of default and election to sell is recorded pursuant to
NRS 107.080.
Sec. 6. NRS 645F.380 is hereby amended to read as follows:
645F.380 The provisions of NRS 645F.300 to 645F.450,
inclusive, and sections 2 to 3.5, inclusive, of this act do not apply
to, and the terms “foreclosure consultant” and “foreclosure
purchaser” do not include:
1. An attorney at law rendering services in the performance of
his duties as an attorney at law [;] , unless the attorney at law is
rendering those services in the course and scope of his
employment by or other affiliation with a mortgage broker or
mortgage agent;
2. A person, firm, company or corporation licensed to engage
in the business of debt adjustment pursuant to chapter 676 of NRS
while engaging in that business;
3. [A person licensed as a real estate broker, broker-salesman
or salesman pursuant to chapter 645 of NRS while acting under the
authority of that license;
4.] A person or the authorized agent of a person acting under
the provisions of a program sponsored by the Federal Government,
this State or a local government, including, without limitation, the
Department of Housing and Urban Development, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage
Association or the Federal Home Loan Bank;
[5.] 4. A person who holds or is owed an obligation secured by
a mortgage or other lien on a residence in foreclosure if the person
performs services in connection with this obligation or lien and the
obligation or lien did not arise as the result of or as part of a
proposed foreclosure reconveyance;
[6.] 5. Any person doing business under the laws of this State
or of the United States relating to banks, trust companies, savings
and loan associations, industrial loan and thrift companies, regulated
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lenders, credit unions, insurance companies, or a mortgagee which
is a United States Department of Housing and Urban Development
approved mortgagee and any subsidiary or affiliate of those persons,
and any agent or employee of those persons while engaged in the
business of those persons;
[7.] 6. A person , other than a person who is licensed
pursuant to section 3 of this act, who is licensed [as an escrow
agent, title agent, mortgage agent, mortgage broker or mortgage
banker] pursuant to chapter 692A or any chapter [645A, 692A,
645B or 645E] of title 54 of NRS [, respectively,] while acting
under the authority of his license;
[8.] 7. A nonprofit agency or organization that offers credit
counseling or advice to a homeowner of a residence in foreclosure
or a person in default on a loan; or
[9.] 8. A judgment creditor of the homeowner whose claim
accrued before the recording of the notice of the pendency of an
action for foreclosure against the homeowner pursuant to NRS
14.010 or the recording of the notice of default and election to sell
pursuant to NRS 107.080.
Sec. 6.5. NRS 645F.400 is hereby amended to read as follows:
645F.400 1. A person who performs any covered service, a
foreclosure consultant and a loan modification consultant shall not:
[1. Claim,]
(a) Claim, demand, charge, collect or receive any compensation
[until after the foreclosure consultant has fully performed each
covered service that he contracted to perform or represented he
would perform.
2.] except in accordance with section 3.3 of this act.
(b) Claim, demand, charge, collect or receive any fee, interest or
other compensation for any reason which is not fully disclosed to
the homeowner.
[3.] (c) Take any wage assignment, lien on real or personal
property, assignment of a homeowner’s equity or other interest in a
residence in foreclosure or other security for the payment of
compensation. Any such security is void and unenforceable.
[4.] (d) Receive any consideration from any third party in
connection with a covered service provided to a homeowner unless
the consideration is first fully disclosed to the homeowner.
[5.] (e) Acquire, directly or indirectly, any interest in the
residence in foreclosure of a homeowner with whom the foreclosure
consultant has contracted to perform a covered service.
[6.] (f) Accept a power of attorney from a homeowner for any
purpose, other than to inspect documents as provided by law.
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2. In addition to any other penalty, a violation of any
provision of this section shall be deemed to constitute mortgage
lending fraud for the purposes of NRS 205.372.
Sec. 7. NRS 645F.430 is hereby amended to read as follows:
645F.430 A foreclosure purchaser who engages in any conduct
that operates as a fraud or deceit upon a homeowner in connection
with a transaction that is subject to the provisions of NRS 645F.300
to 645F.450, inclusive, and sections 2 to 3.5, inclusive, of this act,
including, without limitation, a foreclosure reconveyance, is guilty
of a gross misdemeanor and shall be punished by imprisonment in
the county jail for not more than 1 year, or by a fine of not more
than $50,000, or by both fine and imprisonment.
Sec. 8. NRS 645F.440 is hereby amended to read as follows:
645F.440 1. In addition to the penalty provided in NRS
645F.430 and except as otherwise provided in subsection 5, if a
foreclosure purchaser engages in any conduct that operates as a
fraud or deceit upon a homeowner in connection with a transaction
that is subject to the provisions of NRS 645F.300 to 645F.450,
inclusive, and sections 2 to 3.5, inclusive, of this act, including,
without limitation, a foreclosure reconveyance, the transaction in
which the foreclosure purchaser acquired title to the residence in
foreclosure may be rescinded by the homeowner within 2 years after
the date of the recording of the conveyance.
2. To rescind a transaction pursuant to subsection 1, the
homeowner must give written notice to the foreclosure purchaser
and a successor in interest to the foreclosure purchaser, if the
successor in interest is not a bona fide purchaser, and record that
notice with the recorder of the county in which the property is
located. The notice of rescission must contain:
(a) The name of the homeowner, the foreclosure purchaser and
any successor in interest who holds title to the property; and
(b) A description of the property.
3. Within 20 days after receiving notice pursuant to
subsection 2:
(a) The foreclosure purchaser and the successor in interest, if the
successor in interest is not a bona fide purchaser, shall reconvey to
the homeowner title to the property free and clear of encumbrances
which were created subsequent to the rescinded transaction and
which are due to the actions of the foreclosure purchaser; and
(b) The homeowner shall return to the foreclosure purchaser any
consideration received from the foreclosure purchaser in exchange
for the property.
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4. If the foreclosure purchaser has not reconveyed to the
homeowner title to the property within the period described in
subsection 3, the homeowner may bring an action to enforce the
rescission in the district court of the county in which the property is
located.
5. A transaction may not be rescinded pursuant to this section
if the foreclosure purchaser has transferred the property to a bona
fide purchaser.
6. As used in this section, “bona fide purchaser” means any
person who purchases an interest in a residence in foreclosure from
a foreclosure purchaser in good faith and for valuable consideration
and who does not know or have reasonable cause to believe that the
foreclosure purchaser engaged in conduct which violates
subsection 1.
Sec. 9. NRS 645F.450 is hereby amended to read as follows:
645F.450 The rights, remedies and penalties provided pursuant
to the provisions of NRS 645F.300 to 645F.450, inclusive, and
sections 2 to 3.5, inclusive, of this act are cumulative and do not
abrogate and are in addition to any other rights, remedies and
penalties that may exist at law or in equity, including, without
limitation, any criminal penalty that may be imposed pursuant to
NRS 645F.430.
Sec. 10. NRS 205.372 is hereby amended to read as follows:
205.372 1. A person who, with the intent to defraud a
participant in a mortgage lending transaction:
(a) Knowingly makes a false statement or misrepresentation
concerning a material fact or deliberately conceals or fails to
disclose a material fact;
(b) Knowingly uses or facilitates the use of a false statement or
misrepresentation made by another person concerning a material
fact or deliberately uses or facilitates the use of another person’s
concealment or failure to disclose a material fact;
(c) Receives any proceeds or any other money in connection
with a mortgage lending transaction that the person knows resulted
from a violation of paragraph (a) or (b);
(d) Conspires with another person to violate any of the
provisions of paragraph (a), (b) or (c); or
(e) Files or causes to be filed with a county recorder any
document that the person knows to include a misstatement,
misrepresentation or omission concerning a material fact,

commits the offense of mortgage lending fraud which is a
category C felony and, upon conviction, shall be punished by
imprisonment in the state prison for a minimum term of not less
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than 1 year and a maximum term of not more than 10 years, or by a
fine of not more than $10,000, or by both fine and imprisonment.
2. A person who engages in a pattern of mortgage lending
fraud or conspires or attempts to engage in a pattern of mortgage
lending fraud is guilty of a category B felony and, upon conviction,
shall be punished by imprisonment in the state prison for a
minimum term of not less than 3 years and a maximum term of not
more than 20 years, or by a fine of not more than $50,000, or by
both fine and imprisonment.
3. Each mortgage lending transaction in which a person
violates any provision of subsection 1 constitutes a separate
violation.
4. Except as otherwise provided in this subsection, if a lender
or any agent of the lender is convicted of the offense of mortgage
lending fraud in violation of this section, the mortgage lending
transaction with regard to which the fraud was committed may be
rescinded by the borrower within 6 months after the date of the
conviction if the borrower gives written notice to the lender and
records that notice with the recorder of the county in which the
mortgage was recorded. A mortgage lending transaction may not be
rescinded pursuant to this subsection if the lender has transferred the
mortgage to a bona fide purchaser.
5. The Attorney General may investigate and prosecute a
violation of this section.
6. As used in this section:
(a) “Bona fide purchaser” means any person who purchases a
mortgage in good faith and for valuable consideration and who does
not know or have reasonable cause to believe that the lender or any
agent of the lender engaged in mortgage lending fraud in violation
of this section.
(b) “Mortgage lending transaction” means any transaction
between two or more persons for the purpose of making or
obtaining, attempting to make or obtain, or assisting another person
to make or obtain a loan that is secured by a mortgage or other lien
on residential real property. The term includes, without limitation:
(1) The solicitation of a person to make or obtain the loan;
(2) The representation or offer to represent another person to
make or obtain the loan;
(3) The negotiation of the terms of the loan;
(4) The provision of services in connection with the loan;
and
(5) The execution of any document in connection with
making or obtaining the loan.
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(c) “Participant in a mortgage lending transaction” includes,
without limitation:
(1) A borrower as defined in NRS 598D.020;
(2) An escrow agent as defined in NRS 645A.010;
(3) A foreclosure consultant as defined in NRS 645F.320;
(4) A foreclosure purchaser as defined in NRS 645F.330;
(5) An investor as defined in NRS 645B.0121;
(6) A lender as defined in NRS 598D.050;
(7) A loan modification consultant as defined in section 2
of this act;
(8) A mortgage agent as defined in NRS 645B.0125;
[(8)] (9) A mortgage banker as defined in NRS 645E.100;
and
[(9)] (10) A mortgage broker as defined in NRS 645B.0127.
(d) “Pattern of mortgage lending fraud” means one or more
violations of a provision of subsection 1 committed in two or more
mortgage lending transactions which have the same or similar
intents, results, accomplices, victims or methods of commission, or
are otherwise interrelated by distinguishing characteristics.
Sec. 10.5. The Commissioner of Mortgage Lending shall
adopt regulations required by sections 3 and 3.1 of this act and
submit the regulations to the Legislative Commission for review
within 90 days after the passage and approval of this act.
Sec. 11. This act becomes effective:
1. Upon passage and approval for the purposes of adopting
regulations and performing any other preparatory actions that are
necessary to carry out the provisions of this act; and
2. On July 1, 2009 for all other purposes.
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Source: http://www.leg.state.nv.us/75th2009/Bills/AB/AB152_EN.pdf