The Nevada Division of Mortgage Lending (“Division”) recently adopted new regulations establishing substantive requirements and licensing application procedures for mortgage servicers in Nevada. The Division has also posted New Application Checklists on the Nationwide Multistate Licensing System (“NMLS”) for the newly-required Mortgage Servicer License and Supplemental Mortgage Servicer License.
The new regulation, Regulation R120-15, implements the licensing requirements for mortgage servicers under Nevada Assembly Bill 480 (“AB 480”), which went into effect on January 1, 2016. Under AB 480, a “mortgage servicer” is defined to mean a person who directly services a mortgage loan, or who is responsible for interacting with a borrower, managing a loan account on a daily basis, including, without limitation, collecting and crediting periodic loan payments, managing any escrow account or enforcing the note and security instrument, either as the current owner of the promissory note or as the authorized agent of the current owner of the promissory note. The term includes a person providing such services by contract as a subservicing agent to a master servicer by contract. Note that AB 480 also provides certain express exemptions from the mortgage servicer license requirement.
Under Regulation R120-15 and the applicable New Application Checklist, an applicant for a Mortgage Servicer License must provide, among other specified items: (1) a financial statement demonstrating a minimum net worth of $100,000; (2) a surety bond in an amount ranging from $100,000 to $300,000 depending on the applicant’s mortgage servicing volume; and (3) the name of a designed Qualified Employee with at least 2 years of verifiable experience in the business of servicing mortgage loans within the immediately preceding 5 years and who meets certain other specified requirements. Note that licensed mortgage servicers are not required to have an office location in Nevada.
The Supplemental Mortgage Servicer License is required for a person that is currently licensed as a mortgage broker or mortgage banker in Nevada and will act as a mortgage servicer in relation to mortgage loans that the person did not make or arrange under their qualifying license (i.e., to engage in third party servicing). The application requirements for the Supplemental Mortgage Servicer License are substantially similar to those for the Mortgage Servicer License, although the Supplemental Mortgage Servicer License has a lower application fee.
The Division began accepting applications for the Mortgage Servicer License and Supplemental Mortgage Servicer License through the NMLS on December 24, 2015. In a memorandum published on its website and dated December 21, 2015 (“Memo No. 2015-003”), the Division stated that a person requiring licensure under AB 480 will have 30 days after the Division begins accepting applications to submit a completed application. If a person submits a completed application within the 30 day period, the Division will not consider continued servicing to be unlicensed activity while the application is being processed and reviewed. However, note that any person who is required to be licensed as a mortgage servicer is subject to all other requirements and obligations under AB 480 and Regulation R120-15 effective January 1, 2016.
Memo No. 2015-003 also contains responses to certain frequently asked questions concerning the new licensing requirements, including clarification that a license is not required if a person only holds mortgage servicing rights and does not otherwise engage in the activities of a “mortgage servicer” as defined under AB 480 and Regulation R120-15.
Please note that Regulation R120-15 also imposes a number of substantive requirements on mortgage servicers in Nevada (including, for example, a duty of good faith and fair dealing in connection with the servicing of each borrower’s mortgage loan). Due to the number and complexity of these requirements, we recommend that you independently review the new regulation in order to ensure compliance therewith.
The mortgage servicer regulations under Regulation R120-15 went into effect on January 1, 2016. A copy of Regulation R120-15 can be found at: http://mld.nv.gov/uploadedFiles/mldnvgov/content/About/R120-15AdoptedRegulation12-23-2015.pdf.
A copy of Memo No. 2015-003 can be found at: http://mld.nv.gov/uploadedFiles/mldnvgov/content/About/2015-003-ServicerNotificationLetter-MortgageServicer12-21-2015.pdf.