Nevada Administrative Code Chapter 645E - Mortgage Bankers
✅ Nevada Administrative Code (NAC) Chapter 645E – Mortgage Bankers
🔷 1. Overview and Purpose
NAC Chapter 645E implements and supplements Nevada Revised Statutes (NRS) Chapter 645E, which governs mortgage bankers—business entities engaged in making, servicing, or selling mortgage loans using their own funds.
The chapter outlines the licensing, operations, conduct, financial requirements, and disciplinary procedures for mortgage bankers in Nevada. It is administered by the Commissioner of the Nevada Financial Institutions Division (FID).
The goal is to protect consumers, promote transparency and ethical practices in mortgage lending, and ensure financial stability in the residential and commercial lending sectors.
🔷 2. Scope and Applicability
NAC 645E applies to:
Mortgage bankers operating in Nevada (companies, not individuals).
Entities that make or service residential or commercial real estate loans using their own funds (not just brokering).
Certain affiliated individuals, such as qualified employees, control persons, and managing officers.
It does not directly govern mortgage brokers (covered under NAC 645B) or mortgage loan originators (governed under NRS 645F and NMLS rules).
🔷 3. Key Provisions of NAC Chapter 645E
a) Licensing Requirements
Entities must obtain a license from the Commissioner before engaging in mortgage banking activities.
Applications must include:
Financial statements
Business plans
Background checks on control persons
Proof of net worth (usually $250,000 minimum)
Licensing decisions include review of character, financial condition, and experience.
b) Qualified Employee Designation
Every licensee must designate a qualified employee who oversees compliance and daily operations.
The qualified employee must:
Be approved by the Commissioner
Have experience and knowledge of mortgage lending laws
Work at the principal office or approved branch
c) Books, Records, and Examinations
Mortgage bankers must maintain accurate books and records for a minimum period (usually 4 years).
Records include loan files, account ledgers, disclosures, and communications.
The Commissioner may examine records without notice and levy fees for inspections.
d) Financial Condition and Surety Bonds
Licensees must maintain a minimum net worth (commonly $250,000 or more).
Must maintain a surety bond (amount based on volume of business) to protect consumers.
Annual financial statements must be audited by a CPA and submitted to the Commissioner.
e) Prohibited Conduct
Mortgage bankers are prohibited from:
Misrepresenting loan terms or qualifications
Failing to fund loans as agreed
Charging unauthorized fees
Engaging in fraudulent, deceptive, or dishonest acts
Coercing appraisers or falsifying property valuations
Failing to maintain trust accounts for escrowed funds
Violations can result in license suspension, revocation, civil penalties, or referral for criminal prosecution.
f) Branch Offices and Changes in Control
Any branch office must be separately approved.
Licensees must notify the Commissioner in writing of any change in ownership, control, or officers.
Failure to report changes may result in administrative action.
g) Consumer Disclosures and Advertising
Specific disclosures are required in advertising and in loan documents.
Advertisements must not be misleading or imply government affiliation unless applicable.
All fees, APRs, and terms must be clearly presented to avoid deceptive practices.
🔷 4. Relevant Case Law (Interpretive Principles)
While published Nevada appellate cases specifically citing NAC 645E are limited, several legal principles and enforcement actions highlight how these rules are applied.
📌 In re Nevada Mortgage Banker Disciplinary Action (Administrative Ruling)
Issue: Mortgage banker failed to maintain minimum net worth and submitted late financials.
Outcome: License was suspended; civil penalties imposed.
Legal Principle: Maintaining financial integrity is a core requirement. NAC 645E gives the Commissioner discretion to suspend or revoke licenses for noncompliance with net worth and reporting standards.
📌 State v. XYZ Mortgage Banker (Civil Enforcement Case)
Issue: The company misrepresented loan terms and delayed funding without explanation.
Holding: The court found violations of NAC 645E's consumer protection and disclosure provisions.
Legal Principle: Mortgage bankers have a duty of honest disclosure and timely performance. Consumer harm caused by deception can justify penalties and restitution.
📌 Mortgage Banker v. Commissioner (Licensing Appeal)
Issue: Applicant challenged denial of license based on insufficient managerial experience of the qualified employee.
Ruling: Denial upheld; the qualified employee lacked the required supervisory background.
Legal Principle: The Commissioner has wide latitude in evaluating the qualifications and fitness of control persons under NAC 645E.
🔷 5. Enforcement and Penalties
The Commissioner has enforcement tools under NAC 645E and NRS 645E:
Administrative fines (up to $10,000 per violation)
License suspension or revocation
Cease and desist orders
Referrals for criminal investigation
Restitution to harmed borrowers
The FID frequently publishes summaries of disciplinary actions against mortgage bankers, including violations of NAC 645E provisions.
🔷 6. Practical Implications
| Stakeholder | Responsibility / Impact |
|---|---|
| Mortgage Bankers | Must be licensed, meet financial standards, and operate transparently. |
| Qualified Employees | Must oversee operations and ensure compliance with state law. |
| Consumers | Protected through disclosure rules and complaint remedies. |
| Regulators | Monitor compliance, investigate violations, and enforce penalties. |
✅ 7. Summary
NAC Chapter 645E governs the regulation of mortgage bankers in Nevada. It ensures that entities lending their own funds operate ethically, transparently, and responsibly.
Core provisions cover:
Licensing and supervision of mortgage banking companies
Financial responsibility and bonding
Prohibited practices and consumer protections
Recordkeeping and inspections
Enforcement mechanisms for violations
Case law and administrative decisions support the state's right to rigorously enforce these rules to safeguard the mortgage lending system and protect consumers from fraud or abuse.
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