SB44 - Revises provisions relating to financial services. (BDR 54-258)

- 83rd Session (2025) Senate Bill No. 44–Committee on Commerce and Labor CHAPTER.......... AN ACT relating to financial services; imposing certain duties on providers of certain financial services relating to the safeguarding of customer information; establishing certain standards relating to the financial condition and corporate governance of certain mortgage servicers; requiring the Commissioner of Mortgage Lending and the Commissioner of Financial Institutions to adopt certain regulations; providing penalties; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing federal regulations set forth standards for the safeguarding of customer information by certain businesses over which the Federal Trade Commission has jurisdiction that are engaged in activities that are financial in nature or incidental to such financial activities. (16 C.F.R. Part 314) The standards require such businesses to, among other things: (1) develop, implement and maintain a comprehensive information security program; and (2) notify the Federal Trade Commission of certain unauthorized acquisitions of customer information, which existing federal regulations designate as a “notification event.” (16 C.F.R. §§ 314.2-312.4) Sections 1, 2, 4, 7, 8, 38-41 and 43-47 of this bill specifically require persons that are providers of certain financial services in this State to comply with the requirements set forth in those federal regulations. Additionally, sections 1, 2, 4, 7, 8, 38-41 and 43-47 require such a person to: (1) maintain the information security program required by existing federal regulations as part of the books and records of the person; and (2) notify the Commissioner of Financial Institutions or Commissioner of Mortgage Lending, as applicable, of any notification event in accordance with the regulations adopted by the applicable commissioner. The persons to which the requirements apply include private professional guardians and private professional guardian companies, escrow agents and escrow agencies, mortgage companies, mortgage loan originators, mortgage servicers, foreclosure consultants, foreclosure purchasers, loan modification consultants, persons performing covered services for compensation, collection agencies and collection agents, persons operating deferred deposit loan services, high-interest loan services, title loan services and check- cashing services, consumer litigation funding companies, providers of earned wage access services, trust companies, student loan servicers, private education lenders, money transmitters and their authorized delegates, installment lenders and providers of debt-management services. Sections 3, 5, 32 and 42 of this bill require the Commissioner of Mortgage Lending and the Commissioner of Financial Institutions, as applicable, to adopt regulations establishing procedures and requirements for notifying the applicable commissioner of a notification event pursuant to sections 1, 2, 4, 7, 8, 38-41 and 43-47. Section 33 of this bill applies the definitions in existing law that govern foreclosure consultants, foreclosure purchasers, loan modification consultants and persons performing covered services for compensation to the provisions of section 7. Section 34 of this bill provides that the provisions of section 7 do not apply to certain persons. Existing law provides for the licensure and regulation of mortgage servicers by the Commissioner of Mortgage Lending. (NRS 645F.500-645F.540) Sections 9-31 – 2 – - 83rd Session (2025) of this bill set forth certain standards for the financial condition and corporate governance of certain mortgage servicers which are modeled, in general, after the Model State Regulatory Prudential Standards for Nonbank Mortgage Servicers approved by the Conference of State Bank Supervisors. Under sections 26 and 35 of this bill, the standards apply, with certain exceptions, to a “covered institution” which is defined in section 13 to mean, in general, a mortgage servicer that: (1) services 2,000 or more residential mortgage loans; and (2) operates in two or more states, districts or territories of the United States. Section 26 requires a covered institution to: (1) maintain certain quantities of assets for liquidity; and (2) have in place sound cash management and business operating plans. Section 27 requires a covered institution to establish and maintain a board of directors or similar body. Section 28 imposes certain duties on a board of directors or similar body relating to corporate governance and internal audits. Section 29 requires a covered institution to obtain an annual external audit. Section 30 requires a covered institution to: (1) establish a risk management program meeting certain requirements; (2) conduct an annual risk management assessment; and (3) maintain evidence of activities to manage risk performed throughout the year. Section 31 authorizes the Commissioner, under certain circumstances, to: (1) require a covered institution to satisfy additional conditions; and (2) waive or temporarily suspend any or all of the requirements set forth in sections 9-31. Sections 9-24 define words and terms for the purposes of sections 9-31. Section 36 of this bill authorizes the Commissioner of Mortgage Lending to adopt regulations to carry out the provisions requiring compliance with the standards for the safeguarding of customer information and the standards for the financial condition and corporate governance of certain mortgage servicers. Section 37 of this bill authorizes the Commissioner to: (1) investigate a mortgage servicer or applicant for a license as a mortgage servicer to ensure compliance with those provisions; and (2) take certain disciplinary actions against a mortgage servicer or applicant for a license as a mortgage servicer who violates those provisions. EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 628B of NRS is hereby amended by adding thereto a new section to read as follows: 1. A licensee shall comply with the requirements set forth in 16 C.F.R. Part 314. 2. In addition to complying with the requirements set forth in 16 C.F.R. Part 314, a licensee shall: (a) Maintain the information security program required by 16 C.F.R. § 314.3 as part of the books and records of the licensee; and (b) Notify the Commissioner of any notification event in accordance with the regulations adopted by the Commissioner pursuant to subsection 4 of NRS 658.105. 3. As used in this section: – 3 – - 83rd Session (2025) (a) “Information security program” has the meaning ascribed to it in 16 C.F.R. § 314.2. (b) “Notification event” has the meaning ascribed to it in 16 C.F.R. § 314.2. Sec. 2. Chapter 645A of NRS is hereby amended by adding thereto a new section to read as follows: 1. A licensee shall comply with the requirements set forth in 16 C.F.R. Part 314. 2. In addition to complying with the requirements set forth in 16 C.F.R. Part 314, a licensee shall: (a) Maintain the information security program required by 16 C.F.R. § 314.3 as part of the books and records of the licensee; and (b) Notify the Commissioner of any notification event in accordance with the regulations adopted by the Commissioner pursuant to NRS 645A.050. 3. As used in this section: (a) “Information security program” has the meaning ascribed to it in 16 C.F.R. § 314.2. (b) “Notification event” has the meaning ascribed to it in 16 C.F.R. § 314.2. Sec. 3. NRS 645A.050 is hereby amended to read as follows: 645A.050 1. Subject to the administrative control of the Director of the Department of Business and Industry, the Commissioner shall exercise general supervision and control over escrow agents and agencies doing business in the State of Nevada. 2. In addition to the other duties imposed upon him or her by law, the Commissioner shall: (a) Adopt such regulations as may be necessary for making this chapter effective. Such regulations must establish procedures and requirements for notifying the Commissioner of a notification event pursuant to section 2 of this act. (b) Conduct or cause to be conducted each year an examination of each escrow agency licensed pursuant to this chapter. (c) Conduct such investigations as may be necessary to determine whether any person has violated any provision of this chapter. (d) Conduct such examinations, investigations and hearings, in addition to those specifically provided for by law, as may be necessary and proper for the efficient administration of the laws of this State relating to escrow. – 4 – - 83rd Session (2025) (e) Classify as confidential the financial statements of an escrow agency and those records and information obtained by the Division which: (1) Are obtained from a governmental agency upon the express condition that they remain confidential. (2) Except as otherwise provided in NRS 645A.082, consist of information compiled by the Division in the investigation of possible violations of this chapter.  This paragraph does not limit examination by the Legislative Auditor or any other person pursuant to a court order. 3. An escrow agency may engage a certified public accountant to perform such an examination in lieu of the Division. In such a case, the examination must be equivalent to the type of examination made by the Division and the expense must be borne by the escrow agency being examined. 4. The Commissioner shall determine whether an examination performed by an accountant pursuant to subsection 3 is equivalent to an examination conducted by the Division. The Commissioner may examine any area of the operation of an escrow agency if the Commissioner determines that the examination of that area is not equivalent to an examination conducted by the Division. Sec. 4. Chapter 645B of NRS is hereby amended by adding thereto a new section to read as follows: 1. A mortgage company and mortgage loan originator shall comply with the requirements set forth in 16 C.F.R. Part 314. 2. In addition to complying with the requirements set forth in 16 C.F.R. Part 314, a mortgage company and mortgage loan originator shall: (a) Maintain the information security program required by 16 C.F.R. § 314.3 as part of the books and records of the mortgage company or mortgage loan originator; and (b) Notify the Commissioner of any notification event in accordance with the regulations adopted by the Commissioner pursuant to NRS 645B.060. 3. As used in this section: (a) “Information security program” has the meaning ascribed to it in 16 C.F.R. § 314.2. (b) “Notification event” has the meaning ascribed to it in 16 C.F.R. § 314.2. Sec. 5. NRS 645B.060 is hereby amended to read as follows: 645B.060 1. Subject to the administrative control of the Director of the Department of Business and Industry, the Commissioner shall exercise general supervision and control over – 5 – - 83rd Session (2025) mortgage companies and mortgage loan originators doing business in this State. 2. In addition to the other duties imposed upon him or her by law, the Commissioner shall: (a) Adopt regulations: (1) Setting forth the requirements for an investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property. The regulations must include, without limitation, the minimum financial conditions that the investor must comply with before becoming an investor. (2) Establishing reasonable limitations and guidelines on loans made by a mortgage company to a director, officer, mortgage loan originator or employee of the mortgage company. (b) Adopt any other regulations that are necessary to carry out the provisions of this chapter, except as to loan fees. Such regulations must establish procedures and requirements for notifying the Commissioner of a notification event pursuant to section 4 of this act. (c) Conduct such investigations as may be necessary to determine whether any person has violated any provision of this chapter, a regulation adopted pursuant to this chapter or an order of the Commissioner. (d) Conduct, at his or her discretion, periodic standard examinations of each mortgage company doing business in this State which must include, without limitation, a formal exit review with the mortgage company. The Commissioner shall adopt regulations prescribing: (1) Standards for determining the rating of each mortgage company based upon the results of a periodic standard examination; and (2) Procedures for resolving any objections made by the mortgage company to the results of a periodic standard examination. The results of a periodic standard examination may not be opened to public inspection pursuant to NRS 645B.090 until after a period of time set by the Commissioner to determine any objections made by the mortgage company. (e) Conduct such other examinations, periodic or special audits, investigations and hearings as may be necessary for the efficient administration of the laws of this State regarding mortgage companies and mortgage loan originators. The Commissioner shall adopt regulations specifying the general guidelines that will be followed when a periodic or special audit of a mortgage company is conducted pursuant to this chapter. – 6 – - 83rd Session (2025) (f) Classify as confidential certain records and information obtained by the Division when those matters are obtained from a governmental agency upon the express condition that they remain confidential. This paragraph does not limit examination by: (1) The Legislative Auditor; or (2) The Department of Taxation if necessary to carry out the provisions of chapters 363A and 363C of NRS. (g) Conduct such examinations and investigations as are necessary to ensure that mortgage companies and mortgage loan originators meet the requirements of this chapter for obtaining a license, both at the time of the application for a license and thereafter on a continuing basis. 3. For each special audit, investigation or examination, a mortgage company or mortgage loan originator shall pay a fee based on the rate established pursuant to NRS 645F.280. Sec. 6. Chapter 645F of NRS is hereby amended by adding thereto the provisions set forth as sections 7 to 31, inclusive, of this act. Sec. 7. 1. A foreclosure consultant, foreclosure purchaser, loan modification consultant or person performing covered services for compensation shall comply with the req [Text truncated for display. 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