New Exemption Under Nevada Mortgage Broker Provisions

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On May 28, 2019, the Nevada legislature passed Assembly Bill 398, which exempts wholesale lenders who only fund or purchase commercial mortgage loans from the mortgage broker licensing and substantive provisions.  The amendment will be effective January 1, 2020.

Note that pursuant to Nevada Assembly Bill 468, which was enacted on June 8, 2017, and is effective January 1, 2020, Nevada will repeal the provisions of law that regulate mortgage bankers and will revise the provisions of law that currently regulate only mortgage brokers so that these provisions will apply to mortgage companies.  The term “mortgage company” will include all persons who previously were mortgage brokers or mortgage bankers.

Existing Nevada law defines the term “wholesale lender” as a person who holds himself out as being able to make loans, or buy or sell notes, secured by liens on real property, or to serve for hire as an agent for any person who has money to lend if the loan is or will be secured by a lien on real property, but does not directly take or receive an application from a borrower for, or negotiate any terms with a borrower relating to, such loans.  Under Nevada Assembly Bill 468, effective January 1, 2020, the term “commercial mortgage loan” is defined as a loan primarily for a business, commercial or agricultural purpose that directly or indirectly is secured by a lien on commercial property and is created with the consent of the owner of the commercial property.  The term “commercial property” is defined under Nevada AB 468 as any real property which is located in Nevada and which is neither used as a dwelling nor upon which a dwelling is constructed or intended to be constructed.  For these purposes, the term “dwelling” means a residential structure or mobile home which contains one to four family housing units, or individual units of condominiums or cooperatives.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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