Nevada Revised Statutes 645B.175 – Trust or escrow account required for money received from investor to fund loan; trust or escrow account required for money received from debtor to repay loan; release of money; accounting to investor, debtor and Com…
1. Except as otherwise provided in this section, all money received by a mortgage company and his or her mortgage loan originators from an investor to acquire ownership of or a beneficial interest in a loan secured by a lien on real property must:
Terms Used In Nevada Revised Statutes 645B.175
- Attorney-in-fact: A person who, acting as an agent, is given written authorization by another person to transact business for him (her) out of court.
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- mortgage: includes a deed of trust. See Nevada Revised Statutes 0.037
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- person: means a natural person, any form of business or social organization and any other nongovernmental legal entity including, but not limited to, a corporation, partnership, association, trust or unincorporated organization. See Nevada Revised Statutes 0.039
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
(a) Be deposited in:
(1) An insured depository financial institution; or
(2) An escrow account which is controlled by a person who is independent of the parties and subject to instructions regarding the account which are approved by the parties.
(b) Be kept separate from money:
(1) Belonging to the mortgage company in an account appropriately named to indicate that the money does not belong to the mortgage company.
(2) Received pursuant to subsection 4.
2. Except as otherwise provided in this section, the amount held in trust pursuant to subsection 1 must be released:
(a) Upon completion of the loan, including proper recordation of the respective interests or release, or upon completion of the transfer of the ownership or beneficial interest therein, to the debtor or the debtor’s designee less the amount due the mortgage company for the payment of any fee or service charge;
(b) If the loan or the transfer thereof is not consummated, to each investor who furnished the money held in trust; or
(c) Pursuant to any instructions regarding the escrow account.
3. The amount held in trust pursuant to subsection 1 must not be released to the debtor or the debtor’s designee unless:
(a) The amount released is equal to the total amount of money which is being loaned to the debtor for that loan, less the amount due the mortgage company for the payment of any fee or service charge; and
(b) The mortgage company has provided a written instruction to a title agent or title insurer requiring that a lender’s policy of title insurance or appropriate title endorsement, which names as an insured each investor who owns a beneficial interest in the loan, be issued for the real property securing the loan.
4. Except as otherwise provided in this section, all money paid to a mortgage company and his or her mortgage loan originators by a person in full or in partial payment of a loan secured by a lien on real property, must:
(a) Be deposited in:
(1) An insured depository financial institution; or
(2) An escrow account which is controlled by a person who is subject to instructions regarding the account which are approved by the parties.
(b) Be kept separate from money:
(1) Belonging to the mortgage company in an account appropriately named to indicate that it does not belong to the mortgage company.
(2) Received pursuant to subsection 1.
5. Except as otherwise provided in this section, the amount held in trust pursuant to subsection 4:
(a) Must be released, upon the deduction and payment of any fee or service charge due the mortgage company, to each investor who owns a beneficial interest in the loan in exact proportion to the beneficial interest that the investor owns in the loan; and
(b) Must not be released, in any proportion, to an investor who owns a beneficial interest in the loan, unless the amount described in paragraph (a) is also released to every other investor who owns a beneficial interest in the loan.
6. An investor may waive, in writing, the right to receive one or more payments, or portions thereof, that are released to other investors in the manner set forth in subsection 5. A mortgage company or mortgage loan originator shall not act as the attorney-in-fact or the agent of an investor with respect to the giving of a written waiver pursuant to this subsection. Any such written waiver applies only to the payment or payments, or portions thereof, that are included in the written waiver and does not affect the right of the investor to:
(a) Receive the waived payment or payments, or portions thereof, at a later date; or
(b) Receive all other payments in full and in accordance with the provisions of subsection 5.
7. Upon reasonable notice, any mortgage company described in this section shall:
(a) Account to any investor or debtor who has paid to the mortgage company or his or her mortgage loan originators money that is required to be deposited in a trust account pursuant to this section; and
(b) Account to the Commissioner for all money which the mortgage company and his or her mortgage loan originators have received from each investor or debtor and which the mortgage company is required to deposit in a trust account pursuant to this section.
8. Money received by a mortgage company and his or her mortgage loan originators pursuant to this section from a person who is not associated with the mortgage company may be held in trust for not more than 45 days before an escrow account must be opened in connection with the loan. If, within this 45-day period, the loan or the transfer therefor is not consummated, the money must be returned within 24 hours. If the money is so returned, it may not be reinvested with the mortgage company for at least 15 days.
9. If a mortgage company or a mortgage loan originator receives any money pursuant to this section, the mortgage company or mortgage loan originator, after the deduction and payment of any fee or service charge due the mortgage company, shall not release the money to:
(a) Any person who does not have a contractual or legal right to receive the money; or
(b) Any person who has a contractual right to receive the money if the mortgage company or mortgage loan originator knows or, in light of all the surrounding facts and circumstances, reasonably should know that the person’s contractual right to receive the money violates any provision of this chapter or a regulation adopted pursuant to this chapter.
10. If a mortgage company maintains any accounts described in subsection 1 or 4, the mortgage company shall, in addition to the annual financial statement audited pursuant to NRS 645B.085, submit to the Commissioner each 6 calendar months a financial statement concerning those trust accounts.
11. The Commissioner shall adopt regulations concerning the form and content required for financial statements submitted pursuant to subsection 10.
12. Any duty, responsibility or obligation of a mortgage company pursuant to this chapter is not delegable or transferable to an investor, and, if an investor only provides money to acquire ownership of or a beneficial interest in a loan secured by a lien on real property, no criminal or civil liability may be imposed on the investor for any act or omission of a mortgage company.