Mortgage company regulations approved

Monday, May 31, 1999 | 3:43 a.m.

The compromise version of AB64 says an investor can't execute a power of attorney agreement with a mortgage company that lasts longer than six months. And the mortgage company must secure written permission from investors each time they move investors' money to new funds.

The bill, approved Sunday, was spawned by the 1997 collapse of the Harley L. Harmon Mortgage Co. of Las Vegas. The company's failure cost 700 investors, some of them politically prominent southern Nevadans, a potential $22.7 million in losses. Harmon, who has never been indicted for any wrongdoing, served as the Assembly majority leader in 1979.

Many of the investors had signed unlimited powers of attorney agreements that allowed Harmon to move their money without their prior knowledge.

Following the company's collapse, the Legislature appointed a special committee chaired by Goldwater, D-Las Vegas, to develop new regulations.

"This is a great deal for the consumers," Goldwater said about the Sunday compromise. "I am very happy."

He clashed Saturday with Townsend, R-Reno, whose committee had attached amendments to Goldwater's AB64 that he claimed removed all investor protections.

The final version of the bill will include provisions that mortgage companies can't run advertisements that guarantee investors a specific rate of return. Mortgage agents also must register with the state Financial Institutions Division and pass a criminal background check.