Regulator: Rejection of mortgage broker rule will cause unfavorable effect in Nevada

Thursday, Dec. 16, 2004 | 11:10 a.m.

CARSON CITY -- A state regulator warned the Legislative Commission Wednesday that its failure to adopt a mortgage broker regulation will open the door to out-of-state operators to come to Nevada and begin "predatory practices."

Scott Bice, commissioner of the state Division of Mortgage Lending, made his remark after the Legislative Commission rejected by an 8-4 vote a proposed rule to require all mortgage brokers to have signs outside their businesses, even if they conducted their business in their homes.

Sen. Randolph Townsend, R-Reno, chairman of the Legislative Commission, said Bice has "done a tremendous job of cleaning up this industry" but he challenged the statement.

Even if the regulation was adopted, Townsend said an out-of-state business could come into Nevada, put up a sign and still conduct "nefarious" practices. One of the biggest signs he has ever seen was in Houston and it advertised Enron, Townsend said.

The regulation was opposed by brokers Spencer Judd of Las Vegas and Jim Fitzgerald of Carson City who both live in planned unit communities that prohibit outdoor signs. The proposed rule that was defeated would have required those who could not put up a sign to rent an outside office.

Senate Minority Leader Dina Titus, D-Las Vegas voted for the sign requirement and said its rejection would cause a "potential big problem for consumers."

Titus was joined in the voting by Assembly Majority Leader Barbara Buckley, D-Las Vegas, Sen. Maggie Carlton, D-North Las Vegas and Sen. Valerie Wiener, D-Las Vegas.

Bice, in pushing for the regulation, said mortgage bankers and real estate officials must have signs outside their business. "It's important to be consistent," he said.

Rejecting the regulation "will definitely have a backlash," said Bice, who is worried about unlicensed brokers setting up shop in Nevada or setting up "bogus websites."

Townsend however said there were other ways to improve the regulation of mortgage brokers. He said Bice could impose higher bonding requirements on those that operate out of their home or send in extra examiners to review their business practices.

The mortgage lending division was created by the 2003 Legislature to impose tighter supervision over the industry that had been plagued with problems such as collapses of lending companies.

Bice was hired in October and he told the commission that the "industry had been unchecked" in the past.

Townsend told Bice to work with Titus and other legislators in arriving at a new regulation that would address the problem. The sign issue doesn't increase supervision, he said.

The Legislative Commission conducts the business of the Legislature in between sessions. It is composed of 12 lawmakers equally divided between senators and assemblymen.