NRS658.200. Nontraditional mortgage loan products; disclosures required.

      1.  A financial institution which is required to be licensed pursuant to the provisions of this title or title 56 of NRS and which offers nontraditional mortgage loan products that are secured by liens on real property shall, with respect to each nontraditional mortgage loan made by the financial institution, disclose to the borrower adequate information concerning the actual costs and risks of the nontraditional mortgage loan product offered.

      2.  The disclosure required by subsection 1 must be written in language that is easy to understand, must be printed in at least 10-point bold type or font and must include, without limitation:

      (a) Information concerning potential increases in monthly payments, including information describing the circumstances under which interest rates or negative amortization could reach the contractual limits;

      (b) Information concerning the maximum monthly payment that the borrower may be required to pay if amortizing payments are required and the interest rate and negative amortization caps are reached;

      (c) Information concerning the circumstances under which structural payment changes will occur, the amount of the new payments and the method of calculating the amount of the new payments;

      (d) Information concerning negative amortization, including information describing the potential for increases in the principal balance and decreases in home equity and any other potential adverse consequences to the borrower resulting from negative amortization;

      (e) If a nontraditional mortgage loan product includes prepayment penalties, information explaining the prepayment penalties and the amount of the penalties;

      (f) If the financial institution offers full-document home loans in addition to low-document home loans, no-document home loans or stated-document home loans, information concerning any pricing premium that attaches to the low-document home loans, no-document home loans or stated-document home loans; and

      (g) For payment option adjustable-rate mortgages, information explaining each payment option available and the effect on the loan balance of each payment option.

      3.  A financial institution required to make a disclosure pursuant to subsection 1 shall, with respect to each nontraditional mortgage loan made by the financial institution, certify to the Commissioner that the financial institution has made the disclosure required by subsection 1. The financial institution may contract with a nonprofit or government-operated consumer credit counseling or housing counseling agency or a nonprofit or government-operated legal services agency which has been operating as such for the immediately preceding 7 years to provide the certification required by this subsection.

      4.  As used in this section:

      (a) “Low-document home loan” has the meaning ascribed to it in NRS 598D.100.

      (b) “No-document home loan” has the meaning ascribed to it in NRS 598D.100.

      (c) “Nonprofit or government-operated consumer credit counseling or housing counseling agency” means:

             (1) A person or organization which is recognized as a charitable organization pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3), and which is certified by the United States Department of Housing and Urban Development as a Housing Counseling Agency;

             (2) A government agency or government-operated organization which is certified by the United States Department of Housing and Urban Development as a Housing Counseling Agency; or

             (3) A person or organization which is recognized as exempt under section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3), and which:

                   (I) As its primary business, provides specialized personal and group counseling services to a person who is seeking to purchase a home or obtain legal advice regarding a real estate transaction and who is suffering or who may suffer economic hardship because of the extension of credit;

                   (II) Acts as an agent for a person who is suffering or who may suffer economic hardship because of the extension of credit in his or her efforts to resolve economic hardships;

                   (III) May receive money or any other thing of value for disbursement to one or more of the creditors of a person who is suffering or who may suffer economic hardship because of the extension of credit; and

                   (IV) If it has a board of directors, has a board of directors with a majority of members who are not employed by the agency or otherwise receive any direct or indirect financial benefit from the provision of any services by the agency.

      (d) “Nonprofit or government-operated legal services agency” means an organization that provides legal services to low-income persons without charge, and:

             (1) Is a government agency or government-operated organization; or

             (2) Is recognized as a charitable organization pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3).

      (e) “Nontraditional mortgage loan product” has the meaning ascribed to it in NRS 658.190 and also includes an adjustable-rate mortgage, a low-document home loan, a no-document home loan and a stated-document home loan.

      (f) “Stated-document home loan” has the meaning ascribed to it in NRS 598D.100.

      (Added to NRS by 2009, 1454)