Please understand the following regarding NRS 598D.040, which is new Nevada law that goes into effect October 1^st, and which pertains to mortgage loans:
 
There is no truth to the rumor that we will no longer be able to originate "reduced-doc,"  "stated-income," or "no-doc" loans in Nevada.  What the law states is that "it is an unfair lending practice for a lender to knowingly or intentionally make a home loan, other than a reverse mortgage, to a borrower, including, without limitation, a low-document home loan, no-document home loan or stated-document home loan without determining , using any commercially reasonable means or mechanism, that the borrower has the ability to repay the home loan."  
 
The above language is pretty vague, but basically the intent is to disallow approving loans based solely on equity.   Loans based sole on equity are hard money loans, as compared to loans that we do as brokers to our typical wholesalers, which are loans that are soled on the secondary market.  Therefore, we are OK to make such loans as long as "any commercially reasonable means or mechanism" was used to determine that the borrower has the ability to repay the loan.  Such means or mechanisms would include, but not limited to, credit scores, salary.com, etc.  Obviously, our lenders partners, in addition to us as a broker, use reasonable means and mechanisms to determine a borrowers ability to repay a loan.  
 
In addition, NRS 598D.040 also spells out what would constitute a class C felony for loan fraud, as follows: "1. A person who, with the intent to defraud a participant in a mortgage
 lending transaction:
 (a) Knowingly makes a false statement or misrepresentation concerning a
 material fact or deliberately conceals or fails to disclose a material fact;
 (b) Knowingly uses or facilitates the use of a false statement or
 misrepresentation made by another person concerning a material fact or
 deliberately uses or facilitates the use of another person's concealment or failure
 to disclose a material fact;
 (c) Receives any proceeds or any other money in connection with a mortgage
 lending transaction that the person knows resulted from a violation of paragraph
 (a) or (b);
 (d) Conspires with another person to violate any of the provisions of
 paragraph (a), (b) or (c); or
 (e) Files or causes to be filed with a county recorder any document that the
 person knows to include a misstatement, misrepresentation or omission
 concerning a material fact,
 _ commits the offense of mortgage lending fraud which is a category C felony
 and, upon conviction, shall be punished by imprisonment in the state prison for a
 minimum term of not less than 1 year and a maximum term of not more than 10
 years, or by a fine of not more than $10,000, or by both fine and imprisonment."
   
According to the written regulations, "a person" above would include mortgage agents, employees of financial institutions governed by the Mortgage Lending Division, as well as applicants and borrowers.

(special thanks to Frank Seidman for bringing this to my attention)

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