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Nevada bill would impose prudential standards and FTC‑style data‑security rules on nonbank mortgage servicers
Summary
Senate Bill 44 would give Nevada regulators authority to require prudential standards for nonbank mortgage servicers and adopt a model data security law modeled on the FTC safeguard rule; regulators said the changes are needed because nonbank servicers now handle most mortgage servicing and current state authority is limited.
CARSON CITY — Regulators asked lawmakers to authorize new oversight of nonbank mortgage servicers and other non‑depository financial service providers under Senate Bill 44, saying state authority has not kept pace with industry growth and cyber risk.
Kathy Sheehy, commissioner of the Mortgage Lending Division (MLD), told the Assembly Committee on Commerce and Labor that the bill has two components: prudential standards for nonbank mortgage servicers (covering capital, liquidity and corporate governance) and a model data‑security law for nonbank financial institutions that mirrors the Federal Trade Commission’s Safeguards Rule (16 CFR Part 314).
"Nonbank mortgage servicers currently service more than 60% of the agency mortgage market and roughly 53% of the $13 trillion single‑family mortgage market," Sheehy said. The prudential standards would create a uniform set of expectations for financial condition and management practices similar to those FHFA enforces for Fannie Mae and Freddie Mac, she said. The model data‑security law would require covered entities to maintain written information‑security programs, designate qualified individuals, train staff, keep incident plans and report "notification events" to state regulators.
Sheehy and representatives from the Financial Institutions Division (FID) said the bill would position Nevada to require clear information‑security practices and give state commissioners authority to examine and, where necessary, enforce requirements. During questioning, Assemblymember Cole asked when examiners could request risk‑management assessments; Sheehy said such requests would typically arise during the course of an examination or an investigation.
Supporters included industry and consumer‑protection voices. Kimberly Fergus testified in support, saying SB 44 will help "modernize and strengthen oversight of financial service providers in Nevada, particularly mortgage servicers and high‑risk lending entities." No callers testified in opposition during the hearing. The committee closed the hearing with no vote recorded that day.
Ending: Sponsors and regulators said SB 44 would provide consumer protection, operational integrity and regulatory clarity by giving state supervisors authority to enforce prudential and data‑security standards; details about scope and implementation will be worked out in committee and by regulators if the bill advances.
