1. For each loan requiring the deposit of money to an escrow account, loan trust account or other impound account for the payment of taxes, assessments, rental or leasehold payments, insurance premiums or other obligations related to the encumbered property, the lender shall:
(a) Require contributions in an amount reasonably necessary to pay the obligations as they become due.
(b) Unless money in the account is insufficient, pay in a timely manner the obligations as they become due.
(c) At least annually, analyze the account. The analysis of each account must be performed to determine whether sufficient money is contributed to the account on a monthly basis to pay for the projected disbursements from the account. At least 30 days before the effective date of any increased contribution to the account based on the analysis, a statement must be sent to the borrower showing the method of determining the amount of money held in the account, the amount of projected disbursements from the account and the amount of the reserves which may be held in accordance with federal guidelines.
2. If, upon completion of the analysis, it is determined that an account is not sufficiently funded to pay from the normal payment the items when due on the account, the lender shall offer the borrower the opportunity to correct the deficiency by making one lump-sum payment or by making increased monthly contributions, in an amount required by the lender. The lender shall not declare a default on the account solely because the borrower is unable to pay the amount of the deficiency in one lump sum.
3. Except for payments made by a borrower for a lender to recover previous deficiencies in contributions to the account pursuant to subsection 2, the borrower is entitled pursuant to subsection 4 to the amount by which the borrower’s contributions to the account exceed the amount reasonably necessary to pay the annual obligations due from the account, together with interest thereon at the rate established pursuant to NRS 99.040.
4. If, upon completion of the analysis, it is determined that the amount of money held by the lender in the account, together with anticipated future monthly contributions to the account to be credited to the account before the dates items are due on the account, exceed the amount of money required to pay the items when due, the lender shall, not later than 30 days after completion of its annual review of the account, notify the borrower:
(a) Of the amount by which the contributions and interest earned pursuant to subsection 3 exceed the amount reasonably necessary to pay the annual obligations due from the account; and
(b) That the borrower may, not later than 20 days after receipt of the notice, specify that the lender:
(1) Repay the excess money and interest promptly to the borrower;
(2) Apply the excess money and interest to the outstanding principal balance; or
(3) Retain the excess money and interest in the account.
5. If the borrower fails to specify the disposition of the excess money and interest as provided in paragraph (b) of subsection 4, the lender shall maintain the excess money and interest in the account.
6. If any payment on the loan is delinquent at the time of the analysis, the lender shall retain any excess money and interest in the account and apply the excess money and interest in the account toward payment of the delinquency.
7. A lender who violates any provision of subsections 4, 5 and 6 is liable to the borrower for a civil penalty of not more than $1,000.
8. The provisions of this section apply exclusively to:
(a) A loan secured by a single family residence, as that term is defined in NRS 107.015; and
(b) A unit in a common-interest community that is used exclusively for residential use, as those terms are defined in chapter 116 of NRS.
9. As used in this section:
(a) "Borrower" means any person who receives a loan secured by real property and who is required to make advance contributions for the payment of taxes, insurance premiums or other expenses related to the property.
(b) "Lender" means any person who makes loans secured by real property and who requires advance contributions for the payment of taxes, insurance premiums or other expenses related to the property.
(Added to NRS by 1989, 1068; A 2013, 1016; 2017, 4101; 2019, 1375)