Texas 2009 - 81st Regular

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1	1	81R7564 CLG-D
2	2	By: Solomons H.B. No. 10
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of mortgage loan originators; providing
8	8	a penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
11	11	adding Chapter 180 to read as follows:
12	12	CHAPTER 180. MORTGAGE LOAN ORIGINATORS
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 180.001. SHORT TITLE. This chapter may be cited as the
15	15	Secure and Fair Enforcement for Mortgage Licensing Act.
16	16	Sec. 180.002. PURPOSE. The purpose of this chapter is to
17	17	protect consumers seeking mortgage loans and to ensure that the
18	18	mortgage lending industry is operating without unfair, deceptive,
19	19	or fraudulent practices by mortgage loan originators.
20	20	Sec. 180.003. DEFINITIONS. In this chapter:
21	21	(1) "Clerical or support duties," following the
22	22	receipt of an application from a consumer, includes:
23	23	(A) the receipt, collection, distribution, and
24	24	analysis of information related to the processing or underwriting
25	25	of a residential mortgage loan; and
26	26	(B) communication with a consumer to obtain
27	27	information necessary to process or underwrite a loan, to the
28	28	extent that the communication does not include offering or
29	29	negotiating loan rates or terms or counseling the consumer about
30	30	residential mortgage loan rates or terms.
31	31	(2) "Depository institution" has the meaning assigned
32	32	by Section 3, Federal Deposit Insurance Act (12 U.S.C. Section
33	33	1813). The term includes a credit union.
34	34	(3) "Federal banking agency" means:
35	35	(A) the Board of Governors of the Federal Reserve
36	36	System;
37	37	(B) the Office of the Comptroller of the
38	38	Currency;
39	39	(C) the Office of Thrift Supervision;
40	40	(D) the National Credit Union Administration;
41	41	(E) the Federal Deposit Insurance Corporation;
42	42	or
43	43	(F) the successor of any of those agencies.
44	44	(4) "Finance commission" means the Finance Commission
45	45	of Texas.
46	46	(5) "License" means a license issued under the laws of
47	47	this state to an individual acting as or engaged in the business of
48	48	a mortgage loan originator.
49	49	(6) "Loan processor or underwriter" means an
50	50	individual who performs clerical or support duties as an employee
51	51	at the direction of and subject to the supervision and instruction
52	52	of a person licensed under Chapter 156 or exempt from licensure
53	53	under that chapter.
54	54	(7) "Mortgage loan originator":
55	55	(A) means an individual who:
56	56	(i) takes a residential mortgage loan
57	57	application; and
58	58	(ii) offers or negotiates the terms of a
59	59	residential mortgage loan for compensation or gain; and
60	60	(B) does not include:
61	61	(i) an individual who performs solely
62	62	administrative or clerical tasks on behalf of a person described by
63	63	Paragraph (A);
64	64	(ii) a person who performs only real estate
65	65	brokerage activities and is licensed or registered by the state as a
66	66	real estate broker or salesperson, unless the person is compensated
67	67	by:
68	68	(a) a lender, mortgage broker, or
69	69	other loan originator; or
70	70	(b) an agent of a lender, mortgage
71	71	broker, or other loan originator; or
72	72	(iii) a person who is involved solely in
73	73	providing extensions of credit relating to timeshare plans, as
74	74	defined by 11 U.S.C. Section 101(53D).
75	75	(8) "Nationwide Mortgage Licensing System and
76	76	Registry" means a mortgage licensing system developed and
77	77	maintained by the Conference of State Bank Supervisors and the
78	78	American Association of Residential Mortgage Regulators for the
79	79	licensing and registration of state-licensed mortgage loan
80	80	originators.
81	81	(9) "Nontraditional mortgage product" means a
82	82	mortgage product other than a 30-year fixed rate mortgage.
83	83	(10) "Person" means an individual, corporation,
84	84	company, limited liability company, partnership, or association.
85	85	(11) "Real estate brokerage activity" means an
86	86	activity that involves offering or providing real estate brokerage
87	87	services to the public, including:
88	88	(A) acting as a real estate broker or salesperson
89	89	for a buyer, seller, lessor, or lessee of real property;
90	90	(B) bringing together parties interested in the
91	91	sale, purchase, lease, rental, or exchange of real property;
92	92	(C) negotiating, on a party's behalf, any
93	93	provision of a contract relating to the sale, purchase, lease,
94	94	rental, or exchange of real property, other than a negotiation
95	95	conducted in connection with providing financing with respect to
96	96	such a transaction;
97	97	(D) engaging in an activity for which a person is
98	98	required to be registered or licensed by the state as a real estate
99	99	broker or salesperson; and
100	100	(E) offering to engage in an activity described
101	101	by Paragraphs (A) through (D) or to act in the same capacity as a
102	102	person described by Paragraphs (A) through (D).
103	103	(12) "Registered mortgage loan originator" means an
104	104	individual who:
105	105	(A) is a mortgage loan originator and is an
106	106	employee of:
107	107	(i) a depository institution;
108	108	(ii) a subsidiary that is:
109	109	(a) owned and controlled by a
110	110	depository institution; and
111	111	(b) regulated by a federal banking
112	112	agency; or
113	113	(iii) an institution regulated by the Farm
114	114	Credit Administration; and
115	115	(B) is registered with, and maintains a unique
116	116	identifier through, the Nationwide Mortgage Licensing System and
117	117	Registry.
118	118	(13) "Regulatory official" means:
119	119	(A) the commissioner of the Texas Department of
120	120	Banking;
121	121	(B) with respect to Chapters 156 and 157, the
122	122	savings and mortgage lending commissioner;
123	123	(C) with respect to Chapters 342, 347, 348, and
124	124	351, the consumer credit commissioner; and
125	125	(D) with respect to Chapter 127, the credit union
126	126	commissioner.
127	127	(14) "Residential mortgage loan" means a loan
128	128	primarily for personal, family, or household use that is secured by
129	129	a mortgage, deed of trust, or other equivalent consensual security
130	130	interest on a dwelling, as defined by Section 103(v) of the Truth in
131	131	Lending Act (15 U.S.C. Section 1601 et seq.), or on residential real
132	132	estate.
133	133	(15) "Residential real estate" means real property
134	134	located in this state on which a dwelling is constructed or intended
135	135	to be constructed.
136	136	(16) "Rulemaking authority" means:
137	137	(A) the finance commission, except as provided by
138	138	Paragraph (B); or
139	139	(B) with respect to Chapter 127, the Credit Union
140	140	Commission.
141	141	(17) "S.A.F.E. Mortgage Licensing Act" means the
142	142	federal Secure and Fair Enforcement for Mortgage Licensing Act of
143	143	2008 (Pub. L. No. 110-289).
144	144	(18) "Unique identifier" means a number or other
145	145	identifier assigned by protocols established by the Nationwide
146	146	Mortgage Licensing System and Registry.
147	147	Sec. 180.004. EXEMPTION. This chapter does not apply to a
148	148	licensed attorney who negotiates the terms of a residential
149	149	mortgage loan on behalf of a client as an ancillary matter to the
150	150	attorney's representation of the client, unless the attorney is
151	151	compensated by:
152	152	(1) a lender, mortgage broker, or other mortgage loan
153	153	originator; or
154	154	(2) an agent of a lender, mortgage broker, or other
155	155	mortgage loan originator.
156	156	Sec. 180.005. ADMINISTRATIVE AUTHORITY. (a) A regulatory
157	157	official has broad authority to administer, interpret, and enforce
158	158	this chapter.
159	159	(b) A rulemaking authority has broad authority to adopt
160	160	rules to implement this chapter to carry out the legislature's
161	161	intent.
162	162	[Sections 180.006-180.050 reserved for expansion]
163	163	SUBCHAPTER B. LICENSING AND REGISTRATION REQUIREMENTS
164	164	Sec. 180.051. STATE LICENSE REQUIRED; RENEWAL. (a) An
165	165	individual may not engage in business as a mortgage loan originator
166	166	with respect to a dwelling located in this state unless the
167	167	individual:
168	168	(1) is licensed to engage in that business under
169	169	Chapter 127, 156, 157, 342, 347, 348, or 351; and
170	170	(2) complies with the requirements of this chapter.
171	171	(b) The individual must renew the license annually to be
172	172	considered licensed for purposes of this section.
173	173	(c) Notwithstanding any provision of law listed in
174	174	Subsection (a)(1), the regulatory official shall provide for annual
175	175	renewal of licenses for individuals seeking to engage in mortgage
176	176	loan origination activities.
177	177	Sec. 180.052. REGISTRATION WITH NATIONWIDE MORTGAGE
178	178	LICENSING SYSTEM AND REGISTRY. (a) A licensed mortgage loan
179	179	originator must register with and maintain a valid unique
180	180	identifier issued by the Nationwide Mortgage Licensing System and
181	181	Registry.
182	182	(b) A non-federally insured credit union that employs loan
183	183	originators, as defined by the S.A.F.E. Mortgage Licensing Act,
184	184	shall register those employees with the Nationwide Mortgage
185	185	Licensing System and Registry by furnishing the information
186	186	relating to the employees' identity set forth in Section 1507(a)(2)
187	187	of the S.A.F.E. Mortgage Licensing Act.
188	188	Sec. 180.053. AUTHORITY TO REQUIRE LICENSE AND
189	189	REGISTRATION. (a) The regulatory official who administers the law
190	190	under which a mortgage loan originator is licensed shall require
191	191	the mortgage loan originator to be registered through the
192	192	Nationwide Mortgage Licensing System and Registry.
193	193	(b) For purposes of implementing Subsection (a), the
194	194	regulatory official may participate in the Nationwide Mortgage
195	195	Licensing System and Registry.
196	196	Sec. 180.054. APPLICATION FORM. (a) A regulatory official
197	197	shall prescribe application forms for a license as a mortgage loan
198	198	originator.
199	199	(b) A regulatory official may change or update an
200	200	application form as necessary to carry out the purposes of this
201	201	chapter.
202	202	Sec. 180.055. CRIMINAL AND OTHER BACKGROUND CHECKS. (a) In
203	203	connection with an application for a license as a mortgage loan
204	204	originator, the applicant shall, at a minimum, furnish to the
205	205	Nationwide Mortgage Licensing System and Registry information
206	206	concerning the applicant's identity, including:
207	207	(1) fingerprints for submission to the Federal Bureau
208	208	of Investigation and any governmental agency or entity authorized
209	209	to receive the information to conduct a state, national, and
210	210	international criminal background check; and
211	211	(2) personal history and experience information in a
212	212	form prescribed by the Nationwide Mortgage Licensing System and
213	213	Registry, including the submission of authorization for the
214	214	Nationwide Mortgage Licensing System and Registry and the
215	215	appropriate regulatory official to obtain:
216	216	(A) an independent credit report obtained from a
217	217	consumer reporting agency described by Section 603(p), Fair Credit
218	218	Reporting Act (15 U.S.C. Section 1681a(p)); and
219	219	(B) information related to any administrative,
220	220	civil, or criminal findings by a governmental jurisdiction.
221	221	(b) For purposes of this section and to reduce the points of
222	222	contact that the Federal Bureau of Investigation may have to
223	223	maintain for purposes of Subsection (a)(1), a regulatory official
224	224	may use the Nationwide Mortgage Licensing System and Registry as a
225	225	channeling agent for requesting information from and distributing
226	226	information to the United States Department of Justice, any
227	227	governmental agency, or any source at the regulatory official's
228	228	direction.
229	229	Sec. 180.056. ISSUANCE OF LICENSE. (a) The regulatory
230	230	official may not issue a mortgage loan originator license to an
231	231	individual unless the regulatory official determines, at a minimum,
232	232	that the applicant:
233	233	(1) has not had a mortgage loan originator license
234	234	revoked in any governmental jurisdiction;
235	235	(2) has not been convicted of, or pled guilty or nolo
236	236	contendere to, a felony in a domestic, foreign, or military court:
237	237	(A) during the seven-year period preceding the
238	238	date of application; or
239	239	(B) at any time preceding the date of
240	240	application, if the felony involved an act of fraud, dishonesty,
241	241	breach of trust, or money laundering;
242	242	(3) demonstrates financial responsibility, character,
243	243	and general fitness so as to command the confidence of the community
244	244	and to warrant a determination that the individual will operate
245	245	honestly, fairly, and efficiently as a mortgage loan originator
246	246	within the purposes of this chapter and any other appropriate
247	247	regulatory law of this state;
248	248	(4) provides satisfactory evidence that the applicant
249	249	has completed prelicensing education courses described by Section
250	250	180.057;
251	251	(5) provides satisfactory evidence of having passed an
252	252	examination that meets the requirements of Section 180.058; and
253	253	(6) has paid a recovery fund fee or surety bond as
254	254	required under the appropriate state regulatory law.
255	255	(b) A revocation that has been formally vacated may not be
256	256	considered a license revocation for purposes of Subsection (a)(1).
257	257	(c) A conviction for which a full pardon has been granted
258	258	may not be considered a conviction for purposes of Subsection
259	259	(a)(2).
260	260	(d) For purposes of Subsection (a)(3), an individual is
261	261	considered not to be financially responsible if the individual has
262	262	shown a lack of regard in managing the individual's own financial
263	263	affairs or condition. A determination that an individual has not
264	264	shown financial responsibility may include:
265	265	(1) an outstanding judgment against the individual,
266	266	other than a judgment imposed solely as a result of medical
267	267	expenses;
268	268	(2) an outstanding tax lien or other governmental
269	269	liens and filings;
270	270	(3) a foreclosure during the three-year period
271	271	preceding the date of the license application; and
272	272	(4) a pattern of substantially delinquent accounts
273	273	during the three-year period preceding the date of the application.
274	274	Sec. 180.057. PRELICENSING EDUCATIONAL COURSES. (a) An
275	275	applicant for a mortgage loan originator license must complete
276	276	education courses that include, at a minimum, at least the minimum
277	277	number of hours and type of courses required by the S.A.F.E.
278	278	Mortgage Licensing Act and the minimum number of hours of training
279	279	related to lending standards for the nontraditional mortgage
280	280	product marketplace required by that Act.
281	281	(b) Education courses required under this section must be
282	282	reviewed and approved by the Nationwide Mortgage Licensing System
283	283	and Registry in accordance with the S.A.F.E. Mortgage Licensing
284	284	Act.
285	285	(c) Nothing in this section precludes any education course
286	286	approved in accordance with the S.A.F.E. Mortgage Licensing Act
287	287	from being provided by:
288	288	(1) an applicant's employer;
289	289	(2) an entity affiliated with the applicant by an
290	290	agency contract; or
291	291	(3) a subsidiary or affiliate of the employer or
292	292	entity.
293	293	(d) Education courses required under this section may be
294	294	offered in a classroom, online, or by any other means approved by
295	295	the Nationwide Mortgage Licensing System and Registry.
296	296	(e) An individual who has successfully completed
297	297	prelicensing education requirements approved by the Nationwide
298	298	Mortgage Licensing System and Registry for another state shall be
299	299	given credit toward completion of the prelicensing education
300	300	requirements of this section if the regulatory official determines
301	301	that the prelicensing education requirements the individual has
302	302	completed are substantially equivalent to those of this state.
303	303	(f) An applicant who has previously held a mortgage loan
304	304	originator license that meets the requirements of this chapter and
305	305	other appropriate regulatory law, before being issued a new
306	306	original license, must demonstrate to the appropriate regulatory
307	307	official that the applicant has completed all continuing education
308	308	requirements for the calendar year in which the license was last
309	309	held by the applicant.
310	310	(g) If the appropriate federal regulators and the
311	311	Nationwide Mortgage Licensing System and Registry establish
312	312	additional educational requirements for licensed mortgage loan
313	313	originators, the rulemaking authority shall adopt necessary rules
314	314	to implement the changes to the educational requirements of this
315	315	section.
316	316	Sec. 180.058. EXAMINATION REQUIREMENTS. (a) An applicant
317	317	for a mortgage loan originator license must pass a qualified,
318	318	written examination that meets the standards and requirements
319	319	established by the S.A.F.E. Mortgage Licensing Act, is developed by
320	320	the Nationwide Mortgage Licensing System and Registry, and is
321	321	administered by a test provider in accordance with that Act.
322	322	(b) An individual may retake the examination the number of
323	323	times and within the period prescribed by the S.A.F.E. Mortgage
324	324	Licensing Act.
325	325	(c) An individual who fails to maintain a mortgage loan
326	326	originator license for at least five consecutive years must retake
327	327	the examination.
328	328	(d) This section does not prohibit a test provider approved
329	329	in accordance with the S.A.F.E. Mortgage Licensing Act from
330	330	providing an examination at the location of:
331	331	(1) the license applicant's employer;
332	332	(2) a subsidiary or affiliate of the applicant's
333	333	employer; or
334	334	(3) an entity with which the applicant holds an
335	335	exclusive arrangement to conduct the business of a mortgage loan
336	336	originator.
337	337	Sec. 180.059. SURETY BOND OR RECOVERY FUND FEE REQUIREMENT.
338	338	(a) A regulatory official may not issue a mortgage loan originator
339	339	license unless the official determines that the applicant meets the
340	340	surety bond requirement or has paid a recovery fund fee, as
341	341	applicable, in accordance with the requirements of the S.A.F.E.
342	342	Mortgage Licensing Act.
343	343	(b) Each regulatory official shall adopt rules requiring an
344	344	individual licensed as a mortgage loan originator to have a surety
345	345	bond or pay a recovery fund fee as the official determines
346	346	appropriate to comply with the S.A.F.E. Mortgage Licensing Act.
347	347	Sec. 180.060. STANDARDS FOR LICENSE RENEWAL. A license to
348	348	act as a mortgage loan originator may be renewed on or before its
349	349	expiration date if the license holder:
350	350	(1) continues to meet the minimum requirements for
351	351	license issuance; and
352	352	(2) provides satisfactory evidence that the license
353	353	holder has completed the continuing education requirements of
354	354	Section 180.061.
355	355	Sec. 180.061. CONTINUING EDUCATION COURSES. (a) To renew a
356	356	mortgage loan originator license, a license holder must annually
357	357	complete the minimum number of hours and type of continuing
358	358	education courses required by the S.A.F.E. Mortgage Licensing Act,
359	359	the minimum requirements established by the Nationwide Mortgage
360	360	Licensing System and Registry, and any additional requirements
361	361	established by the regulatory official.
362	362	(b) Continuing education courses, including the course
363	363	provider, must be reviewed and approved by the Nationwide Mortgage
364	364	Licensing System and Registry as required by the S.A.F.E. Mortgage
365	365	Licensing Act. Course credit must be granted in accordance with
366	366	that Act.
367	367	(c) Nothing in this section precludes any continuing
368	368	education course approved in accordance with the S.A.F.E. Mortgage
369	369	Licensing Act from being provided by:
370	370	(1) the employer of the license holder;
371	371	(2) an entity affiliated with the license holder by an
372	372	agency contract; or
373	373	(3) a subsidiary or affiliate of the employer or
374	374	entity.
375	375	(d) A person who successfully completes continuing
376	376	education requirements approved by the Nationwide Mortgage
377	377	Licensing System and Registry for another state shall be given
378	378	credit toward completion of the continuing education requirements
379	379	of this section if the regulatory official determines that the
380	380	continuing education requirements the person has completed are
381	381	substantially equivalent to those of this state.
382	382	Sec. 180.062. RULEMAKING AUTHORITY. A rulemaking authority
383	383	may adopt rules establishing requirements as necessary for:
384	384	(1) conducting background checks by obtaining:
385	385	(A) criminal history information through
386	386	fingerprint or other databases;
387	387	(B) civil administrative records;
388	388	(C) credit history information; or
389	389	(D) any other information considered necessary
390	390	by the Nationwide Mortgage Licensing System and Registry;
391	391	(2) payment of fees to apply for or renew licenses
392	392	through the Nationwide Mortgage Licensing System and Registry;
393	393	(3) setting or resetting, as necessary, license
394	394	renewal dates or reporting periods; and
395	395	(4) amending or surrendering a license or any other
396	396	activity a regulatory official considers necessary for
397	397	participation in the Nationwide Mortgage Licensing System and
398	398	Registry.
399	399	[Sections 180.063-180.100 reserved for expansion]
400	400	SUBCHAPTER C. REPORTING AND OTHER REQUIREMENTS REGARDING
401	401	NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY
402	402	Sec. 180.101. MORTGAGE CALL REPORTS. Each licensed
403	403	mortgage loan originator shall submit to the Nationwide Mortgage
404	404	Licensing System and Registry a report of condition that is in the
405	405	form and contains the information required by the Nationwide
406	406	Mortgage Licensing System and Registry.
407	407	Sec. 180.102. REPORT OF VIOLATIONS AND ENFORCEMENT ACTIONS.
408	408	A regulatory official shall report to the Nationwide Mortgage
409	409	Licensing System and Registry on a regular basis regarding any
410	410	violations of this chapter, enforcement actions, and other relevant
411	411	information.
412	412	Sec. 180.103. INFORMATION CHALLENGE PROCESS. The
413	413	applicable rulemaking authority by rule shall establish a process
414	414	by which licensed mortgage loan originators may dispute information
415	415	submitted by the regulatory official to the Nationwide Mortgage
416	416	Licensing System and Registry.
417	417	[Sections 180.104-180.150 reserved for expansion]
418	418	SUBCHAPTER D. BUSINESS PRACTICES
419	419	Sec. 180.151. DISPLAY OF UNIQUE IDENTIFIER. The unique
420	420	identifier of a person originating a residential mortgage loan must
421	421	be clearly shown on each residential mortgage loan application
422	422	form, solicitation, or advertisement, including business cards and
423	423	websites, and any other document required by rule of the rulemaking
424	424	authority.
425	425	Sec. 180.152. REPRESENTATIONS. An individual who is
426	426	engaged exclusively in loan processor or underwriter activities may
427	427	not represent to the public, through the use of advertising,
428	428	business cards, stationery, brochures, signs, rate lists, or other
429	429	means, that the individual can or will perform any of the activities
430	430	of a mortgage loan originator.
431	431	[Sections 180.153-180.200 reserved for expansion]
432	432	SUBCHAPTER E. ENFORCEMENT PROVISIONS
433	433	Sec. 180.201. ENFORCEMENT AUTHORITY. To ensure the
434	434	effective supervision and enforcement of this chapter, a regulatory
435	435	official may:
436	436	(1) deny, suspend, revoke, condition, or decline to
437	437	renew a license for a violation of this chapter, a rule adopted
438	438	under this chapter, or an order or directive issued under this
439	439	chapter;
440	440	(2) deny, suspend, revoke, condition, or decline to
441	441	renew a license if an applicant or license holder:
442	442	(A) fails to meet the requirements of Subchapter
443	443	B; or
444	444	(B) withholds information or makes a material
445	445	misstatement in an application for a license or renewal of a
446	446	license;
447	447	(3) order restitution against a person subject to
448	448	regulation under this chapter for a violation of this chapter;
449	449	(4) impose an administrative penalty on a person
450	450	subject to regulation under this chapter, subject to Section
451	451	180.202; or
452	452	(5) issue orders or directives as provided by Section
453	453	180.203.
454	454	Sec. 180.202. ADMINISTRATIVE PENALTY. (a) A regulatory
455	455	official may impose an administrative penalty on a mortgage loan
456	456	originator or other person subject to regulation under this
457	457	chapter, if the official, after notice and opportunity for hearing,
458	458	determines that the mortgage loan originator or other person
459	459	subject to regulation under this chapter has violated or failed to
460	460	comply with:
461	461	(1) this chapter;
462	462	(2) a rule adopted under this chapter; or
463	463	(3) an order issued under this chapter.
464	464	(b) The penalty may not exceed $25,000 for each violation.
465	465	(c) The amount of the penalty shall be based on:
466	466	(1) the seriousness of the violation, including the
467	467	nature, circumstances, extent, and gravity of the violation;
468	468	(2) the economic harm to property caused by the
469	469	violation;
470	470	(3) the history of previous violations;
471	471	(4) the amount necessary to deter a future violation;
472	472	(5) efforts to correct the violation; and
473	473	(6) any other matter that justice may require.
474	474	Sec. 180.203. CEASE AND DESIST ORDERS. A regulatory
475	475	official may:
476	476	(1) order or direct a person subject to regulation
477	477	under this chapter to cease and desist from conducting business,
478	478	including issuing an immediate temporary order to cease and desist
479	479	from conducting business;
480	480	(2) order or direct a person subject to regulation
481	481	under this chapter to cease a violation of this chapter or a harmful
482	482	activity in violation of this chapter, including issuing an
483	483	immediate temporary order to cease and desist;
484	484	(3) enter immediate temporary orders against a person
485	485	subject to regulation under this chapter to cease engaging in
486	486	business under a license if the regulatory official determines that
487	487	the license was erroneously granted or the license holder is in
488	488	violation of this chapter; and
489	489	(4) order or direct other affirmative action as the
490	490	regulatory official considers necessary.
491	491	[Sections 180.204-180.250 reserved for expansion]
492	492	SUBCHAPTER F. DUTIES OF REGULATORY OFFICIALS
493	493	Sec. 180.251. GENERAL DUTIES OF REGULATORY OFFICIALS. (a)
494	494	The savings and mortgage lending commissioner shall administer and
495	495	enforce this chapter with respect to individuals licensed under
496	496	Chapter 156 or 157.
497	497	(b) The credit union commissioner shall administer and
498	498	enforce this chapter with respect to individuals licensed under
499	499	Chapter 127.
500	500	(c) The consumer credit commissioner shall administer and
501	501	enforce this chapter with respect to individuals licensed under
502	502	Chapter 342, 347, 348, or 351.
503	503	Sec. 180.252. AUTHORITY OF REGULATORY OFFICIALS TO
504	504	ESTABLISH RELATIONSHIP WITH NATIONWIDE MORTGAGE LICENSING SYSTEM
505	505	AND REGISTRY; CONTRACTING AUTHORITY. To fulfill the purposes of
506	506	this chapter, a regulatory official may establish a relationship
507	507	with or contract with the Nationwide Mortgage Licensing System and
508	508	Registry or an entity designated by the Nationwide Mortgage
509	509	Licensing System and Registry to collect and maintain records and
510	510	process transaction fees or other fees related to licensed mortgage
511	511	loan originators or other persons subject to regulation under this
512	512	chapter.
513	513	SECTION 2. Section 14.107(b), Finance Code, is amended to
514	514	read as follows:
515	515	(b) The finance commission by rule shall set the fees for
516	516	licensing and examination under Chapter 342, 347, 348, 351, or 371
517	517	at amounts or rates necessary to recover the costs of administering
518	518	those chapters. The rules may provide that the amount of a fee
519	519	charged to a license holder is based on the volume of the license
520	520	holder's regulated business and other key factors. The
521	521	commissioner may provide for collection of a single annual fee from
522	522	a person licensed under Chapter 342, 347, 348, 351, or 371 to
523	523	include amounts due for both licensing and examination.
524	524	SECTION 3. Subtitle D, Title 3, Finance Code, is amended by
525	525	adding Chapter 127 to read as follows:
526	526	CHAPTER 127. REGULATION OF MORTGAGE LOAN ORIGINATORS EMPLOYED BY
527	527	CREDIT UNION SUBSIDIARY ORGANIZATIONS
528	528	SUBCHAPTER A. GENERAL PROVISIONS
529	529	Sec. 127.001. DEFINITIONS. In this chapter:
530	530	(1) "Credit union" means a state or federal credit
531	531	union operating in this state.
532	532	(2) "Credit union subsidiary organization" means an
533	533	agency, association, or company wholly or partly owned by a credit
534	534	union that is designed primarily to serve or otherwise assist
535	535	credit union operations. The term includes a credit union service
536	536	organization authorized by:
537	537	(A) Section 124.351(a)(1);
538	538	(B) commission rule; or
539	539	(C) Part 712 of the National Credit Union
540	540	Administration's Rules and Regulations.
541	541	(3) "Mortgage loan originator" has the meaning
542	542	assigned by Section 180.003.
543	543	(4) "Nationwide Mortgage Licensing System and
544	544	Registry" has the meaning assigned by Section 180.003.
545	545	Sec. 127.002. RULEMAKING AUTHORITY. The commission may
546	546	adopt and enforce reasonable rules necessary to administer and
547	547	accomplish the purposes of this chapter, including rules
548	548	establishing procedures for issuing, renewing, and enforcing a
549	549	license under this chapter.
550	550	Sec. 127.003. AUTHORITY TO SHARE INFORMATION. The
551	551	commissioner may enter into agreements or share arrangements with
552	552	other governmental agencies, the Conference of State Bank
553	553	Supervisors, the American Association of Residential Mortgage
554	554	Regulators, or other associations representing governmental
555	555	agencies as established by commission rule.
556	556	[Sections 127.004-127.050 reserved for expansion]
557	557	SUBCHAPTER B. LICENSE REQUIREMENTS
558	558	Sec. 127.051. LICENSE REQUIRED. An employee of a credit
559	559	union subsidiary organization may not act as a mortgage loan
560	560	originator unless the employee:
561	561	(1) is licensed under this chapter;
562	562	(2) is registered through the Nationwide Mortgage
563	563	Licensing System and Registry as required by Section 180.053; and
564	564	(3) complies with other applicable requirements of
565	565	Chapter 180 and rules adopted under that chapter.
566	566	Sec. 127.052. APPLICATION; FEES. (a) An application for a
567	567	mortgage loan originator license must be:
568	568	(1) in writing and under oath; and
569	569	(2) on the form prescribed by the commissioner.
570	570	(b) The application must be accompanied by an application
571	571	fee in an amount set by the commission. The application fee is not
572	572	refundable and may not be credited or applied to any other fee or
573	573	indebtedness owed by the applicant or any entity paying the fee.
574	574	Sec. 127.053. ISSUANCE OF LICENSE. The commissioner shall
575	575	issue a mortgage loan originator license to an applicant if the
576	576	commissioner determines that the applicant meets the requirements
577	577	prescribed by Section 180.056.
578	578	Sec. 127.054. CONFIDENTIALITY OF INFORMATION. Section
579	579	126.002 applies to information obtained by the department
580	580	concerning the financial condition or business affairs of a credit
581	581	union subsidiary organization or a mortgage loan originator.
582	582	[Sections 127.055-127.100 reserved for expansion]
583	583	SUBCHAPTER C. BOOKS AND RECORDS; REPORTS
584	584	Sec. 127.101. BOOKS AND RECORDS. (a) A credit union
585	585	subsidiary organization that employs a mortgage loan originator and
586	586	each license holder or other person subject to regulation under
587	587	this chapter shall, on request, make books and records available to
588	588	the commissioner for examination under Section 15.4032.
589	589	(b) The commissioner may interview the officers,
590	590	principals, mortgage loan originators, employees, independent
591	591	contractors, agents, and customers of the license holder or other
592	592	person subject to regulation under this chapter regarding any
593	593	mortgage loan originating activities.
594	594	Sec. 127.102. REPORTS AND OTHER INFORMATION. Each credit
595	595	union subsidiary organization that employs a mortgage loan
596	596	originator and each license holder or other person subject to
597	597	regulation under this chapter shall prepare or compile reports or
598	598	provide other information as required by the commissioner.
599	599	Sec. 127.103. REPORTS TO NATIONWIDE LICENSING SYSTEM AND
600	600	REGISTRY. Each credit union subsidiary organization that employs
601	601	mortgage loan originators shall submit to the Nationwide Mortgage
602	602	Licensing System and Registry reports of condition that are in the
603	603	form and contain the information required by the registry.
604	604	Sec. 127.104. WITHHOLDING RECORDS PROHIBITED. A credit
605	605	union subsidiary organization that employs a mortgage loan
606	606	originator or a license holder or other person subject to
607	607	regulation under this chapter may not withhold, abstract, remove,
608	608	mutilate, or destroy any books, records, computer records, or other
609	609	information related to mortgage loan origination activities.
610	610	[Sections 127.105-127.150 reserved for expansion]
611	611	SUBCHAPTER D. ENFORCEMENT
612	612	Sec. 127.151. CEASE AND DESIST ORDERS. If the commissioner
613	613	makes a finding listed in Section 122.255 and determines that an
614	614	order to cease and desist is necessary and in the best interest of
615	615	the credit union subsidiary organization involved, the
616	616	commissioner may serve on the credit union subsidiary organization
617	617	an order to cease and desist from a violation or practice specified
618	618	in the order as authorized by Section 122.257.
619	619	SECTION 4. Subchapter C, Chapter 156, Finance Code, is
620	620	amended by adding Section 156.2015 to read as follows:
621	621	Sec. 156.2015. MORTGAGE LOAN ORIGINATION ACTIVITIES. (a)
622	622	In this section, "mortgage loan originator" and "Nationwide
623	623	Mortgage Licensing System and Registry" have the meanings assigned
624	624	by Section 180.003.
625	625	(b) An individual subject to regulation under this chapter
626	626	may not act as a mortgage loan originator unless:
627	627	(1) the individual's license under this chapter
628	628	otherwise authorizes the individual to act as a mortgage loan
629	629	originator;
630	630	(2) the individual is registered through the
631	631	Nationwide Mortgage Licensing System and Registry as required by
632	632	Section 180.053; and
633	633	(3) the individual complies with other applicable
634	634	requirements of Chapter 180 and rules adopted under that chapter.
635	635	(c) The finance commission by rule may waive or modify,
636	636	wholly or partly, any requirement of this chapter and establish new
637	637	requirements as reasonably necessary to enable the commissioner to
638	638	participate in and individuals to register through the Nationwide
639	639	Mortgage Licensing System and Registry for purposes of this section
640	640	and Chapter 180.
641	641	SECTION 5. Chapter 157, Finance Code, is amended by adding
642	642	Section 157.0035 to read as follows:
643	643	Sec. 157.0035. MORTGAGE LOAN ORIGINATION ACTIVITIES. (a)
644	644	In this section, "mortgage loan originator" and "Nationwide
645	645	Mortgage Licensing System and Registry" have the meanings assigned
646	646	by Section 180.003.
647	647	(b) An individual subject to regulation under this chapter
648	648	may not act as a mortgage loan originator unless the individual:
649	649	(1) is licensed and registered through the Nationwide
650	650	Mortgage Licensing System and Registry as required by Section
651	651	180.053; and
652	652	(2) complies with other applicable requirements of
653	653	Chapter 180 and rules adopted under that chapter.
654	654	SECTION 6. Subchapter B, Chapter 342, Finance Code, is
655	655	amended by adding Section 342.0515 to read as follows:
656	656	Sec. 342.0515. MORTGAGE LOAN ORIGINATOR ACTIVITIES. (a)
657	657	In this section, "mortgage loan originator" and "Nationwide
658	658	Mortgage Licensing System and Registry" have the meanings assigned
659	659	by Section 180.003.
660	660	(b) An individual who acts as a mortgage loan originator in
661	661	the making, transacting, or negotiating of a loan subject to this
662	662	chapter must:
663	663	(1) be licensed to engage in that activity under this
664	664	chapter;
665	665	(2) be registered through the Nationwide Mortgage
666	666	Licensing System and Registry as required by Section 180.053; and
667	667	(3) comply with other applicable requirements of
668	668	Chapter 180 and rules adopted under that chapter.
669	669	(c) The finance commission shall adopt rules establishing
670	670	procedures for issuing, renewing, and enforcing a license under
671	671	this section. In adopting rules under this subsection, the finance
672	672	commission shall ensure that:
673	673	(1) the minimum eligibility requirements for issuance
674	674	of a license are the same as the requirements of Section 180.056;
675	675	(2) the minimum eligibility requirements for renewal
676	676	of a license are the same as the requirements of Section 180.060;
677	677	and
678	678	(3) the applicant pays:
679	679	(A) an investigation fee in a reasonable amount
680	680	determined by the commissioner; and
681	681	(B) an annual license fee in an amount determined
682	682	as provided by Section 14.107.
683	683	(d) The finance commission by rule may waive or modify,
684	684	wholly or partly, any requirement of this chapter and establish new
685	685	requirements as reasonably necessary to enable the commissioner to
686	686	participate in the Nationwide Mortgage Licensing System and
687	687	Registry for purposes of this section and Chapter 180.
688	688	SECTION 7. Section 342.156, Finance Code, is amended to
689	689	read as follows:
690	690	Sec. 342.156. LICENSE SUSPENSION OR REVOCATION. After
691	691	notice and a hearing the commissioner may suspend or revoke a
692	692	license if the commissioner finds that:
693	693	(1) the license holder failed to pay the annual
694	694	license fee, an examination fee, an investigation fee, or another
695	695	charge imposed by the commissioner under this chapter;
696	696	(2) the license holder, knowingly or without the
697	697	exercise of due care, violated this chapter or a rule adopted or
698	698	order issued under this chapter; [or]
699	699	(3) a fact or condition exists that, if it had existed
700	700	or had been known to exist at the time of the original application
701	701	for the license, clearly would have justified the commissioner's
702	702	denial of the application; or
703	703	(4) the license holder has failed to ensure that an
704	704	individual acting as a mortgage loan originator, as defined by
705	705	Section 180.003, in the making, transacting, or negotiating of a
706	706	loan subject to this chapter is licensed under this chapter in
707	707	accordance with Section 342.0515.
708	708	SECTION 8. The heading to Subchapter J, Chapter 347,
709	709	Finance Code, is amended to read as follows:
710	710	SUBCHAPTER J. RIGHTS AND DUTIES OF CREDITOR AND MORTGAGE LOAN
711	711	ORIGINATOR
712	712	SECTION 9. Section 347.451, Finance Code, is amended by
713	713	adding Subsection (b-1) to read as follows:
714	714	(b-1) A registered creditor must meet the surety bond
715	715	requirement of the creditor's mortgage loan originator under
716	716	Section 180.059.
717	717	SECTION 10. Subchapter J, Chapter 347, Finance Code, is
718	718	amended by adding Section 347.4515 to read as follows:
719	719	Sec. 347.4515. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED.
720	720	(a) In this section, "mortgage loan originator" and "Nationwide
721	721	Mortgage Licensing System and Registry" have the meanings assigned
722	722	by Section 180.003.
723	723	(b) An individual who acts as a mortgage loan originator in
724	724	the making, transacting, or negotiating of an extension of credit
725	725	subject to this chapter must:
726	726	(1) be licensed to engage in that activity under this
727	727	chapter;
728	728	(2) be registered through the Nationwide Mortgage
729	729	Licensing System and Registry as required by Section 180.053; and
730	730	(3) comply with other applicable requirements of
731	731	Chapter 180 and rules adopted under that chapter.
732	732	(c) The finance commission shall adopt rules establishing
733	733	procedures for issuing, renewing, and enforcing a license under
734	734	this section. In adopting rules under this subsection, the finance
735	735	commission shall ensure that:
736	736	(1) the minimum eligibility requirements for issuance
737	737	of a license are the same as the requirements of Section 180.056;
738	738	(2) the minimum eligibility requirements for renewal
739	739	of a license are the same as the requirements of Section 180.060;
740	740	and
741	741	(3) the applicant pays:
742	742	(A) an investigation fee in a reasonable amount
743	743	determined by the commissioner; and
744	744	(B) an annual license fee in an amount determined
745	745	as provided by Section 14.107.
746	746	(d) The finance commission by rule may waive or modify,
747	747	wholly or partly, any requirement of this chapter and establish new
748	748	requirements as reasonably necessary to enable the commissioner to
749	749	participate in the Nationwide Mortgage Licensing System and
750	750	Registry for purposes of this section and Chapter 180.
751	751	SECTION 11. Section 348.501, Finance Code, is amended by
752	752	adding Subsection (c) to read as follows:
753	753	(c) A license holder under this chapter who engages in the
754	754	sale of a motor vehicle to be used as a principal dwelling must meet
755	755	the surety bond requirements of the holder's mortgage loan
756	756	originator under Section 180.059.
757	757	SECTION 12. Subchapter F, Chapter 348, Finance Code, is
758	758	amended by adding Section 348.5015 to read as follows:
759	759	Sec. 348.5015. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED.
760	760	(a) In this section, "mortgage loan originator" and "Nationwide
761	761	Mortgage Licensing System and Registry" have the meanings assigned
762	762	by Section 180.003.
763	763	(b) An individual who acts as a mortgage loan originator in
764	764	the sale of a motor vehicle to be used as a principal dwelling must:
765	765	(1) be licensed to engage in that activity under this
766	766	chapter;
767	767	(2) be registered through the Nationwide Mortgage
768	768	Licensing System and Registry as required by Section 180.053; and
769	769	(3) comply with other applicable requirements of
770	770	Chapter 180 and rules adopted under that chapter.
771	771	(c) The finance commission shall adopt rules establishing
772	772	procedures for applying for issuing, renewing, and enforcing a
773	773	license under this section. In adopting rules under this
774	774	subsection, the finance commission shall ensure that:
775	775	(1) the minimum eligibility requirements for issuance
776	776	of a license are the same as the requirements of Section 180.056;
777	777	(2) the minimum eligibility requirements for renewal
778	778	of a license are the same as the requirements of Section 180.060;
779	779	and
780	780	(3) the applicant pays:
781	781	(A) an investigation fee in a reasonable amount
782	782	determined by the commissioner; and
783	783	(B) an annual license fee in an amount determined
784	784	as provided by Section 14.107.
785	785	(d) The finance commission by rule may waive or modify,
786	786	wholly or partly, any requirement of this chapter and establish new
787	787	requirements as reasonably necessary to enable the commissioner to
788	788	participate in the Nationwide Mortgage Licensing System and
789	789	Registry for purposes of this section and Chapter 180.
790	790	SECTION 13. Subchapter B, Chapter 351, Finance Code, as
791	791	added by Chapter 1220 (H.B. 2138), Acts of the 80th Legislature,
792	792	Regular Session, 2007, is amended by adding Section 351.0515 to
793	793	read as follows:
794	794	Sec. 351.0515. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED.
795	795	(a) In this section, "mortgage loan originator" and "Nationwide
796	796	Mortgage Licensing System and Registry" have the meanings assigned
797	797	by Section 180.003.
798	798	(b) An individual who acts as a mortgage loan originator in
799	799	the making, transacting, or negotiating of a property tax loan for a
800	800	principal dwelling must:
801	801	(1) be licensed to engage in that activity under this
802	802	chapter;
803	803	(2) be registered through the Nationwide Mortgage
804	804	Licensing System and Registry as required by Section 180.053; and
805	805	(3) comply with other applicable requirements of
806	806	Chapter 180 and rules adopted under that chapter.
807	807	(c) The finance commission shall adopt rules establishing
808	808	procedures for issuing, renewing, and enforcing a license under
809	809	this section. In adopting rules under this subsection, the finance
810	810	commission shall ensure that:
811	811	(1) the minimum eligibility requirements for issuance
812	812	of a license are the same as the requirements of Section 180.056;
813	813	(2) the minimum eligibility requirements for renewal
814	814	of a license are the same as the requirements of Section 180.060;
815	815	and
816	816	(3) the applicant pays:
817	817	(A) an investigation fee in a reasonable amount
818	818	determined by the commissioner; and
819	819	(B) an annual license fee in an amount determined
820	820	as provided by Section 14.107.
821	821	(d) The finance commission by rule may waive or modify,
822	822	wholly or partly, any requirement of this chapter and establish new
823	823	requirements as reasonably necessary to enable the commissioner to
824	824	participate in the Nationwide Mortgage Licensing System and
825	825	Registry for purposes of this section and Chapter 180.
826	826	SECTION 14. Section 351.102, Finance Code, as added by
827	827	Chapter 1220 (H.B. 2138), Acts of the 80th Legislature, Regular
828	828	Session, 2007, is amended by adding Subsection (e) to read as
829	829	follows:
830	830	(e) A license holder engaged in the business of making,
831	831	transacting, or negotiating a property tax loan for a principal
832	832	dwelling must meet the surety bond requirement of the holder's
833	833	mortgage loan originator under Section 180.059.
834	834	SECTION 15. Section 351.156, Finance Code, as added by
835	835	Chapter 1220 (H.B. 2138), Acts of the 80th Legislature, Regular
836	836	Session, 2007, is amended to read as follows:
837	837	Sec. 351.156. LICENSE SUSPENSION OR REVOCATION. After
838	838	notice and a hearing the commissioner may suspend or revoke a
839	839	license if the commissioner finds that:
840	840	(1) the license holder failed to pay the annual
841	841	license fee, an examination fee, an investigation fee, or another
842	842	charge imposed by the commissioner under this chapter;
843	843	(2) the license holder, knowingly or without the
844	844	exercise of due care, violated this chapter or Section 32.06 or
845	845	32.065, Tax Code, or a rule adopted or an order issued under this
846	846	chapter or Section 32.06 or 32.065, Tax Code; [or]
847	847	(3) a fact or condition exists that, if it had existed
848	848	or had been known to exist at the time of the original application
849	849	for the license, clearly would have justified the commissioner's
850	850	denial of the application; or
851	851	(4) the license holder has failed to ensure that an
852	852	individual acting as a mortgage loan originator, as defined by
853	853	Section 180.003, in the making, transacting, or negotiating of a
854	854	property tax loan for a principal dwelling is licensed under this
855	855	chapter in accordance with Section 351.0515.
856	856	SECTION 16. Section 411.095, Government Code, is amended to
857	857	read as follows:
858	858	Sec. 411.095. ACCESS TO CRIMINAL HISTORY RECORD
859	859	INFORMATION: CONSUMER CREDIT COMMISSIONER. [(a)] The consumer
860	860	credit commissioner is entitled to obtain from the department
861	861	criminal history record information that relates to a person who is
862	862	an applicant for or holder of a license under Chapter 342, 347, 348,
863	863	351, or 371, Finance Code.
864	864	SECTION 17. Section 411.1407(a), Government Code, is
865	865	amended to read as follows:
866	866	(a) The credit union commissioner is entitled to obtain from
867	867	the department criminal history record information maintained by
868	868	the department that relates to a person who is:
869	869	(1) an individual who applies to incorporate a credit
870	870	union under Subtitle D, Title 3, Finance Code;
871	871	(2) a board member of a credit union incorporated
872	872	under Subtitle D, Title 3, Finance Code;
873	873	(3) an applicant for employment by the credit union
874	874	department; [or]
875	875	(4) an employee of the credit union department; or
876	876	(5) an applicant for a mortgage loan originator
877	877	license under Chapter 127, Finance Code.
878	878	SECTION 18. For purposes of implementing an orderly and
879	879	efficient process for licensing and registering mortgage loan
880	880	originators that meets the requirements of the federal Secure and
881	881	Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
882	882	110-289), Chapters 127 and 180, Finance Code, as added by this Act,
883	883	and Chapters 156, 157, 342, 347, 348, and 351, Finance Code, as
884	884	amended by this Act, the Finance Commission of Texas and the credit
885	885	union commissioner, as soon as practicable after the effective date
886	886	of this Act, may adopt rules and establish interim procedures for
887	887	licensing persons engaging in or conducting the business of a
888	888	mortgage loan originator in this state and for the approval or
889	889	denial of applications for licenses authorizing persons to engage
890	890	in business as a mortgage loan originator. For individuals or other
891	891	persons authorized by state law to engage in mortgage loan
892	892	origination activities immediately before the effective date of
893	893	this Act, the Finance Commission of Texas may establish expedited
894	894	review and licensing procedures.
895	895	SECTION 19. (a) Except as provided by Subsection (b) of
896	896	this section, an individual is not required to comply with Chapters
897	897	127 and 180, Finance Code, as added by this Act, and Chapters 156,
898	898	157, 342, 347, 348, and 351, Finance Code, as amended by this Act,
899	899	until the later of:
900	900	(1) July 31, 2010; or
901	901	(2) a subsequent date that is approved by the
902	902	secretary of the United States Department of Housing and Urban
903	903	Development under the authority granted under the federal Secure
904	904	and Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
905	905	110-289).
906	906	(b) An individual authorized to engage in mortgage loan
907	907	origination activities in this state as of July 31, 2009, is not
908	908	required to comply with Chapters 127 and 180, Finance Code, as added
909	909	by this Act, and Chapters 156, 157, 342, 347, 348, and 351, Finance
910	910	Code, as amended by this Act, until the later of:
911	911	(1) July 31, 2011; or
912	912	(2) a subsequent date approved by the secretary of the
913	913	United States Department of Housing and Urban Development under the
914	914	authority granted under the federal Secure and Fair Enforcement for
915	915	Mortgage Licensing Act of 2008 (Pub. L. No. 110-289).
916	916	SECTION 20. This Act takes effect September 1, 2009.