81R7564 CLG-D
By: Solomons H.B. No. 10
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of mortgage loan originators; providing
a penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
adding Chapter 180 to read as follows:
CHAPTER 180. MORTGAGE LOAN ORIGINATORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 180.001. SHORT TITLE. This chapter may be cited as the
Secure and Fair Enforcement for Mortgage Licensing Act.
Sec. 180.002. PURPOSE. The purpose of this chapter is to
protect consumers seeking mortgage loans and to ensure that the
mortgage lending industry is operating without unfair, deceptive,
or fraudulent practices by mortgage loan originators.
Sec. 180.003. DEFINITIONS. In this chapter:
(1) "Clerical or support duties," following the
receipt of an application from a consumer, includes:
(A) the receipt, collection, distribution, and
analysis of information related to the processing or underwriting
of a residential mortgage loan; and
(B) communication with a consumer to obtain
information necessary to process or underwrite a loan, to the
extent that the communication does not include offering or
negotiating loan rates or terms or counseling the consumer about
residential mortgage loan rates or terms.
(2) "Depository institution" has the meaning assigned
by Section 3, Federal Deposit Insurance Act (12 U.S.C. Section
1813). The term includes a credit union.
(3) "Federal banking agency" means:
(A) the Board of Governors of the Federal Reserve
System;
(B) the Office of the Comptroller of the
Currency;
(C) the Office of Thrift Supervision;
(D) the National Credit Union Administration;
(E) the Federal Deposit Insurance Corporation;
or
(F) the successor of any of those agencies.
(4) "Finance commission" means the Finance Commission
of Texas.
(5) "License" means a license issued under the laws of
this state to an individual acting as or engaged in the business of
a mortgage loan originator.
(6) "Loan processor or underwriter" means an
individual who performs clerical or support duties as an employee
at the direction of and subject to the supervision and instruction
of a person licensed under Chapter 156 or exempt from licensure
under that chapter.
(7) "Mortgage loan originator":
(A) means an individual who:
(i) takes a residential mortgage loan
application; and
(ii) offers or negotiates the terms of a
residential mortgage loan for compensation or gain; and
(B) does not include:
(i) an individual who performs solely
administrative or clerical tasks on behalf of a person described by
Paragraph (A);
(ii) a person who performs only real estate
brokerage activities and is licensed or registered by the state as a
real estate broker or salesperson, unless the person is compensated
by:
(a) a lender, mortgage broker, or
other loan originator; or
(b) an agent of a lender, mortgage
broker, or other loan originator; or
(iii) a person who is involved solely in
providing extensions of credit relating to timeshare plans, as
defined by 11 U.S.C. Section 101(53D).
(8) "Nationwide Mortgage Licensing System and
Registry" means a mortgage licensing system developed and
maintained by the Conference of State Bank Supervisors and the
American Association of Residential Mortgage Regulators for the
licensing and registration of state-licensed mortgage loan
originators.
(9) "Nontraditional mortgage product" means a
mortgage product other than a 30-year fixed rate mortgage.
(10) "Person" means an individual, corporation,
company, limited liability company, partnership, or association.
(11) "Real estate brokerage activity" means an
activity that involves offering or providing real estate brokerage
services to the public, including:
(A) acting as a real estate broker or salesperson
for a buyer, seller, lessor, or lessee of real property;
(B) bringing together parties interested in the
sale, purchase, lease, rental, or exchange of real property;
(C) negotiating, on a party's behalf, any
provision of a contract relating to the sale, purchase, lease,
rental, or exchange of real property, other than a negotiation
conducted in connection with providing financing with respect to
such a transaction;
(D) engaging in an activity for which a person is
required to be registered or licensed by the state as a real estate
broker or salesperson; and
(E) offering to engage in an activity described
by Paragraphs (A) through (D) or to act in the same capacity as a
person described by Paragraphs (A) through (D).
(12) "Registered mortgage loan originator" means an
individual who:
(A) is a mortgage loan originator and is an
employee of:
(i) a depository institution;
(ii) a subsidiary that is:
(a) owned and controlled by a
depository institution; and
(b) regulated by a federal banking
agency; or
(iii) an institution regulated by the Farm
Credit Administration; and
(B) is registered with, and maintains a unique
identifier through, the Nationwide Mortgage Licensing System and
Registry.
(13) "Regulatory official" means:
(A) the commissioner of the Texas Department of
Banking;
(B) with respect to Chapters 156 and 157, the
savings and mortgage lending commissioner;
(C) with respect to Chapters 342, 347, 348, and
351, the consumer credit commissioner; and
(D) with respect to Chapter 127, the credit union
commissioner.
(14) "Residential mortgage loan" means a loan
primarily for personal, family, or household use that is secured by
a mortgage, deed of trust, or other equivalent consensual security
interest on a dwelling, as defined by Section 103(v) of the Truth in
Lending Act (15 U.S.C. Section 1601 et seq.), or on residential real
estate.
(15) "Residential real estate" means real property
located in this state on which a dwelling is constructed or intended
to be constructed.
(16) "Rulemaking authority" means:
(A) the finance commission, except as provided by
Paragraph (B); or
(B) with respect to Chapter 127, the Credit Union
Commission.
(17) "S.A.F.E. Mortgage Licensing Act" means the
federal Secure and Fair Enforcement for Mortgage Licensing Act of
2008 (Pub. L. No. 110-289).
(18) "Unique identifier" means a number or other
identifier assigned by protocols established by the Nationwide
Mortgage Licensing System and Registry.
Sec. 180.004. EXEMPTION. This chapter does not apply to a
licensed attorney who negotiates the terms of a residential
mortgage loan on behalf of a client as an ancillary matter to the
attorney's representation of the client, unless the attorney is
compensated by:
(1) a lender, mortgage broker, or other mortgage loan
originator; or
(2) an agent of a lender, mortgage broker, or other
mortgage loan originator.
Sec. 180.005. ADMINISTRATIVE AUTHORITY. (a) A regulatory
official has broad authority to administer, interpret, and enforce
this chapter.
(b) A rulemaking authority has broad authority to adopt
rules to implement this chapter to carry out the legislature's
intent.
[Sections 180.006-180.050 reserved for expansion]
SUBCHAPTER B. LICENSING AND REGISTRATION REQUIREMENTS
Sec. 180.051. STATE LICENSE REQUIRED; RENEWAL. (a) An
individual may not engage in business as a mortgage loan originator
with respect to a dwelling located in this state unless the
individual:
(1) is licensed to engage in that business under
Chapter 127, 156, 157, 342, 347, 348, or 351; and
(2) complies with the requirements of this chapter.
(b) The individual must renew the license annually to be
considered licensed for purposes of this section.
(c) Notwithstanding any provision of law listed in
Subsection (a)(1), the regulatory official shall provide for annual
renewal of licenses for individuals seeking to engage in mortgage
loan origination activities.
Sec. 180.052. REGISTRATION WITH NATIONWIDE MORTGAGE
LICENSING SYSTEM AND REGISTRY. (a) A licensed mortgage loan
originator must register with and maintain a valid unique
identifier issued by the Nationwide Mortgage Licensing System and
Registry.
(b) A non-federally insured credit union that employs loan
originators, as defined by the S.A.F.E. Mortgage Licensing Act,
shall register those employees with the Nationwide Mortgage
Licensing System and Registry by furnishing the information
relating to the employees' identity set forth in Section 1507(a)(2)
of the S.A.F.E. Mortgage Licensing Act.
Sec. 180.053. AUTHORITY TO REQUIRE LICENSE AND
REGISTRATION. (a) The regulatory official who administers the law
under which a mortgage loan originator is licensed shall require
the mortgage loan originator to be registered through the
Nationwide Mortgage Licensing System and Registry.
(b) For purposes of implementing Subsection (a), the
regulatory official may participate in the Nationwide Mortgage
Licensing System and Registry.
Sec. 180.054. APPLICATION FORM. (a) A regulatory official
shall prescribe application forms for a license as a mortgage loan
originator.
(b) A regulatory official may change or update an
application form as necessary to carry out the purposes of this
chapter.
Sec. 180.055. CRIMINAL AND OTHER BACKGROUND CHECKS. (a) In
connection with an application for a license as a mortgage loan
originator, the applicant shall, at a minimum, furnish to the
Nationwide Mortgage Licensing System and Registry information
concerning the applicant's identity, including:
(1) fingerprints for submission to the Federal Bureau
of Investigation and any governmental agency or entity authorized
to receive the information to conduct a state, national, and
international criminal background check; and
(2) personal history and experience information in a
form prescribed by the Nationwide Mortgage Licensing System and
Registry, including the submission of authorization for the
Nationwide Mortgage Licensing System and Registry and the
appropriate regulatory official to obtain:
(A) an independent credit report obtained from a
consumer reporting agency described by Section 603(p), Fair Credit
Reporting Act (15 U.S.C. Section 1681a(p)); and
(B) information related to any administrative,
civil, or criminal findings by a governmental jurisdiction.
(b) For purposes of this section and to reduce the points of
contact that the Federal Bureau of Investigation may have to
maintain for purposes of Subsection (a)(1), a regulatory official
may use the Nationwide Mortgage Licensing System and Registry as a
channeling agent for requesting information from and distributing
information to the United States Department of Justice, any
governmental agency, or any source at the regulatory official's
direction.
Sec. 180.056. ISSUANCE OF LICENSE. (a) The regulatory
official may not issue a mortgage loan originator license to an
individual unless the regulatory official determines, at a minimum,
that the applicant:
(1) has not had a mortgage loan originator license
revoked in any governmental jurisdiction;
(2) has not been convicted of, or pled guilty or nolo
contendere to, a felony in a domestic, foreign, or military court:
(A) during the seven-year period preceding the
date of application; or
(B) at any time preceding the date of
application, if the felony involved an act of fraud, dishonesty,
breach of trust, or money laundering;
(3) demonstrates financial responsibility, character,
and general fitness so as to command the confidence of the community
and to warrant a determination that the individual will operate
honestly, fairly, and efficiently as a mortgage loan originator
within the purposes of this chapter and any other appropriate
regulatory law of this state;
(4) provides satisfactory evidence that the applicant
has completed prelicensing education courses described by Section
180.057;
(5) provides satisfactory evidence of having passed an
examination that meets the requirements of Section 180.058; and
(6) has paid a recovery fund fee or surety bond as
required under the appropriate state regulatory law.
(b) A revocation that has been formally vacated may not be
considered a license revocation for purposes of Subsection (a)(1).
(c) A conviction for which a full pardon has been granted
may not be considered a conviction for purposes of Subsection
(a)(2).
(d) For purposes of Subsection (a)(3), an individual is
considered not to be financially responsible if the individual has
shown a lack of regard in managing the individual's own financial
affairs or condition. A determination that an individual has not
shown financial responsibility may include:
(1) an outstanding judgment against the individual,
other than a judgment imposed solely as a result of medical
expenses;
(2) an outstanding tax lien or other governmental
liens and filings;
(3) a foreclosure during the three-year period
preceding the date of the license application; and
(4) a pattern of substantially delinquent accounts
during the three-year period preceding the date of the application.
Sec. 180.057. PRELICENSING EDUCATIONAL COURSES. (a) An
applicant for a mortgage loan originator license must complete
education courses that include, at a minimum, at least the minimum
number of hours and type of courses required by the S.A.F.E.
Mortgage Licensing Act and the minimum number of hours of training
related to lending standards for the nontraditional mortgage
product marketplace required by that Act.
(b) Education courses required under this section must be
reviewed and approved by the Nationwide Mortgage Licensing System
and Registry in accordance with the S.A.F.E. Mortgage Licensing
Act.
(c) Nothing in this section precludes any education course
approved in accordance with the S.A.F.E. Mortgage Licensing Act
from being provided by:
(1) an applicant's employer;
(2) an entity affiliated with the applicant by an
agency contract; or
(3) a subsidiary or affiliate of the employer or
entity.
(d) Education courses required under this section may be
offered in a classroom, online, or by any other means approved by
the Nationwide Mortgage Licensing System and Registry.
(e) An individual who has successfully completed
prelicensing education requirements approved by the Nationwide
Mortgage Licensing System and Registry for another state shall be
given credit toward completion of the prelicensing education
requirements of this section if the regulatory official determines
that the prelicensing education requirements the individual has
completed are substantially equivalent to those of this state.
(f) An applicant who has previously held a mortgage loan
originator license that meets the requirements of this chapter and
other appropriate regulatory law, before being issued a new
original license, must demonstrate to the appropriate regulatory
official that the applicant has completed all continuing education
requirements for the calendar year in which the license was last
held by the applicant.
(g) If the appropriate federal regulators and the
Nationwide Mortgage Licensing System and Registry establish
additional educational requirements for licensed mortgage loan
originators, the rulemaking authority shall adopt necessary rules
to implement the changes to the educational requirements of this
section.
Sec. 180.058. EXAMINATION REQUIREMENTS. (a) An applicant
for a mortgage loan originator license must pass a qualified,
written examination that meets the standards and requirements
established by the S.A.F.E. Mortgage Licensing Act, is developed by
the Nationwide Mortgage Licensing System and Registry, and is
administered by a test provider in accordance with that Act.
(b) An individual may retake the examination the number of
times and within the period prescribed by the S.A.F.E. Mortgage
Licensing Act.
(c) An individual who fails to maintain a mortgage loan
originator license for at least five consecutive years must retake
the examination.
(d) This section does not prohibit a test provider approved
in accordance with the S.A.F.E. Mortgage Licensing Act from
providing an examination at the location of:
(1) the license applicant's employer;
(2) a subsidiary or affiliate of the applicant's
employer; or
(3) an entity with which the applicant holds an
exclusive arrangement to conduct the business of a mortgage loan
originator.
Sec. 180.059. SURETY BOND OR RECOVERY FUND FEE REQUIREMENT.
(a) A regulatory official may not issue a mortgage loan originator
license unless the official determines that the applicant meets the
surety bond requirement or has paid a recovery fund fee, as
applicable, in accordance with the requirements of the S.A.F.E.
Mortgage Licensing Act.
(b) Each regulatory official shall adopt rules requiring an
individual licensed as a mortgage loan originator to have a surety
bond or pay a recovery fund fee as the official determines
appropriate to comply with the S.A.F.E. Mortgage Licensing Act.
Sec. 180.060. STANDARDS FOR LICENSE RENEWAL. A license to
act as a mortgage loan originator may be renewed on or before its
expiration date if the license holder:
(1) continues to meet the minimum requirements for
license issuance; and
(2) provides satisfactory evidence that the license
holder has completed the continuing education requirements of
Section 180.061.
Sec. 180.061. CONTINUING EDUCATION COURSES. (a) To renew a
mortgage loan originator license, a license holder must annually
complete the minimum number of hours and type of continuing
education courses required by the S.A.F.E. Mortgage Licensing Act,
the minimum requirements established by the Nationwide Mortgage
Licensing System and Registry, and any additional requirements
established by the regulatory official.
(b) Continuing education courses, including the course
provider, must be reviewed and approved by the Nationwide Mortgage
Licensing System and Registry as required by the S.A.F.E. Mortgage
Licensing Act. Course credit must be granted in accordance with
that Act.
(c) Nothing in this section precludes any continuing
education course approved in accordance with the S.A.F.E. Mortgage
Licensing Act from being provided by:
(1) the employer of the license holder;
(2) an entity affiliated with the license holder by an
agency contract; or
(3) a subsidiary or affiliate of the employer or
entity.
(d) A person who successfully completes continuing
education requirements approved by the Nationwide Mortgage
Licensing System and Registry for another state shall be given
credit toward completion of the continuing education requirements
of this section if the regulatory official determines that the
continuing education requirements the person has completed are
substantially equivalent to those of this state.
Sec. 180.062. RULEMAKING AUTHORITY. A rulemaking authority
may adopt rules establishing requirements as necessary for:
(1) conducting background checks by obtaining:
(A) criminal history information through
fingerprint or other databases;
(B) civil administrative records;
(C) credit history information; or
(D) any other information considered necessary
by the Nationwide Mortgage Licensing System and Registry;
(2) payment of fees to apply for or renew licenses
through the Nationwide Mortgage Licensing System and Registry;
(3) setting or resetting, as necessary, license
renewal dates or reporting periods; and
(4) amending or surrendering a license or any other
activity a regulatory official considers necessary for
participation in the Nationwide Mortgage Licensing System and
Registry.
[Sections 180.063-180.100 reserved for expansion]
SUBCHAPTER C. REPORTING AND OTHER REQUIREMENTS REGARDING
NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY
Sec. 180.101. MORTGAGE CALL REPORTS. Each licensed
mortgage loan originator shall submit to the Nationwide Mortgage
Licensing System and Registry a report of condition that is in the
form and contains the information required by the Nationwide
Mortgage Licensing System and Registry.
Sec. 180.102. REPORT OF VIOLATIONS AND ENFORCEMENT ACTIONS.
A regulatory official shall report to the Nationwide Mortgage
Licensing System and Registry on a regular basis regarding any
violations of this chapter, enforcement actions, and other relevant
information.
Sec. 180.103. INFORMATION CHALLENGE PROCESS. The
applicable rulemaking authority by rule shall establish a process
by which licensed mortgage loan originators may dispute information
submitted by the regulatory official to the Nationwide Mortgage
Licensing System and Registry.
[Sections 180.104-180.150 reserved for expansion]
SUBCHAPTER D. BUSINESS PRACTICES
Sec. 180.151. DISPLAY OF UNIQUE IDENTIFIER. The unique
identifier of a person originating a residential mortgage loan must
be clearly shown on each residential mortgage loan application
form, solicitation, or advertisement, including business cards and
websites, and any other document required by rule of the rulemaking
authority.
Sec. 180.152. REPRESENTATIONS. An individual who is
engaged exclusively in loan processor or underwriter activities may
not represent to the public, through the use of advertising,
business cards, stationery, brochures, signs, rate lists, or other
means, that the individual can or will perform any of the activities
of a mortgage loan originator.
[Sections 180.153-180.200 reserved for expansion]
SUBCHAPTER E. ENFORCEMENT PROVISIONS
Sec. 180.201. ENFORCEMENT AUTHORITY. To ensure the
effective supervision and enforcement of this chapter, a regulatory
official may:
(1) deny, suspend, revoke, condition, or decline to
renew a license for a violation of this chapter, a rule adopted
under this chapter, or an order or directive issued under this
chapter;
(2) deny, suspend, revoke, condition, or decline to
renew a license if an applicant or license holder:
(A) fails to meet the requirements of Subchapter
B; or
(B) withholds information or makes a material
misstatement in an application for a license or renewal of a
license;
(3) order restitution against a person subject to
regulation under this chapter for a violation of this chapter;
(4) impose an administrative penalty on a person
subject to regulation under this chapter, subject to Section
180.202; or
(5) issue orders or directives as provided by Section
180.203.
Sec. 180.202. ADMINISTRATIVE PENALTY. (a) A regulatory
official may impose an administrative penalty on a mortgage loan
originator or other person subject to regulation under this
chapter, if the official, after notice and opportunity for hearing,
determines that the mortgage loan originator or other person
subject to regulation under this chapter has violated or failed to
comply with:
(1) this chapter;
(2) a rule adopted under this chapter; or
(3) an order issued under this chapter.
(b) The penalty may not exceed $25,000 for each violation.
(c) The amount of the penalty shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
(2) the economic harm to property caused by the
violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation; and
(6) any other matter that justice may require.
Sec. 180.203. CEASE AND DESIST ORDERS. A regulatory
official may:
(1) order or direct a person subject to regulation
under this chapter to cease and desist from conducting business,
including issuing an immediate temporary order to cease and desist
from conducting business;
(2) order or direct a person subject to regulation
under this chapter to cease a violation of this chapter or a harmful
activity in violation of this chapter, including issuing an
immediate temporary order to cease and desist;
(3) enter immediate temporary orders against a person
subject to regulation under this chapter to cease engaging in
business under a license if the regulatory official determines that
the license was erroneously granted or the license holder is in
violation of this chapter; and
(4) order or direct other affirmative action as the
regulatory official considers necessary.
[Sections 180.204-180.250 reserved for expansion]
SUBCHAPTER F. DUTIES OF REGULATORY OFFICIALS
Sec. 180.251. GENERAL DUTIES OF REGULATORY OFFICIALS. (a)
The savings and mortgage lending commissioner shall administer and
enforce this chapter with respect to individuals licensed under
Chapter 156 or 157.
(b) The credit union commissioner shall administer and
enforce this chapter with respect to individuals licensed under
Chapter 127.
(c) The consumer credit commissioner shall administer and
enforce this chapter with respect to individuals licensed under
Chapter 342, 347, 348, or 351.
Sec. 180.252. AUTHORITY OF REGULATORY OFFICIALS TO
ESTABLISH RELATIONSHIP WITH NATIONWIDE MORTGAGE LICENSING SYSTEM
AND REGISTRY; CONTRACTING AUTHORITY. To fulfill the purposes of
this chapter, a regulatory official may establish a relationship
with or contract with the Nationwide Mortgage Licensing System and
Registry or an entity designated by the Nationwide Mortgage
Licensing System and Registry to collect and maintain records and
process transaction fees or other fees related to licensed mortgage
loan originators or other persons subject to regulation under this
chapter.
SECTION 2. Section 14.107(b), Finance Code, is amended to
read as follows:
(b) The finance commission by rule shall set the fees for
licensing and examination under Chapter 342, 347, 348, 351, or 371
at amounts or rates necessary to recover the costs of administering
those chapters. The rules may provide that the amount of a fee
charged to a license holder is based on the volume of the license
holder's regulated business and other key factors. The
commissioner may provide for collection of a single annual fee from
a person licensed under Chapter 342, 347, 348, 351, or 371 to
include amounts due for both licensing and examination.
SECTION 3. Subtitle D, Title 3, Finance Code, is amended by
adding Chapter 127 to read as follows:
CHAPTER 127. REGULATION OF MORTGAGE LOAN ORIGINATORS EMPLOYED BY
CREDIT UNION SUBSIDIARY ORGANIZATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 127.001. DEFINITIONS. In this chapter:
(1) "Credit union" means a state or federal credit
union operating in this state.
(2) "Credit union subsidiary organization" means an
agency, association, or company wholly or partly owned by a credit
union that is designed primarily to serve or otherwise assist
credit union operations. The term includes a credit union service
organization authorized by:
(A) Section 124.351(a)(1);
(B) commission rule; or
(C) Part 712 of the National Credit Union
Administration's Rules and Regulations.
(3) "Mortgage loan originator" has the meaning
assigned by Section 180.003.
(4) "Nationwide Mortgage Licensing System and
Registry" has the meaning assigned by Section 180.003.
Sec. 127.002. RULEMAKING AUTHORITY. The commission may
adopt and enforce reasonable rules necessary to administer and
accomplish the purposes of this chapter, including rules
establishing procedures for issuing, renewing, and enforcing a
license under this chapter.
Sec. 127.003. AUTHORITY TO SHARE INFORMATION. The
commissioner may enter into agreements or share arrangements with
other governmental agencies, the Conference of State Bank
Supervisors, the American Association of Residential Mortgage
Regulators, or other associations representing governmental
agencies as established by commission rule.
[Sections 127.004-127.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 127.051. LICENSE REQUIRED. An employee of a credit
union subsidiary organization may not act as a mortgage loan
originator unless the employee:
(1) is licensed under this chapter;
(2) is registered through the Nationwide Mortgage
Licensing System and Registry as required by Section 180.053; and
(3) complies with other applicable requirements of
Chapter 180 and rules adopted under that chapter.
Sec. 127.052. APPLICATION; FEES. (a) An application for a
mortgage loan originator license must be:
(1) in writing and under oath; and
(2) on the form prescribed by the commissioner.
(b) The application must be accompanied by an application
fee in an amount set by the commission. The application fee is not
refundable and may not be credited or applied to any other fee or
indebtedness owed by the applicant or any entity paying the fee.
Sec. 127.053. ISSUANCE OF LICENSE. The commissioner shall
issue a mortgage loan originator license to an applicant if the
commissioner determines that the applicant meets the requirements
prescribed by Section 180.056.
Sec. 127.054. CONFIDENTIALITY OF INFORMATION. Section
126.002 applies to information obtained by the department
concerning the financial condition or business affairs of a credit
union subsidiary organization or a mortgage loan originator.
[Sections 127.055-127.100 reserved for expansion]
SUBCHAPTER C. BOOKS AND RECORDS; REPORTS
Sec. 127.101. BOOKS AND RECORDS. (a) A credit union
subsidiary organization that employs a mortgage loan originator and
each license holder or other person subject to regulation under
this chapter shall, on request, make books and records available to
the commissioner for examination under Section 15.4032.
(b) The commissioner may interview the officers,
principals, mortgage loan originators, employees, independent
contractors, agents, and customers of the license holder or other
person subject to regulation under this chapter regarding any
mortgage loan originating activities.
Sec. 127.102. REPORTS AND OTHER INFORMATION. Each credit
union subsidiary organization that employs a mortgage loan
originator and each license holder or other person subject to
regulation under this chapter shall prepare or compile reports or
provide other information as required by the commissioner.
Sec. 127.103. REPORTS TO NATIONWIDE LICENSING SYSTEM AND
REGISTRY. Each credit union subsidiary organization that employs
mortgage loan originators shall submit to the Nationwide Mortgage
Licensing System and Registry reports of condition that are in the
form and contain the information required by the registry.
Sec. 127.104. WITHHOLDING RECORDS PROHIBITED. A credit
union subsidiary organization that employs a mortgage loan
originator or a license holder or other person subject to
regulation under this chapter may not withhold, abstract, remove,
mutilate, or destroy any books, records, computer records, or other
information related to mortgage loan origination activities.
[Sections 127.105-127.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 127.151. CEASE AND DESIST ORDERS. If the commissioner
makes a finding listed in Section 122.255 and determines that an
order to cease and desist is necessary and in the best interest of
the credit union subsidiary organization involved, the
commissioner may serve on the credit union subsidiary organization
an order to cease and desist from a violation or practice specified
in the order as authorized by Section 122.257.
SECTION 4. Subchapter C, Chapter 156, Finance Code, is
amended by adding Section 156.2015 to read as follows:
Sec. 156.2015. MORTGAGE LOAN ORIGINATION ACTIVITIES. (a)
In this section, "mortgage loan originator" and "Nationwide
Mortgage Licensing System and Registry" have the meanings assigned
by Section 180.003.
(b) An individual subject to regulation under this chapter
may not act as a mortgage loan originator unless:
(1) the individual's license under this chapter
otherwise authorizes the individual to act as a mortgage loan
originator;
(2) the individual is registered through the
Nationwide Mortgage Licensing System and Registry as required by
Section 180.053; and
(3) the individual complies with other applicable
requirements of Chapter 180 and rules adopted under that chapter.
(c) The finance commission by rule may waive or modify,
wholly or partly, any requirement of this chapter and establish new
requirements as reasonably necessary to enable the commissioner to
participate in and individuals to register through the Nationwide
Mortgage Licensing System and Registry for purposes of this section
and Chapter 180.
SECTION 5. Chapter 157, Finance Code, is amended by adding
Section 157.0035 to read as follows:
Sec. 157.0035. MORTGAGE LOAN ORIGINATION ACTIVITIES. (a)
In this section, "mortgage loan originator" and "Nationwide
Mortgage Licensing System and Registry" have the meanings assigned
by Section 180.003.
(b) An individual subject to regulation under this chapter
may not act as a mortgage loan originator unless the individual:
(1) is licensed and registered through the Nationwide
Mortgage Licensing System and Registry as required by Section
180.053; and
(2) complies with other applicable requirements of
Chapter 180 and rules adopted under that chapter.
SECTION 6. Subchapter B, Chapter 342, Finance Code, is
amended by adding Section 342.0515 to read as follows:
Sec. 342.0515. MORTGAGE LOAN ORIGINATOR ACTIVITIES. (a)
In this section, "mortgage loan originator" and "Nationwide
Mortgage Licensing System and Registry" have the meanings assigned
by Section 180.003.
(b) An individual who acts as a mortgage loan originator in
the making, transacting, or negotiating of a loan subject to this
chapter must:
(1) be licensed to engage in that activity under this
chapter;
(2) be registered through the Nationwide Mortgage
Licensing System and Registry as required by Section 180.053; and
(3) comply with other applicable requirements of
Chapter 180 and rules adopted under that chapter.
(c) The finance commission shall adopt rules establishing
procedures for issuing, renewing, and enforcing a license under
this section. In adopting rules under this subsection, the finance
commission shall ensure that:
(1) the minimum eligibility requirements for issuance
of a license are the same as the requirements of Section 180.056;
(2) the minimum eligibility requirements for renewal
of a license are the same as the requirements of Section 180.060;
and
(3) the applicant pays:
(A) an investigation fee in a reasonable amount
determined by the commissioner; and
(B) an annual license fee in an amount determined
as provided by Section 14.107.
(d) The finance commission by rule may waive or modify,
wholly or partly, any requirement of this chapter and establish new
requirements as reasonably necessary to enable the commissioner to
participate in the Nationwide Mortgage Licensing System and
Registry for purposes of this section and Chapter 180.
SECTION 7. Section 342.156, Finance Code, is amended to
read as follows:
Sec. 342.156. LICENSE SUSPENSION OR REVOCATION. After
notice and a hearing the commissioner may suspend or revoke a
license if the commissioner finds that:
(1) the license holder failed to pay the annual
license fee, an examination fee, an investigation fee, or another
charge imposed by the commissioner under this chapter;
(2) the license holder, knowingly or without the
exercise of due care, violated this chapter or a rule adopted or
order issued under this chapter; [or]
(3) a fact or condition exists that, if it had existed
or had been known to exist at the time of the original application
for the license, clearly would have justified the commissioner's
denial of the application; or
(4) the license holder has failed to ensure that an
individual acting as a mortgage loan originator, as defined by
Section 180.003, in the making, transacting, or negotiating of a
loan subject to this chapter is licensed under this chapter in
accordance with Section 342.0515.
SECTION 8. The heading to Subchapter J, Chapter 347,
Finance Code, is amended to read as follows:
SUBCHAPTER J. RIGHTS AND DUTIES OF CREDITOR AND MORTGAGE LOAN
ORIGINATOR
SECTION 9. Section 347.451, Finance Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) A registered creditor must meet the surety bond
requirement of the creditor's mortgage loan originator under
Section 180.059.
SECTION 10. Subchapter J, Chapter 347, Finance Code, is
amended by adding Section 347.4515 to read as follows:
Sec. 347.4515. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED.
(a) In this section, "mortgage loan originator" and "Nationwide
Mortgage Licensing System and Registry" have the meanings assigned
by Section 180.003.
(b) An individual who acts as a mortgage loan originator in
the making, transacting, or negotiating of an extension of credit
subject to this chapter must:
(1) be licensed to engage in that activity under this
chapter;
(2) be registered through the Nationwide Mortgage
Licensing System and Registry as required by Section 180.053; and
(3) comply with other applicable requirements of
Chapter 180 and rules adopted under that chapter.
(c) The finance commission shall adopt rules establishing
procedures for issuing, renewing, and enforcing a license under
this section. In adopting rules under this subsection, the finance
commission shall ensure that:
(1) the minimum eligibility requirements for issuance
of a license are the same as the requirements of Section 180.056;
(2) the minimum eligibility requirements for renewal
of a license are the same as the requirements of Section 180.060;
and
(3) the applicant pays:
(A) an investigation fee in a reasonable amount
determined by the commissioner; and
(B) an annual license fee in an amount determined
as provided by Section 14.107.
(d) The finance commission by rule may waive or modify,
wholly or partly, any requirement of this chapter and establish new
requirements as reasonably necessary to enable the commissioner to
participate in the Nationwide Mortgage Licensing System and
Registry for purposes of this section and Chapter 180.
SECTION 11. Section 348.501, Finance Code, is amended by
adding Subsection (c) to read as follows:
(c) A license holder under this chapter who engages in the
sale of a motor vehicle to be used as a principal dwelling must meet
the surety bond requirements of the holder's mortgage loan
originator under Section 180.059.
SECTION 12. Subchapter F, Chapter 348, Finance Code, is
amended by adding Section 348.5015 to read as follows:
Sec. 348.5015. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED.
(a) In this section, "mortgage loan originator" and "Nationwide
Mortgage Licensing System and Registry" have the meanings assigned
by Section 180.003.
(b) An individual who acts as a mortgage loan originator in
the sale of a motor vehicle to be used as a principal dwelling must:
(1) be licensed to engage in that activity under this
chapter;
(2) be registered through the Nationwide Mortgage
Licensing System and Registry as required by Section 180.053; and
(3) comply with other applicable requirements of
Chapter 180 and rules adopted under that chapter.
(c) The finance commission shall adopt rules establishing
procedures for applying for issuing, renewing, and enforcing a
license under this section. In adopting rules under this
subsection, the finance commission shall ensure that:
(1) the minimum eligibility requirements for issuance
of a license are the same as the requirements of Section 180.056;
(2) the minimum eligibility requirements for renewal
of a license are the same as the requirements of Section 180.060;
and
(3) the applicant pays:
(A) an investigation fee in a reasonable amount
determined by the commissioner; and
(B) an annual license fee in an amount determined
as provided by Section 14.107.
(d) The finance commission by rule may waive or modify,
wholly or partly, any requirement of this chapter and establish new
requirements as reasonably necessary to enable the commissioner to
participate in the Nationwide Mortgage Licensing System and
Registry for purposes of this section and Chapter 180.
SECTION 13. Subchapter B, Chapter 351, Finance Code, as
added by Chapter 1220 (H.B. 2138), Acts of the 80th Legislature,
Regular Session, 2007, is amended by adding Section 351.0515 to
read as follows:
Sec. 351.0515. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED.
(a) In this section, "mortgage loan originator" and "Nationwide
Mortgage Licensing System and Registry" have the meanings assigned
by Section 180.003.
(b) An individual who acts as a mortgage loan originator in
the making, transacting, or negotiating of a property tax loan for a
principal dwelling must:
(1) be licensed to engage in that activity under this
chapter;
(2) be registered through the Nationwide Mortgage
Licensing System and Registry as required by Section 180.053; and
(3) comply with other applicable requirements of
Chapter 180 and rules adopted under that chapter.
(c) The finance commission shall adopt rules establishing
procedures for issuing, renewing, and enforcing a license under
this section. In adopting rules under this subsection, the finance
commission shall ensure that:
(1) the minimum eligibility requirements for issuance
of a license are the same as the requirements of Section 180.056;
(2) the minimum eligibility requirements for renewal
of a license are the same as the requirements of Section 180.060;
and
(3) the applicant pays:
(A) an investigation fee in a reasonable amount
determined by the commissioner; and
(B) an annual license fee in an amount determined
as provided by Section 14.107.
(d) The finance commission by rule may waive or modify,
wholly or partly, any requirement of this chapter and establish new
requirements as reasonably necessary to enable the commissioner to
participate in the Nationwide Mortgage Licensing System and
Registry for purposes of this section and Chapter 180.
SECTION 14. Section 351.102, Finance Code, as added by
Chapter 1220 (H.B. 2138), Acts of the 80th Legislature, Regular
Session, 2007, is amended by adding Subsection (e) to read as
follows:
(e) A license holder engaged in the business of making,
transacting, or negotiating a property tax loan for a principal
dwelling must meet the surety bond requirement of the holder's
mortgage loan originator under Section 180.059.
SECTION 15. Section 351.156, Finance Code, as added by
Chapter 1220 (H.B. 2138), Acts of the 80th Legislature, Regular
Session, 2007, is amended to read as follows:
Sec. 351.156. LICENSE SUSPENSION OR REVOCATION. After
notice and a hearing the commissioner may suspend or revoke a
license if the commissioner finds that:
(1) the license holder failed to pay the annual
license fee, an examination fee, an investigation fee, or another
charge imposed by the commissioner under this chapter;
(2) the license holder, knowingly or without the
exercise of due care, violated this chapter or Section 32.06 or
32.065, Tax Code, or a rule adopted or an order issued under this
chapter or Section 32.06 or 32.065, Tax Code; [or]
(3) a fact or condition exists that, if it had existed
or had been known to exist at the time of the original application
for the license, clearly would have justified the commissioner's
denial of the application; or
(4) the license holder has failed to ensure that an
individual acting as a mortgage loan originator, as defined by
Section 180.003, in the making, transacting, or negotiating of a
property tax loan for a principal dwelling is licensed under this
chapter in accordance with Section 351.0515.
SECTION 16. Section 411.095, Government Code, is amended to
read as follows:
Sec. 411.095. ACCESS TO CRIMINAL HISTORY RECORD
INFORMATION: CONSUMER CREDIT COMMISSIONER. [(a)] The consumer
credit commissioner is entitled to obtain from the department
criminal history record information that relates to a person who is
an applicant for or holder of a license under Chapter 342, 347, 348,
351, or 371, Finance Code.
SECTION 17. Section 411.1407(a), Government Code, is
amended to read as follows:
(a) The credit union commissioner is entitled to obtain from
the department criminal history record information maintained by
the department that relates to a person who is:
(1) an individual who applies to incorporate a credit
union under Subtitle D, Title 3, Finance Code;
(2) a board member of a credit union incorporated
under Subtitle D, Title 3, Finance Code;
(3) an applicant for employment by the credit union
department; [or]
(4) an employee of the credit union department; or
(5) an applicant for a mortgage loan originator
license under Chapter 127, Finance Code.
SECTION 18. For purposes of implementing an orderly and
efficient process for licensing and registering mortgage loan
originators that meets the requirements of the federal Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
110-289), Chapters 127 and 180, Finance Code, as added by this Act,
and Chapters 156, 157, 342, 347, 348, and 351, Finance Code, as
amended by this Act, the Finance Commission of Texas and the credit
union commissioner, as soon as practicable after the effective date
of this Act, may adopt rules and establish interim procedures for
licensing persons engaging in or conducting the business of a
mortgage loan originator in this state and for the approval or
denial of applications for licenses authorizing persons to engage
in business as a mortgage loan originator. For individuals or other
persons authorized by state law to engage in mortgage loan
origination activities immediately before the effective date of
this Act, the Finance Commission of Texas may establish expedited
review and licensing procedures.
SECTION 19. (a) Except as provided by Subsection (b) of
this section, an individual is not required to comply with Chapters
127 and 180, Finance Code, as added by this Act, and Chapters 156,
157, 342, 347, 348, and 351, Finance Code, as amended by this Act,
until the later of:
(1) July 31, 2010; or
(2) a subsequent date that is approved by the
secretary of the United States Department of Housing and Urban
Development under the authority granted under the federal Secure
and Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
110-289).
(b) An individual authorized to engage in mortgage loan
origination activities in this state as of July 31, 2009, is not
required to comply with Chapters 127 and 180, Finance Code, as added
by this Act, and Chapters 156, 157, 342, 347, 348, and 351, Finance
Code, as amended by this Act, until the later of:
(1) July 31, 2011; or
(2) a subsequent date approved by the secretary of the
United States Department of Housing and Urban Development under the
authority granted under the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (Pub. L. No. 110-289).
SECTION 20. This Act takes effect September 1, 2009.