Texas 2009 - 81st Regular

Texas House Bill HB2774 Compare Versions

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1	1	H.B. No. 2774
2	2
3	3
4	4	AN ACT
5	5	relating to self-directed and semi-independent status of state
6	6	financial regulatory agencies and the licensing and regulation of
7	7	certain persons involved in residential mortgage lending; making an
8	8	appropriation; providing a penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 156.101, Finance Code, is amended by
11	11	adding Subsection (d) to read as follows:
12	12	(d) The commissioner shall participate in the Nationwide
13	13	Mortgage Licensing System and Registry as provided by Chapter 180.
14	14	SECTION 2. Section 156.102, Finance Code, is amended by
15	15	adding Subsections (a-1) and (b-1) to read as follows:
16	16	(a-1) The finance commission may adopt rules under this
17	17	chapter as required to carry out the intentions of the federal
18	18	Secure and Fair Enforcement for Mortgage Licensing Act of 2008
19	19	(Pub. L. No. 110-289).
20	20	(b-1) The finance commission on the commissioner's
21	21	recommendation may adopt rules to promote a fair and orderly
22	22	administration of the fund consistent with the purposes of
23	23	Subchapter F.
24	24	SECTION 3. The heading to Section 156.104, Finance Code, is
25	25	amended to read as follows:
26	26	Sec. 156.104. MORTGAGE INDUSTRY [BROKER] ADVISORY
27	27	COMMITTEE.
28	28	SECTION 4. Sections 156.104(a), (b), and (h), Finance Code,
29	29	are amended to read as follows:
30	30	(a) The mortgage industry [broker] advisory committee is
31	31	created to advise and assist the commissioner.
32	32	(b) The advisory committee is composed of six members [to
33	33	be] appointed by [as follows:
34	34	[(1)] the commissioner. Each of the members must be
35	35	[shall appoint four members, each of whom]:
36	36	(1) under the regulatory authority of the department
37	37	[(A) must hold a mortgage broker license];
38	38	(2) [(B) is] actively engaged in the business of
39	39	originating, brokering, or funding residential mortgage loans at
40	40	the time of appointment; and
41	41	(3) [(C) has been] primarily engaged in the business
42	42	of originating, brokering, or funding residential mortgage loans
43	43	for at least two years before the member's appointment[; and
44	44	[(2) the Texas Real Estate Commission shall appoint
45	45	two members, each of whom must hold a real estate broker or
46	46	salesperson license].
47	47	(h) In addition to other powers and duties delegated to it
48	48	by the commissioner, the advisory committee shall advise the
49	49	commissioner with respect to:
50	50	(1) the proposal and adoption of rules relating to:
51	51	(A) the licensing of mortgage brokers and loan
52	52	officers;
53	53	(B) the education and experience requirements
54	54	for licensing mortgage brokers and loan officers; and
55	55	(C) conduct and ethics of mortgage brokers and
56	56	loan officers;
57	57	[(D) continuing education for licensed mortgage
58	58	brokers and loan officers and the types of courses acceptable as
59	59	continuing education courses under this chapter; and
60	60	[(E) the granting or denying of an application or
61	61	request for renewal for a mortgage broker license or loan officer
62	62	license;]
63	63	(2) the form of or format for any applications or other
64	64	documents under this chapter; and
65	65	(3) the interpretation, implementation, and
66	66	enforcement of this chapter.
67	67	SECTION 5. Effective April 1, 2010, Section 156.104,
68	68	Finance Code, is amended by adding Subsection (b-1) to read as
69	69	follows:
70	70	(b-1) The members of the committee must include:
71	71	(1) three individuals licensed as residential
72	72	mortgage loan originators under this chapter, one of whom must hold
73	73	an active real estate broker or salesperson license issued under
74	74	Chapter 1101, Occupations Code; and
75	75	(2) three individuals licensed as residential
76	76	mortgage loan originators under Chapter 157, one of whom must hold
77	77	an active real estate broker or salesperson license issued under
78	78	Chapter 1101, Occupations Code.
79	79	SECTION 6. Section 156.202, Finance Code, is amended to
80	80	read as follows:
81	81	Sec. 156.202. EXEMPTIONS. (a) The following persons are
82	82	exempt from this chapter:
83	83	(1) any of the following entities or an employee of any
84	84	of the following entities provided the employee is acting for the
85	85	benefit of the employer:
86	86	(A) a bank, savings bank, or savings and loan
87	87	association, or a subsidiary or an affiliate of a bank, savings
88	88	bank, or savings and loan association;
89	89	(B) a state or federal credit union, or a
90	90	subsidiary, affiliate, or credit union service organization of a
91	91	state or federal credit union;
92	92	(C) an insurance company licensed or authorized
93	93	to do business in this state under the Insurance Code;
94	94	(D) a mortgage banker registered under Chapter
95	95	157;
96	96	(E) an organization that qualifies for an
97	97	exemption from state franchise and sales tax as a 501(c)(3)
98	98	organization;
99	99	(F) a Farm Credit System institution; or
100	100	(G) a political subdivision of this state
101	101	involved in affordable home ownership programs;
102	102	(2) an individual who makes a mortgage loan from the
103	103	individual's own funds to a spouse, former spouse, or persons in the
104	104	lineal line of consanguinity of the individual lending the money;
105	105	(3) an owner of real property who in any
106	106	12-consecutive-month period makes no more than five mortgage loans
107	107	to purchasers of the property for all or part of the purchase price
108	108	of the real estate against which the mortgage is secured;
109	109	(4) an individual who:
110	110	(A) makes a mortgage loan from the individual's
111	111	own funds;
112	112	(B) is not an authorized lender under Chapter
113	113	342, Finance Code; and
114	114	(C) does not regularly engage in the business of
115	115	making or brokering mortgage loans; or
116	116	(5) an individual who is an exclusive agent of a
117	117	registered financial services company under a written agreement
118	118	prohibiting the individual from soliciting, processing,
119	119	negotiating, or placing a mortgage loan with a person other than the
120	120	registered financial services company or an affiliate of that
121	121	company.
122	122	(b) An exclusive agent described by Subsection (a)(5) is
123	123	considered an employee of the registered financial services company
124	124	for purposes of this chapter.
125	125	SECTION 7. Section 156.203, Finance Code, is amended by
126	126	adding Subsection (e) to read as follows:
127	127	(e) In addition to the disciplinary action by the
128	128	commissioner authorized under Section 156.303(a)(7), the
129	129	commissioner may collect a fee in an amount not to exceed $50 for
130	130	any returned check or credit card charge back.
131	131	SECTION 8. Section 156.204, Finance Code, is amended by
132	132	amending Subsections (a) and (c) and adding Subsection (f) to read
133	133	as follows:
134	134	(a) To be eligible to be licensed as a mortgage broker as an
135	135	individual, the individual must:
136	136	(1) be at least 18 years of age;
137	137	(2) be a citizen of the United States or a lawfully
138	138	admitted alien;
139	139	(3) maintain a physical office in this state and
140	140	designate that office in the application;
141	141	(4) provide the commissioner with satisfactory
142	142	evidence that the applicant satisfies one of the following:
143	143	(A) the individual [person] has received a
144	144	bachelor's degree in an area relating to finance, banking, or
145	145	business administration from an accredited college or university
146	146	and has 18 months of experience in the mortgage or lending field as
147	147	evidenced by documentary proof of full-time employment as a
148	148	mortgage broker or licensed loan officer with a mortgage broker or
149	149	an individual [a person] exempt under Section 156.202;
150	150	(B) the individual [person] is licensed in this
151	151	state as:
152	152	(i) an active real estate broker under
153	153	Chapter 1101, Occupations Code;
154	154	(ii) an active attorney; or
155	155	(iii) an active general lines [a local
156	156	recording agent or] insurance [solicitor or] agent or a limited
157	157	lines [for a legal reserve life] insurance agent [company under
158	158	Chapter 21, Insurance Code], or holds an equivalent insurance
159	159	license under the [Chapter 21,] Insurance Code; or
160	160	(C) the individual [person] has three years of
161	161	experience in the mortgage lending field as evidenced by
162	162	documentary proof of full-time employment as a licensed loan
163	163	officer with a mortgage broker or an individual [a person] exempt
164	164	under Section 156.202;
165	165	(5) provide the commissioner with satisfactory
166	166	evidence of:
167	167	(A) having passed an examination, offered by a
168	168	testing service or company approved by the finance commission, that
169	169	demonstrates knowledge of:
170	170	(i) the mortgage industry; and
171	171	(ii) the role and responsibilities of a
172	172	mortgage broker; and
173	173	(B) compliance with the financial requirements
174	174	of this chapter;
175	175	(6) not have been convicted of a criminal offense that
176	176	the commissioner determines directly relates to the occupation of a
177	177	mortgage broker as provided by Chapter 53, Occupations Code;
178	178	(7) satisfy the commissioner as to the individual's
179	179	good moral character, including the individual's honesty,
180	180	trustworthiness, and integrity;
181	181	(8) not be in violation of this chapter, a rule adopted
182	182	under this chapter, or any order previously issued to the
183	183	individual by the commissioner; and
184	184	(9) provide the commissioner with satisfactory
185	185	evidence that:
186	186	(A) if the individual [person] has not been
187	187	previously licensed as a mortgage broker or a loan officer under
188	188	this subchapter, the individual [person] has completed 90
189	189	[classroom] hours of education courses approved by the commissioner
190	190	under this section; or
191	191	(B) if the individual [person] has not been
192	192	previously licensed as a mortgage broker under this subchapter but
193	193	has been licensed as a loan officer under this subchapter, the
194	194	individual [person] has successfully completed an additional 30
195	195	[classroom] hours of education courses approved by the commissioner
196	196	under this section.
197	197	(c) To be eligible to be licensed as a loan officer a person
198	198	must:
199	199	(1) be an individual who is at least 18 years of age;
200	200	(2) be a citizen of the United States or a lawfully
201	201	admitted alien;
202	202	(3) designate in the application the name of the
203	203	mortgage broker sponsoring the loan officer;
204	204	(4) provide the commissioner with satisfactory
205	205	evidence that the applicant satisfies one of the following:
206	206	(A) the person [meets one of the requirements
207	207	described by Subsection (a)(4) and] has successfully completed at
208	208	least 60 [classroom] hours of education courses approved by the
209	209	commissioner; [under this section;]
210	210	(B) the person [has 18 months of experience as a
211	211	loan officer as evidenced by documentary proof of full-time
212	212	employment as a loan officer with a person exempt under Section
213	213	156.202 and] has successfully completed 30 [classroom] hours of
214	214	education courses approved by the commissioner under this section
215	215	if the applicant:
216	216	(i) has 18 months or more of experience as a
217	217	mortgage loan officer as evidenced by documentary proof of
218	218	full-time employment as a mortgage loan officer with a person
219	219	exempt under Section 156.202; or
220	220	(ii) is a person who meets the
221	221	qualifications under Subsection (a)(4)(B); or
222	222	(C) the person holds an active mortgage broker
223	223	license issued under this chapter [for applications received prior
224	224	to January 1, 2000, the mortgage broker that will sponsor the
225	225	applicant provides a certification under oath that the applicant
226	226	has been provided necessary and appropriate education and training
227	227	regarding all applicable state and federal law and regulations
228	228	relating to mortgage loans];
229	229	(5) not have been convicted of a criminal offense that
230	230	the commissioner determines directly relates to the occupation of a
231	231	loan officer as provided by Chapter 53, Occupations Code;
232	232	(6) satisfy the commissioner as to the individual's
233	233	good moral character, including the individual's honesty,
234	234	trustworthiness, and integrity;
235	235	(7) provide the commissioner with satisfactory
236	236	evidence of having passed an examination, offered by a testing
237	237	service or company approved by the finance commission, that
238	238	demonstrates knowledge of:
239	239	(A) the mortgage industry; and
240	240	(B) the role and responsibilities of a loan
241	241	officer; and
242	242	(8) not be in violation of this chapter, a rule adopted
243	243	under this chapter, or any order previously issued to the
244	244	individual by the commissioner.
245	245	(f) Subsection (c) and this subsection expire January 1,
246	246	2011.
247	247	SECTION 9. Effective January 1, 2011, Section 156.204,
248	248	Finance Code, is amended by adding Subsection (c-1) to read as
249	249	follows:
250	250	(c-1) To be eligible to be licensed as a loan officer a
251	251	person must:
252	252	(1) be an individual who is at least 18 years of age;
253	253	(2) be a citizen of the United States or a lawfully
254	254	admitted alien;
255	255	(3) designate in the application the name of the
256	256	mortgage broker sponsoring the loan officer;
257	257	(4) provide the commissioner with satisfactory
258	258	evidence that the applicant satisfies one of the following:
259	259	(A) the person has successfully completed at
260	260	least 60 hours of education courses approved by the commissioner;
261	261	(B) the person has successfully completed 30
262	262	hours of education courses approved by the commissioner under this
263	263	section if the applicant has 18 months or more of experience as a
264	264	residential mortgage loan originator as evidenced by documentary
265	265	proof of full-time employment; or
266	266	(C) the person holds an active license as a
267	267	residential mortgage loan originator under Chapter 157 and has held
268	268	that license for a minimum of one year;
269	269	(5) not have been convicted of a criminal offense that
270	270	the commissioner determines directly relates to the occupation of a
271	271	loan officer as provided by Chapter 53, Occupations Code;
272	272	(6) satisfy the commissioner as to the individual's
273	273	good moral character, including the individual's honesty,
274	274	trustworthiness, and integrity;
275	275	(7) provide the commissioner with satisfactory
276	276	evidence of having passed an examination, offered by a testing
277	277	service or company approved by the finance commission, that
278	278	demonstrates knowledge of:
279	279	(A) the mortgage industry; and
280	280	(B) the role and responsibilities of a loan
281	281	officer; and
282	282	(8) not be in violation of this chapter, a rule adopted
283	283	under this chapter, or any order previously issued to the
284	284	individual by the commissioner.
285	285	SECTION 10. Section 156.205, Finance Code, is amended to
286	286	read as follows:
287	287	Sec. 156.205. FINANCIAL REQUIREMENTS [FOR A MORTGAGE
288	288	BROKER]. Financial requirements for holding a mortgage broker or
289	289	loan officer license shall be met through participation in the
290	290	fund. [(a) In this section, "net assets" means the difference
291	291	between total assets and total liabilities, as determined by
292	292	generally acceptable accounting principles, and does not include
293	293	any assets that are exempt under state or federal law. All assets
294	294	and liabilities are subject to verification by the commissioner.
295	295	[(b) A mortgage broker must maintain net assets of at least
296	296	$25,000 or a surety bond in the amount of at least $50,000. The term
297	297	of the surety bond must coincide with the term of the license. The
298	298	finance commission may adopt rules establishing the terms and
299	299	conditions of the surety bond and the qualifications of the surety.
300	300	[(c) The commissioner shall require proof of compliance
301	301	with this section at the time the mortgage broker applies for or
302	302	renews a license.]
303	303	SECTION 11. Section 156.208, Finance Code, is amended by
304	304	amending Subsections (a), (b), and (j) and adding Subsections (k)
305	305	and (l) to read as follows:
306	306	(a) A mortgage broker license issued under this chapter is
307	307	valid for a term of not more than two years and may be renewed on or
308	308	before its expiration date if the mortgage broker:
309	309	(1) pays to the commissioner a renewal fee in an amount
310	310	determined by the commissioner not to exceed $375 and a recovery
311	311	fund fee provided by Section 156.502;
312	312	(2) has not been convicted of a criminal offense the
313	313	commissioner determines is directly related to the occupation of a
314	314	mortgage broker as provided by Chapter 53, Occupations Code; and
315	315	(3) provides the commissioner with satisfactory
316	316	evidence that the mortgage broker:
317	317	(A) has attended, during the term of the current
318	318	license, 15 hours of continuing education courses that the
319	319	commissioner, in accordance with the rules adopted by the finance
320	320	commission under this section, has approved as continuing education
321	321	courses; or
322	322	(B) maintains an active license in this state as:
323	323	(i) a real estate broker;
324	324	(ii) a real estate salesperson;
325	325	(iii) an attorney; or
326	326	(iv) an active general lines insurance [a
327	327	local recording] agent or a limited lines [or] insurance [solicitor
328	328	or] agent [for a legal reserve life insurance company under Chapter
329	329	21, Insurance Code], or holds an equivalent insurance license under
330	330	the [Chapter 21,] Insurance Code.
331	331	(b) A loan officer license issued under this chapter is
332	332	valid for a term of not more than two years and may be renewed on or
333	333	before its expiration date if the loan officer:
334	334	(1) pays to the commissioner a renewal fee in an amount
335	335	determined by the commissioner not to exceed $275 [$175] and a
336	336	recovery fund fee provided by Section 156.502;
337	337	(2) has not been convicted of a criminal offense the
338	338	commissioner determines is directly related to the occupation of a
339	339	loan officer as provided by Chapter 53, Occupations Code; and
340	340	(3) provides the commissioner with satisfactory
341	341	evidence that the loan officer:
342	342	(A) has attended, during the term of the current
343	343	license, 15 hours of continuing education courses that the
344	344	commissioner, in accordance with the rules adopted by the finance
345	345	commission under this section, has approved as continuing education
346	346	courses, including courses provided by or through the licensed
347	347	mortgage broker with whom the loan officer is associated after
348	348	submission to and approval by the commission; or
349	349	(B) maintains an active license in this state as:
350	350	(i) a real estate broker;
351	351	(ii) a real estate salesperson;
352	352	(iii) an attorney; or
353	353	(iv) an active general lines insurance [a
354	354	local recording] agent or a limited lines [or] insurance [solicitor
355	355	or] agent [for a legal reserve life insurance company under Chapter
356	356	21, Insurance Code], or holds an equivalent insurance license under
357	357	the [Chapter 21,] Insurance Code.
358	358	(j) The commissioner may deny the renewal of a mortgage
359	359	broker license or a loan officer license if:
360	360	(1) the mortgage broker or loan officer is in
361	361	violation of this chapter, a rule adopted under this chapter, or any
362	362	order previously issued to the individual by the commissioner;
363	363	(2) the mortgage broker or loan officer is in default
364	364	in the payment of any administrative penalty, fee, charge, or other
365	365	indebtedness owed under this title; [or]
366	366	(3) during the current term of the license, the
367	367	commissioner becomes aware of any fact that would have been grounds
368	368	for denial of an original license if the fact had been known by the
369	369	commissioner on the date the license was granted; or
370	370	(4) the mortgage broker or loan officer is in default
371	371	on a student loan administered by the Texas Guaranteed Student Loan
372	372	Corporation, pursuant to Section 57.491, Education Code.
373	373	(k) In addition to the disciplinary action by the
374	374	commissioner authorized under Section 156.303(a)(7), the
375	375	commissioner may collect a fee in an amount not to exceed $50 for
376	376	any returned check or credit card charge back.
377	377	(l) Subsections (a) and (b) and this subsection expire
378	378	January 1, 2011.
379	379	SECTION 12. Effective January 1, 2011, Section 156.208,
380	380	Finance Code, is amended by adding Subsections (a-1) and (b-1) to
381	381	read as follows:
382	382	(a-1) A mortgage broker license issued under this chapter is
383	383	valid for a term of not more than two years and may be renewed on or
384	384	before its expiration date if the mortgage broker:
385	385	(1) pays to the commissioner a renewal fee in an amount
386	386	determined by the commissioner not to exceed $375 and a recovery
387	387	fund fee provided by Section 156.502;
388	388	(2) has not been convicted of a criminal offense the
389	389	commissioner determines is directly related to the occupation of a
390	390	mortgage broker as provided by Chapter 53, Occupations Code; and
391	391	(3) provides the commissioner with satisfactory
392	392	evidence that the mortgage broker has attended, during the term of
393	393	the current license, continuing education courses in accordance
394	394	with the applicable requirements of Chapter 180.
395	395	(b-1) A loan officer license issued under this chapter is
396	396	valid for a term of not more than two years and may be renewed on or
397	397	before its expiration date if the loan officer:
398	398	(1) pays to the commissioner a renewal fee in an amount
399	399	determined by the commissioner not to exceed $275 and a recovery
400	400	fund fee provided by Section 156.502;
401	401	(2) has not been convicted of a criminal offense the
402	402	commissioner determines is directly related to the occupation of a
403	403	loan officer as provided by Chapter 53, Occupations Code; and
404	404	(3) provides the commissioner with satisfactory
405	405	evidence that the loan officer has attended, during the term of the
406	406	current license, continuing education courses in accordance with
407	407	the applicable requirements of Chapter 180.
408	408	SECTION 13. The heading to Section 156.212, Finance Code,
409	409	is amended to read as follows:
410	410	Sec. 156.212. MAINTENANCE AND LOCATION OF OFFICES[; DISPLAY
411	411	OF LICENSE CERTIFICATES].
412	412	SECTION 14. Section 156.214(b), Finance Code, as added by
413	413	Chapter 228 (H.B. 1716), Acts of the 80th Legislature, Regular
414	414	Session, 2007, is amended to read as follows:
415	415	(b) To be eligible to register as a registered financial
416	416	services company, a person must:
417	417	(1) be a depository institution exempt from this
418	418	chapter under Section 156.202(1)(A) or (B) and chartered and
419	419	regulated by the Office of Thrift Supervision or the Office of the
420	420	Comptroller of the Currency, or be a subsidiary or affiliate of the
421	421	institution;
422	422	(2) provide the commissioner with satisfactory
423	423	evidence of an undertaking of accountability in a form acceptable
424	424	to the commissioner, supported by a surety bond equal to $1 million
425	425	to cover the person's responsibility for mortgage broker activities
426	426	of each exclusive agent;
427	427	(3) provide a business plan satisfactory to the
428	428	commissioner that sets forth the person's plan to provide education
429	429	to its exclusive agents, handle consumer complaints relating to its
430	430	exclusive agents, and supervise the mortgage broker activities of
431	431	its exclusive agents;
432	432	(4) pay an annual registration fee in an amount
433	433	determined as follows [of the lesser of]:
434	434	(A) if the registered financial services company
435	435	has 2,000 or fewer exclusive agents acting in this state, an amount
436	436	equal to the lesser of:
437	437	(i) one-half of the license fee for a loan
438	438	officer under Section 156.203(c)(1), multiplied by the number of
439	439	exclusive agents under contract to act for the person in this state;
440	440	or
441	441	(ii) [(B)] $200,000;
442	442	(B) if the registered financial services company
443	443	has at least 2,001 but not more than 2,500 exclusive agents acting
444	444	in this state, $225,000;
445	445	(C) if the registered financial services company
446	446	has at least 2,501 but not more than 3,000 exclusive agents acting
447	447	in this state, $250,000;
448	448	(D) if the registered financial services company
449	449	has at least 3,001 but not more than 5,000 exclusive agents acting
450	450	in this state, $300,000; or
451	451	(E) if the registered financial services company
452	452	has at least 5,001 exclusive agents acting in this state, $350,000;
453	453	and
454	454	(5) designate an officer of the person to be
455	455	responsible for the activities of the exclusive agents.
456	456	SECTION 15. Section 156.301, Finance Code, is amended by
457	457	adding Subsection (h) to read as follows:
458	458	(h) The commissioner may require reimbursement in an amount
459	459	not to exceed $325 for each examiner a day for on-site examination
460	460	or investigation of a mortgage broker if records are located out of
461	461	state or if the review is considered necessary beyond the routine
462	462	examination process.
463	463	SECTION 16. Section 156.302(a), Finance Code, is amended to
464	464	read as follows:
465	465	(a) The commissioner, after notice and opportunity for
466	466	hearing, may impose an administrative penalty on a person licensed
467	467	under this chapter who violates this chapter or a rule or order
468	468	adopted under this chapter.
469	469	SECTION 17. Section 156.303, Finance Code, is amended by
470	470	amending Subsections (a), (e), (g), (h), and (j) and adding
471	471	Subsection (a-1) to read as follows:
472	472	(a) The commissioner may order disciplinary action against
473	473	a licensed mortgage broker or a licensed loan officer when the
474	474	commissioner, after notice and opportunity for [a] hearing, has
475	475	determined that the person:
476	476	(1) obtained a license, including a renewal of a
477	477	license, under this chapter through a false or fraudulent
478	478	representation or made a material misrepresentation in an
479	479	application for a license or for the renewal of a license under this
480	480	chapter;
481	481	(2) published or caused to be published an
482	482	advertisement related to the business of a mortgage broker or loan
483	483	officer that:
484	484	(A) is misleading;
485	485	(B) is likely to deceive the public;
486	486	(C) in any manner tends to create a misleading
487	487	impression;
488	488	(D) fails to identify as a mortgage broker or
489	489	loan officer the person causing the advertisement to be published;
490	490	or
491	491	(E) violates federal or state law;
492	492	(3) while performing an act for which a license under
493	493	this chapter is required, engaged in conduct that constitutes
494	494	improper, fraudulent, or dishonest dealings;
495	495	(4) entered a plea of guilty or nolo contendere to, or
496	496	is convicted of, a criminal offense that is a felony or that
497	497	involves fraud or moral turpitude in a court of this or another
498	498	state or in a federal court;
499	499	(5) failed to use a fee collected in advance of closing
500	500	of a mortgage loan for a purpose for which the fee was paid;
501	501	(6) charged or received, directly or indirectly, a fee
502	502	for assisting a mortgage applicant in obtaining a mortgage loan
503	503	before all of the services that the person agreed to perform for the
504	504	mortgage applicant are completed, and the proceeds of the mortgage
505	505	loan have been disbursed to or on behalf of the mortgage applicant,
506	506	except as provided by Section 156.304;
507	507	(7) failed within a reasonable time to honor a check
508	508	issued to the commissioner after the commissioner has mailed a
509	509	request for payment by certified mail to the person's last known
510	510	business address as reflected by the commissioner's records;
511	511	(8) paid compensation to a person who is not licensed
512	512	or exempt under this chapter for acts for which a license under this
513	513	chapter is required;
514	514	(9) induced or attempted to induce a party to a
515	515	contract to breach the contract so the person may make a mortgage
516	516	loan;
517	517	(10) published or circulated an unjustified or
518	518	unwarranted threat of legal proceedings in matters related to the
519	519	person's actions or services as a mortgage broker or loan officer,
520	520	as applicable;
521	521	(11) established an association, by employment or
522	522	otherwise, with a person not licensed or exempt under this chapter
523	523	who was expected or required to act as a mortgage broker or loan
524	524	officer;
525	525	(12) aided, abetted, or conspired with a person to
526	526	circumvent the requirements of this chapter;
527	527	(13) acted in the dual capacity of a mortgage broker or
528	528	loan officer and real estate broker, salesperson, or attorney in a
529	529	transaction without the knowledge and written consent of the
530	530	mortgage applicant or in violation of applicable requirements under
531	531	federal law;
532	532	(14) discriminated against a prospective borrower on
533	533	the basis of race, color, religion, sex, national origin, ancestry,
534	534	familial status, or a disability;
535	535	(15) failed or refused on demand to:
536	536	(A) produce a document, book, or record
537	537	concerning a mortgage loan transaction conducted by the mortgage
538	538	broker or loan officer for inspection by the commissioner or the
539	539	commissioner's authorized personnel or representative;
540	540	(B) give the commissioner or the commissioner's
541	541	authorized personnel or representative free access to the books or
542	542	records relating to the person's business kept by an officer,
543	543	agent, or employee of the person or any business entity through
544	544	which the person conducts mortgage brokerage activities, including
545	545	a subsidiary or holding company affiliate; or
546	546	(C) provide information requested by the
547	547	commissioner as a result of a formal or informal complaint made to
548	548	the commissioner;
549	549	(16) failed without just cause to surrender, on
550	550	demand, a copy of a document or other instrument coming into the
551	551	person's possession that was provided to the person by another
552	552	person making the demand or that the person making the demand is
553	553	under law entitled to receive;
554	554	(17) disregarded or violated this chapter, a rule
555	555	adopted by the finance commission under this chapter, or an order
556	556	issued by the commissioner under this chapter; or
557	557	(18) provided false information to the commissioner
558	558	during the course of an investigation or inspection.
559	559	(a-1) The commissioner may also order disciplinary action
560	560	after notice and opportunity for hearing against a licensed
561	561	mortgage broker or a licensed loan officer if the commissioner
562	562	becomes aware during the term of the license of any fact that would
563	563	have been grounds for denial of an original license if the fact had
564	564	been known by the commissioner on the date the license was issued.
565	565	(e) The commissioner, after giving notice and an
566	566	opportunity for hearing, may impose against a person who violates a
567	567	cease and desist order an administrative penalty in an amount not to
568	568	exceed $1,000 for each day of the violation. In addition to any
569	569	other remedy provided by law, the commissioner may institute in
570	570	district court a suit for injunctive relief and to collect the
571	571	administrative penalty. A bond is not required of the commissioner
572	572	with respect to injunctive relief granted under this subsection.
573	573	[A penalty collected under this subsection shall be deposited in
574	574	the fund.]
575	575	(g) If a person fails to pay an administrative penalty that
576	576	has become final or fails to comply with an order of the
577	577	commissioner that has become final, in addition to any other remedy
578	578	provided under law the commissioner, on not less than 10 days'
579	579	notice to the person, may without a prior hearing suspend the
580	580	person's mortgage broker license or loan officer license. The
581	581	suspension shall continue until the person has complied with the
582	582	[cease and desist] order or paid the administrative penalty.
583	583	During the period of suspension, the person may not originate a
584	584	mortgage loan and all compensation received by the person during
585	585	the period of suspension is subject to forfeiture as provided by
586	586	Section 156.406(b).
587	587	(h) An order of suspension under Subsection (g) may be
588	588	appealed. An appeal is a contested case governed by Chapter 2001,
589	589	Government Code. A hearing of an appeal of an order of suspension
590	590	issued under Subsection (g) shall be held not later than the 30th
591	591	[15th] day after the date of receipt of the notice of appeal. The
592	592	appellant shall be provided at least three days' notice of the time
593	593	and place of the hearing.
594	594	(j) The [On notice and opportunity for hearing, the]
595	595	commissioner may, on not less than 10 days' notice to the person,
596	596	suspend a person's license without a prior hearing under this
597	597	chapter if an indictment or information is filed or returned
598	598	alleging that the person committed a criminal offense involving
599	599	fraud, theft, or dishonesty. The suspension continues until the
600	600	criminal case is dismissed or the person is acquitted. A person may
601	601	appeal the suspension in accordance with Subsection (h).
602	602	SECTION 18. Section 156.401(a), Finance Code, is amended to
603	603	read as follows:
604	604	(a) The commissioner may employ an enforcement staff to
605	605	investigate and prosecute complaints made against persons licensed
606	606	under this chapter. The commissioner may employ a hearings officer
607	607	to conduct hearings under this section. The commissioner may
608	608	collect and deposit any court costs collected pursuant to a final
609	609	order.
610	610	SECTION 19. Section 156.501, Finance Code, is amended by
611	611	amending Subsections (a) and (b) and adding Subsections (d), (e),
612	612	and (f) to read as follows:
613	613	(a) The commissioner shall establish, administer, and
614	614	maintain a mortgage broker recovery fund as provided by this
615	615	subchapter. The amounts received by the commissioner for deposit
616	616	in the fund shall be held by the commissioner in trust for carrying
617	617	out the purposes of the fund.
618	618	(b) Subject to this subsection, the [The] fund shall be used
619	619	to reimburse residential mortgage loan applicants for actual
620	620	damages incurred because of [aggrieved persons to whom a court
621	621	awards actual damages because of certain] acts committed by a
622	622	mortgage broker or loan officer who was licensed under this chapter
623	623	when the act was committed. The use of the fund is limited to
624	624	reimbursement for out-of-pocket losses caused by an act by a
625	625	mortgage broker or loan officer that constitutes a violation of
626	626	Section 156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12),
627	627	(13), or (16) or 156.304. Payments from the fund may not be made to
628	628	a lender who makes a mortgage loan originated by the mortgage broker
629	629	or loan officer or who acquires a mortgage loan originated by the
630	630	mortgage broker or loan officer.
631	631	(d) The fund may be used at the discretion of the
632	632	commissioner to reimburse expenses incurred to secure and destroy
633	633	residential mortgage loan documents that have been abandoned by a
634	634	current or former individual or entity under the regulatory
635	635	authority of the department.
636	636	(e) Payments from the fund shall be reduced by the amount of
637	637	any recovery from the mortgage broker or loan officer or from any
638	638	surety, insurer, or other person or entity making restitution to
639	639	the applicant on behalf of the mortgage broker or loan officer.
640	640	(f) The commissioner, as manager of the fund, is entitled to
641	641	reimbursement for reasonable and necessary costs and expenses
642	642	incurred in the management of the fund, including costs and
643	643	expenses incurred with regard to applications filed under Section
644	644	156.504.
645	645	SECTION 20. Section 156.502(a), Finance Code, is amended to
646	646	read as follows:
647	647	(a) On an application for an original license or for renewal
648	648	of a license issued under this chapter, the applicant, in addition
649	649	to paying the original application fee or renewal fee, shall pay a
650	650	fee in an amount determined by the commissioner, not to exceed $20
651	651	[fee]. The fee shall be deposited in the fund.
652	652	SECTION 21. Section 156.502(b), Finance Code, is amended to
653	653	read as follows:
654	654	(b) If the balance remaining in the fund at the end of a
655	655	calendar year [after 2010] is more [less] than $3.5 million, the
656	656	amount of money in excess of that amount shall be available to the
657	657	commissioner to offset the expenses of participating in and sharing
658	658	information with the Nationwide Mortgage Licensing System and
659	659	Registry in accordance with Chapter 180 [$500,000, each mortgage
660	660	broker and loan officer licensed under this chapter, on the next
661	661	renewal of the license, shall pay, in addition to any other required
662	662	fees, the lesser of a $10 fee or a pro rata share of the amount
663	663	necessary to bring the fund to $1 million. The fee shall be
664	664	deposited in the fund].
665	665	SECTION 22. Section 156.503, Finance Code, is amended to
666	666	read as follows:
667	667	Sec. 156.503. STATUTE OF LIMITATIONS. (a) An application
668	668	for the recovery of actual damages [action for a judgment that
669	669	subsequently results in an order for collection] from the fund
670	670	under Section 156.504 may not be filed [instituted] after the
671	671	second anniversary of the date of the alleged act or omission
672	672	causing the actual damages or the date the act or omission should
673	673	reasonably have been discovered.
674	674	(b) This section does not apply to a subrogation claim
675	675	brought by the commissioner for recovery of money paid out of the
676	676	fund [on which the cause of action accrues].
677	677	SECTION 23. Section 156.504, Finance Code, is amended to
678	678	read as follows:
679	679	Sec. 156.504. PROCEDURE FOR RECOVERY. (a) To recover from
680	680	the fund, a residential mortgage loan applicant must file a written
681	681	sworn application with the commissioner in the form prescribed by
682	682	[An aggrieved person who recovers against a mortgage broker or loan
683	683	officer licensed under this chapter a valid court judgment for
684	684	conduct described by Section 156.501 that occurred on or after
685	685	January 1, 2000, after final judgment has been entered, execution
686	686	returned nulla bona, and a judgment lien perfected, may file a
687	687	verified claim in the court in which the judgment was entered and,
688	688	on 20 days' written notice to] the commissioner [and to the judgment
689	689	debtor, may apply to the court for an order directing payment from
690	690	the fund of any unpaid judgment amount], subject to Section
691	691	156.503. A person who knowingly makes a false statement in
692	692	connection with applying for money out of the fund may be subject to
693	693	criminal prosecution under Section 37.10, Penal Code.
694	694	(b) The residential mortgage loan applicant [On the hearing
695	695	on the application, the aggrieved person] is required to show:
696	696	(1) that the applicant's claim [judgment] is based on
697	697	facts allowing recovery under Section 156.501; and
698	698	(2) that the applicant:
699	699	(A) [person] is not a spouse of the licensed
700	700	mortgage broker or loan officer;
701	701	(B) is not a child, parent, grandchild,
702	702	grandparent, or sibling, including relationships by adoption, of
703	703	the licensed mortgage broker or loan officer;
704	704	(C) is not a person sharing living quarters with
705	705	the licensed mortgage broker or loan officer or a current or former
706	706	employer, employee, or associate of the licensed mortgage broker or
707	707	loan officer;
708	708	(D) is not a person who has aided, abetted, or
709	709	participated other than as a victim with the [of the debtor, or the
710	710	personal representative of the spouse, and that the person is not]
711	711	licensed [as a] mortgage broker or loan officer in any activity that
712	712	is illegal under Section 156.303(a)(2), (3), (5), (6), (8), (9),
713	713	(10), (11), (12), (13), or (16) or Section 156.304 or is not the
714	714	personal representative of a licensed mortgage broker or loan
715	715	officer; and
716	716	(E) is not licensed as a mortgage broker or loan
717	717	officer under this chapter who is seeking to recover any
718	718	compensation in the transaction or transactions for which the
719	719	application for payment is made[;
720	720	[(3) that based on the best available information, the
721	721	judgment debtor lacks sufficient attachable assets in this state or
722	722	any other state to satisfy the judgment and the surety bond required
723	723	by Section 156.205 is not sufficient to satisfy the judgment; and
724	724	[(4) the amount that may be realized from the sale of
725	725	property or other assets liable to be sold or applied in
726	726	satisfaction of the judgment and the balance remaining due on the
727	727	judgment after application of the amount that may be realized].
728	728	(c) On receipt of the verified application, the
729	729	commissioner's staff shall:
730	730	(1) notify each appropriate license holder and the
731	731	issuer of any surety bond issued in connection with their licenses;
732	732	and
733	733	(2) investigate the application and issue a
734	734	preliminary determination, giving the applicant, the license
735	735	holder, and any surety an opportunity to resolve the matter by
736	736	agreement or to dispute the preliminary determination.
737	737	(d) If the preliminary determination under Subsection
738	738	(c)(2) is not otherwise resolved by agreement and is not disputed by
739	739	written notice to the commissioner before the 31st day after the
740	740	notification date, the preliminary determination automatically
741	741	becomes final and the commissioner shall make payment from the
742	742	fund, subject to [A recovery on the judgment against a single
743	743	defendant made before payment from the fund shall be applied first
744	744	by the creditor to actual damages.
745	745	[(d) The court shall make an order directed to the
746	746	commissioner requiring payment from the fund of the amount the
747	747	court finds to be payable on the claim, pursuant to and in
748	748	accordance with the limitations contained in this subchapter, if
749	749	the court is satisfied, on the hearing, of the truth of all matters
750	750	required to be shown by the aggrieved person under Subsection (b)
751	751	and that the aggrieved person has satisfied all of the requirements
752	752	of this section.
753	753	[(e) When the commissioner receives notice of entry of a
754	754	final judgment and a hearing is scheduled under this section, the
755	755	commissioner may notify the attorney general of the commissioner's
756	756	desire to enter an appearance, file a response, appear at the court
757	757	hearing, defend the action, or to take any other appropriate
758	758	action. In taking any action described by this subsection, the
759	759	commissioner and the attorney general shall act only to protect the
760	760	fund from spurious or unjust claims or to ensure compliance with the
761	761	requirements for recovery under this subchapter.
762	762	[(f) The commissioner may relitigate any issue material and
763	763	relevant in the hearing on the application that was determined in
764	764	the underlying action on which the judgment in favor of the
765	765	applicant was based.
766	766	[(g) If the court finds that the aggregate amount of claims
767	767	against a licensed mortgage broker or loan officer exceeds] the
768	768	limits of [contained in] Section 156.505.
769	769	(e) If the preliminary determination under Subsection
770	770	(c)(2) is disputed by the applicant, the license holder, or any
771	771	surety by written notice to the commissioner before the 31st day
772	772	after the notification date, the matter shall be set for a hearing
773	773	governed by Chapter 2001, Government Code, and the hearing rules of
774	774	the finance commission [, the court shall reduce proportionately
775	775	the amount the court finds payable on the claim].
776	776	SECTION 24. Section 156.505, Finance Code, is amended to
777	777	read as follows:
778	778	Sec. 156.505. RECOVERY LIMITS. (a) A person entitled to
779	779	receive payment out of the fund is entitled to receive
780	780	reimbursement of actual, out-of-pocket damages[, reasonable
781	781	attorney's fees, and court costs as determined by the court] as
782	782	provided by this section.
783	783	(b) A payment from the fund may be made [only pursuant to a
784	784	court order] as provided by Section 156.504 and this section. A
785	785	payment for claims:
786	786	(1) arising out of the same transaction, including
787	787	[attorney's fees,] interest, [and court costs,] is limited in the
788	788	aggregate to $25,000, regardless of the number of claimants; and
789	789	(2) [based on judgments] against a single person
790	790	licensed as a mortgage broker or loan officer under this chapter
791	791	arising out of separate transactions, including interest, is
792	792	limited in the aggregate to $50,000 until the fund has been
793	793	reimbursed for all amounts paid.
794	794	(c) In the event there are concurrent claims under
795	795	Subsections (b)(1) and (2) that exceed the amounts available under
796	796	the fund, the commissioner shall prorate recovery based on the
797	797	amount of damage suffered by each claimant.
798	798	SECTION 25. Section 156.506, Finance Code, is amended by
799	799	amending Subsections (a) and (c) and adding Subsection (a-1) to
800	800	read as follows:
801	801	(a) The commissioner may revoke a license issued under this
802	802	chapter on proof that the commissioner has made a payment from the
803	803	fund of any amount toward satisfaction of a claim [judgment]
804	804	against a [person licensed as a] mortgage broker or loan officer
805	805	under this chapter.
806	806	(a-1) The commissioner may seek to collect from a mortgage
807	807	broker or loan officer the amount paid from the fund on behalf of
808	808	the mortgage broker or loan officer and any costs associated with
809	809	investigating and processing the claim against the fund or with
810	810	collection of reimbursement for payments from the fund, plus
811	811	interest at the current legal rate until the amount has been repaid
812	812	in full. Any amount, including interest, recovered by the
813	813	commissioner shall be deposited to the credit of the fund.
814	814	(c) A person on whose behalf payment was made from the fund
815	815	is not eligible to receive a new license under this chapter until
816	816	the person has repaid in full, plus interest at the current legal
817	817	rate, the amount paid from the fund on the person's behalf and any
818	818	costs associated with investigating and processing the claim
819	819	against the fund or with collection of reimbursement for payments
820	820	from the fund.
821	821	SECTION 26. Section 156.507, Finance Code, is amended to
822	822	read as follows:
823	823	Sec. 156.507. SUBROGATION. When the commissioner has paid
824	824	an applicant [a judgment creditor] an amount from the fund under
825	825	Section 156.504 [as directed by the court], the commissioner is
826	826	subrogated to all of the rights of the applicant [judgment
827	827	creditor] to the extent of the amount paid. The applicant [judgment
828	828	creditor] shall assign all of the applicant's [creditor's] right,
829	829	title, and interest in [the judgment up to the amount paid by the
830	830	commissioner, and that amount has priority for repayment in the
831	831	event of] any subsequent [recovery on the] judgment against the
832	832	license holder, up to the[. Any] amount paid[, including interest,
833	833	recovered] by the commissioner. Any amount, including interest,
834	834	recovered by the commissioner on the assignment [judgment] shall be
835	835	deposited to the credit of the fund.
836	836	SECTION 27. Section 156.508, Finance Code, is amended to
837	837	read as follows:
838	838	Sec. 156.508. FAILURE TO COMPLY WITH SUBCHAPTER OR RULE
839	839	ADOPTED BY THE FINANCE COMMISSION. The failure of an applicant
840	840	under Section 156.504 [aggrieved person] to comply with a provision
841	841	of this subchapter relating to the fund or with a rule adopted by
842	842	the finance commission relating to the fund constitutes a waiver of
843	843	any rights under this subchapter.
844	844	SECTION 28. (a) Title 2, Finance Code, is amended by
845	845	adding Chapter 16 to read as follows:
846	846	CHAPTER 16. FINANCIAL REGULATORY AGENCIES: SELF-DIRECTED AND
847	847	SEMI-INDEPENDENT
848	848	Sec. 16.001. DEFINITIONS. In this chapter:
849	849	(1) "Financial regulatory agency" means:
850	850	(A) the Texas Department of Banking;
851	851	(B) the Department of Savings and Mortgage
852	852	Lending;
853	853	(C) the Office of Consumer Credit Commissioner;
854	854	and
855	855	(D) the Credit Union Department.
856	856	(2) "Policy-making body" means:
857	857	(A) the Finance Commission of Texas for:
858	858	(i) the Texas Department of Banking;
859	859	(ii) the Department of Savings and Mortgage
860	860	Lending; and
861	861	(iii) the Office of Consumer Credit
862	862	Commissioner; and
863	863	(B) the Credit Union Commission for the Credit
864	864	Union Department.
865	865	Sec. 16.002. SELF-DIRECTED AND SEMI-INDEPENDENT STATUS OF
866	866	FINANCIAL REGULATORY AGENCIES. Notwithstanding any other
867	867	provision of law, a financial regulatory agency is self-directed
868	868	and semi-independent as specified by this chapter. Any Act of the
869	869	81st Legislature that relates to a financial regulatory agency and
870	870	that is inconsistent with the agency being self-directed and
871	871	semi-independent may be implemented by the financial regulatory
872	872	agency only on authorization by the policy-making body of the
873	873	financial regulatory agency.
874	874	Sec. 16.003. BUDGET, REVENUES, AND EXPENSES. (a) A
875	875	financial regulatory agency shall submit to the policy-making body
876	876	of the financial regulatory agency a budget annually using
877	877	generally accepted accounting principles. Notwithstanding any
878	878	other provision of law, including the General Appropriations Act,
879	879	the budget shall be adopted and approved only by the policy-making
880	880	body of the financial regulatory agency.
881	881	(b) A financial regulatory agency shall be responsible for
882	882	all direct and indirect costs of the agency's existence and
883	883	operation. The financial regulatory agency may not directly or
884	884	indirectly cause the general revenue fund to incur any cost.
885	885	(c) Subject to any limitations in a financial regulatory
886	886	agency's enabling legislation, a financial regulatory agency may
887	887	set the amounts of fees, penalties, charges, and revenues required
888	888	or permitted by statute or rule as necessary for the purpose of
889	889	carrying out the functions of the financial regulatory agency and
890	890	funding the budget adopted and approved under Subsection (a).
891	891	(d) All fees and funds collected by a financial regulatory
892	892	agency and any funds appropriated to the financial regulatory
893	893	agency shall be deposited in interest-bearing deposit accounts in
894	894	the Texas Treasury Safekeeping Trust Company. The comptroller
895	895	shall contract with the financial regulatory agency for the
896	896	maintenance of the deposit accounts under terms comparable to a
897	897	contract between a commercial banking institution and the
898	898	institution's customers.
899	899	(e) Periodically, each financial regulatory agency shall
900	900	submit to the agency's policy-making body, as directed by the
901	901	policy-making body, a report of the receipts and expenditures of
902	902	the financial regulatory agency.
903	903	(f) The fiscal year for a financial regulatory agency begins
904	904	on September 1 and ends on August 31.
905	905	Sec. 16.004. AUDITS. This chapter does not affect the duty
906	906	of the state auditor to audit a financial regulatory agency. The
907	907	state auditor shall enter into a contract and schedule with each
908	908	financial regulatory agency to conduct audits, including financial
909	909	reports and performance audits. The financial regulatory agency
910	910	shall reimburse the state auditor for all costs incurred in
911	911	performing the audits and shall provide to the governor a copy of
912	912	any audit performed.
913	913	Sec. 16.005. RECORDS; REPORTING REQUIREMENTS. (a) A
914	914	financial regulatory agency shall keep financial and statistical
915	915	information as necessary to disclose completely and accurately the
916	916	financial condition and results of operations of the agency.
917	917	(b) Before the beginning of each regular session of the
918	918	legislature, each financial regulatory agency shall submit to the
919	919	legislature and the governor a report describing all of the
920	920	agency's activities in the previous biennium. The report must
921	921	include:
922	922	(1) an audit as required by Section 16.004;
923	923	(2) a financial report of the previous fiscal year,
924	924	including reports on financial condition and results of operations;
925	925	(3) a description of all changes in fees imposed on
926	926	regulated industries;
927	927	(4) a report on changes in the regulatory jurisdiction
928	928	of the agency, including the number of chartered financial
929	929	institutions, license holders, and registrants subject to the
930	930	agency's jurisdiction and any changes in those figures; and
931	931	(5) a list of all new rules adopted or repealed.
932	932	(c) In addition to the reporting requirements of Subsection
933	933	(b), not later than November 1 of each year, each financial
934	934	regulatory agency shall submit to the governor, the committee of
935	935	each house of the legislature that has jurisdiction over
936	936	appropriations, and the Legislative Budget Board a report that
937	937	contains:
938	938	(1) the salary for all financial regulatory agency
939	939	personnel and the total amount of per diem expenses and travel
940	940	expenses paid for all agency employees;
941	941	(2) the total amount of per diem expenses and travel
942	942	expenses paid for each member of the agency's policy-making body,
943	943	provided that only one report must be submitted regarding the
944	944	Finance Commission of Texas;
945	945	(3) the agency's operating plan and annual budget; and
946	946	(4) a detailed report of all revenue received and all
947	947	expenses incurred by the financial regulatory agency in the
948	948	previous 12 months.
949	949	Sec. 16.006. ABILITY TO CONTRACT. (a) To carry out and
950	950	promote the objectives of this chapter, a financial regulatory
951	951	agency may enter into contracts and do all other acts incidental to
952	952	those contracts that are necessary for the administration of the
953	953	agency's affairs and for the attainment of the agency's purposes,
954	954	except as limited by Subsection (b).
955	955	(b) Any indebtedness, liability, or obligation of the
956	956	financial regulatory agency incurred under this section may not:
957	957	(1) create a debt or other liability of this state or
958	958	another entity other than the financial regulatory agency; or
959	959	(2) create any personal liability on the part of the
960	960	members of the policy-making body or the body's or agency's
961	961	employees.
962	962	Sec. 16.007. PROPERTY. A financial regulatory agency may:
963	963	(1) acquire by purchase, lease, gift, or any other
964	964	manner provided by law and maintain, use, and operate any real,
965	965	personal, or mixed property, or any interest in property, necessary
966	966	or convenient to the exercise of the powers, rights, privileges, or
967	967	functions of the financial regulatory agency;
968	968	(2) sell or otherwise dispose of any real, personal,
969	969	or mixed property, or any interest in property, that the financial
970	970	regulatory agency determines is not necessary or convenient to the
971	971	exercise of the agency's powers, rights, privileges, or functions;
972	972	(3) construct, extend, improve, maintain, and
973	973	reconstruct, or cause to construct, extend, improve, maintain, and
974	974	reconstruct, and use and operate all facilities necessary or
975	975	convenient to the exercise of the powers, rights, privileges, or
976	976	functions of the financial regulatory agency; and
977	977	(4) borrow money, as may be authorized from time to
978	978	time by an affirmative vote of a two-thirds majority of the
979	979	policy-making body of the financial regulatory agency, for a period
980	980	not to exceed five years if necessary or convenient to the exercise
981	981	of the financial regulatory agency's powers, rights, privileges, or
982	982	functions.
983	983	Sec. 16.008. SUITS. The office of the attorney general
984	984	shall represent a financial regulatory agency in any litigation.
985	985	The attorney general may assess and collect from the financial
986	986	regulatory agency reasonable attorney's fees associated with any
987	987	litigation under this section.
988	988	Sec. 16.009. POST-PARTICIPATION LIABILITY. (a) If a
989	989	financial regulatory agency no longer has status under this chapter
990	990	as a self-directed semi-independent financial regulatory agency
991	991	for any reason, the agency shall be liable for any expenses or debts
992	992	incurred by the agency during the time the agency was a
993	993	self-directed semi-independent financial regulatory agency. The
994	994	agency's liability under this section includes liability for any
995	995	lease entered into by the agency. This state is not liable for any
996	996	expense or debt covered by this subsection, and money from the
997	997	general revenue fund may not be used to repay the expense or debt.
998	998	(b) If a financial regulatory agency no longer has status
999	999	under this chapter as a self-directed semi-independent financial
1000	1000	regulatory agency for any reason, ownership of any property or
1001	1001	other asset acquired by the agency during the time the agency was a
1002	1002	self-directed semi-independent financial regulatory agency,
1003	1003	including unexpended fees in a deposit account in the Texas
1004	1004	Treasury Safekeeping Trust Company, shall be transferred to this
1005	1005	state.
1006	1006	Sec. 16.010. DUE PROCESS; OPEN GOVERNMENT. A financial
1007	1007	regulatory agency is:
1008	1008	(1) a governmental body for purposes of Chapters 551
1009	1009	and 552, Government Code; and
1010	1010	(2) a state agency for purposes of Chapters 2001 and
1011	1011	2005, Government Code.
1012	1012	Sec. 16.011. MEMBERSHIP IN EMPLOYEES RETIREMENT SYSTEM.
1013	1013	Employees of the financial regulatory agencies are members of the
1014	1014	Employees Retirement System of Texas under Chapter 812, Government
1015	1015	Code, and the agencies' transition to independent status as
1016	1016	provided by this chapter has no effect on their membership or any
1017	1017	benefits under that system.
1018	1018	Sec. 16.012. GIFTS. (a) Notwithstanding any other law, a
1019	1019	financial regulatory agency may not accept a gift, grant, or
1020	1020	donation:
1021	1021	(1) from a party to an enforcement action; or
1022	1022	(2) to pursue a specific investigation or enforcement
1023	1023	action.
1024	1024	(b) A financial regulatory agency must:
1025	1025	(1) report each gift, grant, or donation that the
1026	1026	agency receives as a separate item in the agency's report required
1027	1027	under Section 16.005(b); and
1028	1028	(2) include with the report a statement indicating the
1029	1029	purpose for which each gift, grant, or donation was donated and
1030	1030	used.
1031	1031	(b) Section 11.104, Finance Code, is amended to read as
1032	1032	follows:
1033	1033	Sec. 11.104. EXPENSES AND COMPENSATION OF MEMBERS. A
1034	1034	member of the finance commission is entitled to:
1035	1035	(1) the reimbursement for reasonable and necessary
1036	1036	expenses incidental to travel incurred in connection with the
1037	1037	performance of official duties; and
1038	1038	(2) a per diem [as set by legislative appropriation]
1039	1039	for each day that the member engages in the business of the finance
1040	1040	commission.
1041	1041	(c) Section 11.110(c), Finance Code, is amended to read as
1042	1042	follows:
1043	1043	(c) A person appointed to the finance commission is entitled
1044	1044	to reimbursement under Section 11.104, as if the person were a
1045	1045	member of the finance commission, [as provided by the General
1046	1046	Appropriations Act,] for the travel expenses incurred in attending
1047	1047	the training program regardless of whether the attendance at the
1048	1048	program occurs before or after the person qualifies for office.
1049	1049	(d) Section 11.204, Finance Code, is amended by adding
1050	1050	Subsection (c) to read as follows:
1051	1051	(c) The finance commission shall have charge and control of
1052	1052	the property known as the Finance Commission Building and use of
1053	1053	staff, equipment, and facilities of the finance agencies. The
1054	1054	Finance Commission Building refers to the property located in the
1055	1055	city of Austin and titled in the name of the Banking Section of the
1056	1056	Finance Commission of Texas, as described by deed recorded in
1057	1057	Volume 5080, Page 1099, of the Deed Records of Travis County, Texas.
1058	1058	(e) Section 15.2041(c), Finance Code, is amended to read as
1059	1059	follows:
1060	1060	(c) A person appointed to the commission is entitled to
1061	1061	reimbursement under Section 15.207, as if the person were a member
1062	1062	of the commission, for travel expenses incurred in attending the
1063	1063	training program, regardless of whether the attendance at the
1064	1064	program occurs before or after the person qualifies for office[, as
1065	1065	provided by the General Appropriations Act and as if the person were
1066	1066	a member of the commission].
1067	1067	(f) Subchapter E, Chapter 15, Finance Code, is amended by
1068	1068	adding Section 15.4011 to read as follows:
1069	1069	Sec. 15.4011. CREDIT UNION DEPARTMENT BUILDING. The
1070	1070	commission shall have charge and control of the property known as
1071	1071	the Credit Union Department Building and use of staff, equipment,
1072	1072	and facilities of the department. The Credit Union Department
1073	1073	Building refers to the property located in the city of Austin and
1074	1074	titled in the name of the State of Texas for the use and benefit of
1075	1075	the Credit Union Department, as described by deed recorded in
1076	1076	Volume 6126, Page 27, of the Deed Records of Travis County, Texas.
1077	1077	(g) Section 156.101(a), Finance Code, is amended to read as
1078	1078	follows:
1079	1079	(a) The commissioner shall administer and enforce this
1080	1080	chapter.
1081	1081	(h) Section 2165.007(b), Government Code, is amended to
1082	1082	read as follows:
1083	1083	(b) Notwithstanding any other law, the commission shall
1084	1084	provide facilities management services in relation to all state
1085	1085	agency facilities in Travis County or a county adjacent to Travis
1086	1086	County. The commission's duty does not apply to:
1087	1087	(1) a facility owned or operated by an institution of
1088	1088	higher education;
1089	1089	(2) military facilities;
1090	1090	(3) facilities owned or operated by the Texas
1091	1091	Department of Criminal Justice;
1092	1092	(4) facilities owned or operated by the Texas Youth
1093	1093	Commission;
1094	1094	(5) facilities owned or operated by the Texas
1095	1095	Department of Transportation;
1096	1096	(6) the Capitol, including the Capitol Extension, the
1097	1097	General Land Office building, the Bob Bullock Texas State History
1098	1098	Museum, any museum located on the Capitol grounds, the Governor's
1099	1099	Mansion, and any property maintained by the Texas Historical
1100	1100	Commission under Sections 442.0072 and 442.0073;
1101	1101	(7) a facility determined by the commission to be
1102	1102	completely residential;
1103	1103	(8) a regional or field office of a state agency; [or]
1104	1104	(9) a facility located within or on state park
1105	1105	property;
1106	1106	(10) the property known as the Finance Commission
1107	1107	Building described by deed recorded in Volume 5080, Page 1099, of
1108	1108	the Deed Records of Travis County, Texas; or
1109	1109	(11) the property known as the Credit Union Department
1110	1110	Building described by deed recorded in Volume 6126, Page 27, of the
1111	1111	Deed Records of Travis County, Texas.
1112	1112	(i) Sections 12.103, 13.005, 13.008, 14.053, 14.060,
1113	1113	15.104, 15.207(c), 15.308, 15.408, and 156.101(b) and (c), Finance
1114	1114	Code, are repealed.
1115	1115	(j)(1) To provide a reasonable period for each financial
1116	1116	regulatory agency, as defined by Section 16.001, Finance Code, as
1117	1117	added by this section, to establish itself as a self-directed and
1118	1118	semi-independent agency, the following amounts are appropriated
1119	1119	from the general revenue fund to each of those financial regulatory
1120	1120	agencies:
1121	1121	(A) for the state fiscal year ending August 31,
1122	1122	2010, an amount equal to 50 percent of the amount of general revenue
1123	1123	appropriated to the agency for the state fiscal year ending August
1124	1124	31, 2009; and
1125	1125	(B) for the state fiscal year ending August 31,
1126	1126	2011, an amount equal to 50 percent of the amount of general revenue
1127	1127	appropriated to the agency for the state fiscal year ending August
1128	1128	31, 2009.
1129	1129	(2) Subject to Section 16.003, Finance Code, as added
1130	1130	by this section, the appropriations made by Subdivision (1) of this
1131	1131	subsection may be spent by the financial regulatory agency to which
1132	1132	they are made as the financial regulatory agency directs. The
1133	1133	financial regulatory agency shall repay to the general revenue fund
1134	1134	the appropriation made to the agency for the state fiscal year
1135	1135	ending August 31, 2010, not later than that date and as funds become
1136	1136	available. The financial regulatory agency shall repay to the
1137	1137	general revenue fund the appropriation made to the agency for the
1138	1138	state fiscal year ending August 31, 2011, not later than that date
1139	1139	and as funds become available.
1140	1140	(k) The transfer of a financial regulatory agency, as
1141	1141	defined by Section 16.001, Finance Code, as added by this section,
1142	1142	to self-directed and semi-independent status under Chapter 16,
1143	1143	Finance Code, as added by this section, and the expiration of
1144	1144	self-directed and semi-independent status may not act to cancel,
1145	1145	suspend, or prevent:
1146	1146	(1) any debt owed to or by the financial regulatory
1147	1147	agency;
1148	1148	(2) any fine, tax, penalty, or obligation of any
1149	1149	party;
1150	1150	(3) any contract or other obligation of any party; or
1151	1151	(4) any action taken by the financial regulatory
1152	1152	agency in the administration or enforcement of the agency's duties.
1153	1153	(l) Each financial regulatory agency, as defined by Section
1154	1154	16.001, Finance Code, as added by this section, shall continue to
1155	1155	have and exercise the powers and duties allocated to the agency in
1156	1156	the agency's enabling legislation, except as specifically amended
1157	1157	by this section.
1158	1158	(m) Title to all supplies, materials, records, equipment,
1159	1159	books, papers, and facilities used by each financial regulatory
1160	1160	agency, as defined by Section 16.001, Finance Code, as added by this
1161	1161	section, is transferred to each respective financial regulatory
1162	1162	agency in fee simple. Nothing in this section shall have an effect
1163	1163	on property owned by a financial regulatory agency on or before the
1164	1164	effective date of this section.
1165	1165	(n) If a conflict exists between this section and another
1166	1166	Act of the 81st Legislature, Regular Session, 2009, that relates to
1167	1167	the self-directed and semi-independent status of a state financial
1168	1168	regulatory agency, this section controls without regard to the
1169	1169	relative dates of the enactment.
1170	1170	SECTION 29. Sections 156.212(c) and (d) and 156.502(c),
1171	1171	Finance Code, are repealed.
1172	1172	SECTION 30. The provisions of this Act or the applications
1173	1173	of those provisions are severable as provided by Section
1174	1174	311.032(c), Government Code. If the Secretary of Housing and Urban
1175	1175	Development determines that any provision of Sections 1-27 and 29
1176	1176	of this Act fails to meet the requirements of the federal Secure and
1177	1177	Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
1178	1178	110-289), that provision of this Act shall be held invalid;
1179	1179	however, the remainder of this Act or the application of the
1180	1180	provision to other persons or circumstances is not affected.
1181	1181	SECTION 31. To the extent of any conflict, this Act prevails
1182	1182	over another Act of the 81st Legislature, Regular Session, 2009,
1183	1183	relating to nonsubstantive additions to and corrections in enacted
1184	1184	codes.
1185	1185	SECTION 32. (a) Subject to Subsection (b) of this section,
1186	1186	this Act takes effect September 1, 2009.
1187	1187	(b) Sections 1, 2, and 18 of this Act take effect only if
1188	1188	House Bill 10 or another similar bill of the Regular Session of the
1189	1189	81st Legislature relating to the licensing of residential mortgage
1190	1190	loan originators is enacted and becomes law. If House Bill 10 or
1191	1191	another similar bill of the Regular Session of the 81st Legislature
1192	1192	relating to the licensing of residential mortgage loan originators
1193	1193	does not become law, Sections 1, 2, and 18 of this Act do not take
1194	1194	effect.
1195	1195	______________________________ ______________________________
1196	1196	President of the Senate Speaker of the House
1197	1197	I certify that H.B. No. 2774 was passed by the House on April
1198	1198	28, 2009, by the following vote: Yeas 147, Nays 0, 1 present, not
1199	1199	voting; that the House refused to concur in Senate amendments to
1200	1200	H.B. No. 2774 on May 29, 2009, and requested the appointment of a
1201	1201	conference committee to consider the differences between the two
1202	1202	houses; and that the House adopted the conference committee report
1203	1203	on H.B. No. 2774 on May 31, 2009, by the following vote: Yeas 144,
1204	1204	Nays 0, 1 present, not voting.
1205	1205	______________________________
1206	1206	Chief Clerk of the House
1207	1207	I certify that H.B. No. 2774 was passed by the Senate, with
1208	1208	amendments, on May 26, 2009, by the following vote: Yeas 31, Nays
1209	1209	0; at the request of the House, the Senate appointed a conference
1210	1210	committee to consider the differences between the two houses; and
1211	1211	that the Senate adopted the conference committee report on H.B. No.
1212	1212	2774 on June 1, 2009, by the following vote: Yeas 31, Nays 0.
1213	1213	______________________________
1214	1214	Secretary of the Senate
1215	1215	APPROVED: __________________
1216	1216	Date
1217	1217	__________________
1218	1218	Governor