81R11344 CLG-D
By: Olivo H.B. No. 3588
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of mortgage brokers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter C, Chapter 156, Finance Code, is
amended by adding Sections 156.216 and 156.217 to read as follows:
Sec. 156.216. MORTGAGE BROKER DUTIES. (a) A mortgage broker
owes a fiduciary duty to a mortgage applicant in the origination of
a mortgage loan. The exercise of this duty includes:
(1) ensuring that any mortgage loan offered is
affordable and meets the mortgage applicant's purposes, as
determined by considering factors including:
(A) the applicant's circumstances;
(B) the purpose of the loan, including the reason
why the applicant has applied for the loan; and
(C) the applicant's ability to repay;
(2) making reasonable efforts to secure a loan that is
suitable to the mortgage applicant considering all of the
circumstances, including interest rates, charges, and repayment
terms of the loan and the loan options for which the applicant
qualifies; and
(3) offering the mortgage applicant the most favorable
terms available to a person having the applicant's qualifications.
(b) A mortgage applicant's statement of ability to repay a
loan is not conclusive evidence of the applicant's ability to repay
the loan. A mortgage broker must evaluate other reliable,
objective evidence of affordability and ability to repay.
(c) The duties of a mortgage broker may not be waived or
disclaimed unless otherwise provided by law.
Sec. 156.217. PROHIBITED PRACTICES. (a) A mortgage broker
may not recommend or make a mortgage loan that contains a provision
for a prepayment penalty.
(b) A mortgage broker may not receive any yield-spread
premium from a lender for processing and originating a mortgage
loan.
(c) A mortgage broker may not recommend to a mortgage
applicant an interest rate, charge, principal amount, or prepayment
term that is not suitable to the mortgage applicant considering all
of the applicant's circumstances, including the characteristics of
the property that secures or will secure the mortgage loan and the
loan terms for which the mortgage applicant qualifies.
(d) A mortgage broker may not:
(1) mischaracterize:
(A) a mortgage applicant's credit history; or
(B) the mortgage loans available to an applicant;
(2) discourage a mortgage applicant from seeking a
mortgage loan from another creditor or with another mortgage
broker, if the mortgage broker is unable to offer or recommend a
suitable mortgage loan to the applicant;
(3) misrepresent the material facts or knowingly make
a false promise likely to induce an applicant to obtain a mortgage
loan, or pursue a course of misrepresentation through an agent or
otherwise;
(4) misrepresent to or conceal from a mortgage
applicant material factors or terms of a mortgage loan transaction;
(5) fail to disburse funds in accordance with an
agreement;
(6) engage in a transaction, practice, or course of
business that operates a fraud on a person or violates Subchapter E,
Chapter 17, Business & Commerce Code;
(7) fraudulently or deceitfully advertise a mortgage
loan or misrepresent the terms or charges incidental to a mortgage
loan in an advertisement;
(8) recommend or encourage default on an existing loan
or other debt before and in connection with the closing or planned
closing of a mortgage loan that refinances all or a portion of that
existing loan or debt;
(9) knowingly engage in the practice of making a home
loan to a mortgage applicant who refinances an existing loan if the
new loan does not have a reasonable, tangible net benefit to the
mortgage applicant considering all of the circumstances, including
the terms of the new and refinanced loans, the cost of the new loan,
and the mortgage applicant's circumstances; and
(10) influence or attempt to influence through direct
or indirect means the outcome of a real estate appraisal sought in
connection with a mortgage loan, or otherwise engage in a practice
or course of business that induces or attempts to induce a real
estate appraiser to violate the Uniform Standards of Professional
Appraisal Practice in connection with a mortgage loan.
(e) This section does not prohibit a mortgage broker from
providing a mortgage applicant with accurate, unbiased, or general
information about consumer home loans, underwriting standards,
methods of improving credit history, or other matters relevant to a
mortgage applicant.
SECTION 2. This Act takes effect September 1, 2009.