81R14098 T
By: Wentworth S.B. No. 2142
A BILL TO BE ENTITLED
AN ACT
relating to amending the Texas Mortgage Banker Registration Act to
provide for licensing and regulation of mortgage banker employees
who are residential mortgage originators and providing enforcement
and penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 157 of the Finance Code is amended to
read as follows:
Sec. 157.001. SHORT TITLE. This chapter may be cited as the
Mortgage Banker Registration and Loan Originator License Act.
Sec. 157.002. DEFINITIONS. In this chapter:
(1) "Commissioner" means the savings and mortgage
lending commissioner.
(2) "Disciplinary action" means any order by the
commissioner that requires one or more of the following:
(A) suspension or revocation of a mortgage loan
originator license under this chapter;
(B) probation of a suspension or revocation of a
mortgage loan originator license under this chapter on terms and
conditions that the commissioner determines appropriate;
(C) a reprimand of a person with a mortgage loan
originator license under this chapter; or
(D) an administrative penalty imposed on a person
holding a mortgage loan originator license under this chapter under
Section ___.
(3) "Finance Commission" means the Finance Commission
of Texas.
(4) "Loan processor or underwriter" shall mean 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 as a mortgage loan originator or exempt from
licensing. Clerical or support duties may include subsequent to
the receipt of a residential mortgage loan application:
(A) the receipt, collection, distribution, and
analysis of information common for the processing or underwriting
of a residential mortgage loan; and
(B) communicating with a consumer to obtain the
information necessary for the processing or underwriting of a loan,
to the extent that such communication does not include offering or
negotiating loan rates or terms, or counseling consumers about
residential mortgage loan rates or terms.
(5) [(2)] "Mortgage banker" means a person who:
(A) accepts an application for a residential
mortgage loan or makes a residential mortgage loan; and
(B) is an approved or authorized:
(i) mortgagee with direct endorsement
underwriting authority granted by the United States Department of
Housing and Urban Development;
(ii) seller or servicer of the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation; or
(iii) issuer for the Government National
Mortgage Association.
(6) "Mortgage loan originator" means a mortgage banker
employee who for compensation or gain or in the expectation of
compensation or gain:
(A) takes a residential mortgage loan
application; or
(B) offers or negotiates terms of a residential
mortgage loan.
The term does not include an individual engaged solely
as a loan processor or underwriter.
(7) "Mortgage loan servicer" means an employee of a
mortgage banker who on behalf of the mortgage banker collects or
receives payments, including payments of principal, interest,
escrow amounts, and other amounts due, on obligations due and owing
to the mortgage banker servicing a residential mortgage loan
including working with the borrower when the borrower is in default
or in reasonably foreseeable likelihood of default to modify either
temporarily or permanently certain terms of those obligations or
otherwise finalizing collection through the foreclosure process.
(8) [(3)] "Residential mortgage [Mortgage] loan"
means a debt secured by a [first] lien on residential real property
designed principally for occupancy by one to four families that is
created by a deed of trust, security deed, or other security
instrument.
(9) "Secure and Fair Enforcement for Mortgage
Licensing Act" refers to Chapter 180 of the Finance Code.
Sec. 157.003. REGISTRATION REQUIRED. (a) A person must
register under this chapter before the person may conduct the
business of a mortgage banker in this state, unless the person is
exempt under this section or Section 157. 004.
(b) To register under this chapter, a mortgage banker shall
file with the commissioner a statement that contains:
(1) the name and address of the mortgage banker;
(2) the name, address, and telephone number of the
representative of the mortgage banker to be contacted regarding a
written complaint; [and]
(3) a list of the locations in this state at which the
person conducts the business of a mortgage banker; and
(4) a list of employees of the mortgage banker who are
residential mortgage loan originators which list will be
continuously updated when there is a change.
(c) An employee of a mortgage banker who is not a
residential mortgage loan originator is not required to register or
be licensed under this chapter.
(d) Except as authorized in Section 157.008(b), the [The]
commissioner may not require a mortgage banker to provide
information other than information contained in the registration
statement.
(e) The registration of a mortgage banker is valid until
withdrawn or revoked. Periodic renewal of the registration is not
required.
Sec. 157.004. EXEMPTIONS. This chapter does not apply to:
(1) a federally insured bank, savings bank, savings
and loan association, Farm Credit System Institution, or credit
union;
(2) A [an affiliate or] subsidiary of a federally
insured bank, savings bank, savings and loan association, Farm
Credit System Institution, or credit union; or
(3) a person licensed as a mortgage broker under
Chapter 156.[; or
[(4) an authorized lender licensed under Chapter 342
if:
[(A) the authorized lender includes with an
application for a mortgage loan a notice that is substantially
similar to the notice required by Section 157.007 and provides the
method of submitting complaints to the consumer credit
commissioner;
[(B) the authorized lender uses the forms adopted
by the Finance Commission of Texas under Section 157.011(b); and
[(C) the Finance Commission of Texas determines
by rule that the consumer credit commissioner may suspend or revoke
a license issued under Chapter 342 if the authorized lender engages
in unlawful or unfair practices while making a mortgage loan.]
Sec. 157.005. UPDATE OF REGISTRATION STATEMENT. A mortgage
banker shall update information contained in the registration
statement not later than the 30th day after the date the information
changes.
Sec. 157.006. REGISTRATION AND ADMINISTRATION FEE. The
commissioner may charge a mortgage banker a reasonable fee to cover
the costs of filing the registration statement and administering
this chapter. The fee may not exceed $500 a year.
Sec. 157.007. DISCLOSURE STATEMENT. A mortgage banker
shall include the following notice to a mortgage loan applicant
with an application for a mortgage loan:
"COMPLAINTS REGARDING MORTGAGE BANKERS SHOULD BE SENT TO THE
DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
______________________________ (street address of the Department
of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
AVAILABLE AT _______________ (telephone number of the Department of
Savings and Mortgage Lending's toll-free consumer hotline)."
Sec. 157.008. COMPLAINTS. (a) If the Department of
Savings and Mortgage Lending receives a signed written complaint
from a person concerning a mortgage banker, the commissioner shall
notify the representative designated by the mortgage banker under
Section 157.003(b) in writing of the complaint and provide a copy of
the complaint to the representative.
(b) The commissioner may request documentary and other
evidence considered by the commissioner as necessary to effectively
evaluate the complaint, including correspondence, loan documents,
and disclosures. A mortgage banker shall promptly provide any
evidence requested by the commissioner.
(c) The commissioner may require the mortgage banker to
resolve the complaint or to provide the commissioner with a
response to the complaint. The commissioner may direct the
mortgage banker in writing to take specific action to resolve the
complaint.
Sec. 157.009. TERMINATION OF REGISTRATION. (a) A
mortgage banker may withdraw the mortgage banker's registration at
any time.
(b) The commissioner may revoke the registration of a
mortgage banker if the mortgage banker fails to pay the
registration and administration fee and fails to cure the default
before the 30th day after the date the mortgage banker receives
notice of the default from the commissioner.
(c) The commissioner may revoke the registration of a
mortgage banker if the mortgage banker fails or refuses to comply
with the commissioner's written request for a response to a
complaint.
(d) The commissioner may revoke the registration of a
mortgage banker after considering a complaint filed under this
chapter if the commissioner concludes that the mortgage banker has
engaged in an intentional course of conduct to violate federal or
state law or has engaged in an intentional course of conduct that
constitutes improper, fraudulent, or dishonest dealings or has
engaged in a negligent course of conduct exhibited through pattern
or practice. The commissioner shall recite the basis of the
decision in an order revoking the registration.
(e) If the commissioner proposes to revoke a registration
under Subsection (c) or (d), the mortgage banker is entitled to a
hearing before the commissioner or a hearings officer, who shall
propose a decision to the commissioner. The commissioner or
hearings officer shall prescribe the time and place of the hearing.
The hearing is governed by Chapter 2001, Government Code.
(f) A mortgage banker aggrieved by a ruling, order, or
decision of the commissioner is entitled to appeal to a district
court in the county in which the hearing was held. An appeal under
this subsection is governed by Chapter 2001, Government Code.
Sec. 157.010. REREGISTRATION. (a) A mortgage banker
whose registration is revoked by the commissioner may register
again only after receiving the authorization of the commissioner.
The commissioner shall authorize the registration if the
commissioner concludes that the mortgage banker will comply with
state and federal law and will not engage in improper, fraudulent,
or dishonest dealings.
(b) A mortgage banker who seeks registration under this
section may request and is entitled to a hearing before the
commissioner or a hearings officer, who shall propose a decision to
the commissioner. The hearing is governed by Chapter 2001,
Government Code.
(c) If the commissioner denies authorization for the
registration of a mortgage banker under this section, the
commissioner shall recite the basis of the decision in an order
denying the authorization.
(d) If the commissioner denies authorization for the
registration of a mortgage banker under this section, the mortgage
banker is entitled to appeal to a district court in Travis County.
An appeal brought under this subsection is governed by Chapter
2001, Government Code.
Sec. 157.011. LICENSE REQUIRED. (a) An employee of a
mortgage banker may not act in the capacity of a mortgage loan
originator without first obtaining from the commissioner a mortgage
loan originator license pursuant to and in compliance with the
requirements of the Secure and Fair Enforcement for Mortgage
License Act, Chapter 180 of the Finance Code and any rule adopted
under this chapter or Chapter 180.
(b) To be eligible to be licensed as a mortgage loan
originator, an individual must:
(1) satisfy the commissioner as to the individual's
good moral character, including the individual's honesty,
trustworthiness, and integrity;
(2) not be in violation of this chapter or Chapter 180,
Finance Code, or a rule adopted under this chapter or Chapter 180;
and
(3) provide the commissioner with satisfactory
evidence that the individual meets the qualifications provided in
Chapter 180, Finance Code.
(c) The net worth of the mortgage banker who must comply with
the requirements of Section 157.002(5) shall constitute the net
worth requirement for the mortgage banker's mortgage loan
originator employee in compliance with the S.A.F.E Mortgage
Licensing Act in lieu of a surety bond or a recovery fund fee as
otherwise would be required by Section 180.059, Finance Code.
Sec. 157.012. APPLICATION FOR A LICENSE; FEES (a) An
application for a mortgage loan originator license must be:
(1) in writing;
(2) under oath; and
(3) on the form prescribed by the commissioner.
(b) An application for a mortgage loan originator license
must be accompanied by an application fee in an amount determined by
the commissioner not to exceed $500.
(c) An application fee under this section is not refundable
and may not be credited or applied to any other fee or indebtedness
owed by the person paying the fee.
Sec. 157.013. ISSUANCE OF MORTGAGE LOAN ORIGINATOR
LICENSE. (a) The commissioner shall issue a mortgage loan
originator license to an applicant if the commissioner finds that
the applicant meets all requirements and conditions for the
license.
(b) Each mortgage loan originator license shall be issued
for no more than a one year period expiring December 31 of each
calendar year.
(c) Each mortgage loan originator license shall have a
license number or a unique identifier as provided for in Chapter
180, Finance Code.
Sec. 157.014. RENEWALS. (a) A mortgage loan originator
license issued under this chapter is valid for one year and may be
renewed on or before its expiration date.
(b) Each mortgage loan originator license will be renewed
for no more than a one year period expiring December 31 of each
calendar year.
(c) An application for renewal of a mortgage loan originator
license shall meet the requirements of Section 157.012.
(d) An application for renewal of a mortgage loan originator
license must meet all of the standards and qualifications for
license renewal contained in Chapter 180, Finance Code.
(e) The commissioner shall issue a renewal mortgage loan
originator license if the commissioner finds that the applicant
meets all of the requirements and conditions for the license.
(f) The commissioner may deny the renewal application for a
mortgage loan originator license for the same reasons and grounds
upon which the commissioner could have denied an original
application for a license.
(g) The commissioner may deny the renewal application for a
mortgage loan originator license if:
(1) the person seeking the renewal of the mortgage
loan originator license is in violation of this chapter, a rule
adopted under this chapter, or any order previously issued to the
person by the commissioner;
(2) the person seeking renewal of the mortgage loan
originator license is in default in the payment of any
administrative penalty, fee, charge, or other indebtedness owed
under this title;
(3) the person seeking the renewal of the mortgage
loan originator license is in default on a student loan
administered by the Texas Guaranteed Student Loan Corporation,
pursuant to Section 57.492 of the Texas Education Code; or
(4) during the current term of the license, the
commissioner becomes aware of any fact that would have been grounds
for denial of an original license if the fact had been known by the
commissioner on the date the license was granted.
Sec. 157.015. RENEWAL AFTER EXPIRATION; NOTICE. (a) A
person whose mortgage loan originator license has expired may not
engage in activities that require a license until the license has
been renewed.
(b) A person whose mortgage loan originator license has not
been renewed prior to January 1 but who is otherwise eligible to
renew a license, and does so before March 1, may renew the license
by paying the commissioner a reinstatement fee that is equal to 150%
of the normally required renewal fee.
(c) A person whose mortgage loan originator license has not
been renewed prior to March 1 may not renew the license. The person
may obtain a new license by complying with the requirements and
procedures for obtaining an original license.
(d) Not later than the 60th day before the date a person's
mortgage loan originator license is scheduled to expire, the
commissioner or authorized designee shall send written notice of
the impending expiration to the person at the person's last known
address according to the official licensing records.
Sec. 157.016. DENIAL OF APPLICATIONS AND RENEWALS. (a) If
the commissioner declines or fails to issue or renew a mortgage loan
originator license, the commissioner shall promptly give written
notice to the applicant that the application or renewal, as
appropriate, was denied.
(b) Before the applicant or a person requesting the renewal
of a mortgage loan originator license may appeal to a district court
as provided in Section 157.025(d), the applicant or person must
file with the commissioner not later than the 10th day after the
date on which notice under subsection (a) is received, an appeal of
the ruling requesting a time and place for a hearing before an
administrative law judge designated by the commissioner.
(c) The designated administrative law judge shall set the
time and place for a hearing requested under subsection (b) not
later than the 90th day after the date on which the appeal is
received. The administrative law judge shall provide at least 10
days' notice of the hearing to the applicant or person requesting
the renewal. The time of the hearing may be continued periodically
with the consent of the applicant or person requesting the renewal.
After the hearing, the commissioner shall enter an order relative
to the applicant based on the findings of fact, conclusions of law,
and recommendations of the administrative law judge.
(d) If an applicant or person requesting the renewal fails
to request a hearing under this section, the commissioner's refusal
to issue or renew a license is final and may not be subject to a
review by the courts.
(e) A hearing held under this section is governed by Chapter
2001, Government Code. An appeal of a final order issued under this
section may be made in accordance with Section 157.025(d).
(f) A person who requests a hearing under this section shall
be required to pay a deposit to secure the payment of the costs of
the hearing in an amount to be determined by the commissioner not to
exceed $500. The entire deposit shall be refunded to the person if
the person prevails in the contested case hearing. If the person
does not prevail, any portion of the deposit in excess of the costs
of the hearing assessed against that person shall be refundable.
(g) A person whose application for a license has been denied
is not eligible to be licensed for a period of two years after the
date the denial becomes final, or a shorter period determined by the
commissioner after evaluating the specific circumstances of the
person's subsequent application. The Finance Commission may adopt
rules to provide conditions for which the commissioner may shorten
the time for eligibility for a new license.
Sec. 157.017. PROBATIONARY AND PROVISIONAL LICENSES. The
commissioner may issue probationary and provisional license. The
Finance Commission by rule shall adopt reasonable terms and
conditions for probationary and provisional licenses.
Sec. 157.018. MODIFICATION OF LICENSE. (a) Before the 10th
day preceding the effective date of an address change, a mortgage
banker employee who is a mortgage loan originator shall notify the
commissioner or authorized designee in writing of the new address.
(b) A person licensed under this chapter must notify the
commissioner or authorized designee not later than the 10th day
after the date of any change in the person's name for the issuance
of an amended license.
Sec. 157.019. ANNUAL CALL REPORT. (a) Each mortgage banker
shall file an annual call report with the commissioner or
authorized designee on a form prescribed by the commissioner or
authorized designee. The report is a statement of condition of the
mortgage banker and its operations including financial statements
and production activity volumes.
(b) The information contained in the call report related to
residential mortgage loan origination volume or other trade
information is confidential and may not be disclosed by the
commissioner or authorized designee.
Sec. 157.020. INSPECTION; INVESTIGATIONS. (a) The
commissioner may conduct inspections of a person licensed as a
mortgage loan originator as the commissioner determines necessary
to determine whether the person is complying with this chapter and
applicable rules. The inspections may include inspection of the
books, records, documents, operations, and facilities of the
person. The commissioner may request the assistance and
cooperation of the mortgage banker in providing needed documents
and records. The commissioner shall not make a request of the
mortgage banker for documents and records unrelated to the person
being investigated or inspected. The commissioner may share
evidence of criminal activity gathered during an inspection or
investigation with any state or federal law enforcement agency.
(b) On the signed written complaint of a person, the
commissioner shall investigate the actions and records of a person
licensed as a mortgage loan originator if the complaint, or the
complaint and documentary or other evidence presented in connection
with the complaint, provides a reasonable cause. The commissioner,
before commencing an investigation, shall notify the licensed
mortgage loan originator in writing of the complaint and that the
commissioner intends to investigate the matter.
(c) For reasonable cause, the commissioner at any time may
investigate a person licensed as a mortgage loan originator to
determine whether the person is complying with this chapter and
applicable rules.
(d) The commissioner may conduct an undercover or covert
investigation only if the commissioner, after due consideration of
the circumstances, determines that the investigation is necessary
to prevent immediate harm and to carry out the purposes of this
chapter.
(e) The Finance Commission by rule shall provide guidelines
to govern an inspection or investigation, including rules to:
(1) determine the information and records of the
licensed mortgage originator to which the commissioner may demand
access during an inspection or an investigation; and
(2) establish what constitutes reasonable cause for an
investigation.
(f) Information obtained by the commissioner during an
inspection or an investigation is confidential unless disclosure of
the information is permitted or required by other law.
(g) The commissioner may share information gathered during
an investigation or inspection with any state or federal agency
only if the commissioner determines there is a valid reason for the
sharing.
Sec. 157.021. ISSUANCE AND ENFORCEMENT OF SUBPOENA. (a)
During an investigation, the commissioner may issue a subpoena that
is addressed to a peace officer of this state or other person
authorized by law to serve citation or perfect service. The
subpoena may require a person to give a deposition, produce
documents, or both.
(b) If a person disobeys a subpoena or if a person appearing
in a deposition in connection with the investigation refuses to
testify, the commissioner may petition a district court in Travis
County to issue an order requiring the person to obey the subpoena,
testify, or produce documents relating to the matter. The court
shall promptly set an application to enforce a subpoena issued
under subsection (a) for hearing and shall cause notice of the
application and the hearing to be served upon the person to whom the
subpoena is directed.
Sec. 157.022. ADMINISTRATIVE PENALTY. (a) The
commissioner, after notice and opportunity for a hearing, may
impose an administrative penalty on a person licensed as a mortgage
loan originator under this chapter who violates this chapter or a
rule or order adopted under this chapter.
(b) The amount of the penalty may not exceed $2,500, and
each day a violation continues or occurs is a separate violation for
the purpose of imposing a penalty. The amount shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
(2) the history of previous violations;
(3) the amount necessary to deter a future violation;
(4) efforts to correct the violation; and
(5) any other matter that justice may require.
(c) The enforcement of the penalty may be stayed during the
time the order is under judicial review if the person pays the
penalty to the clerk of the court or files a supersedes bond with
the court in the amount of the penalty. A person who cannot afford
to pay the penalty or file the bond may stay the enforcement by
filing an affidavit in the manner required by the Texas Rules of
Civil Procedure for a party who cannot afford to file security for
costs, subject to the right of the commissioner to contest the
affidavit as provided by those rules.
(d) The attorney general may sue to collect the penalty.
(e) An appeal of an administrative penalty under this
section is considered to be a contested case under Chapter 2001,
Government Code.
Sec. 157.023. DISCIPLINARY ACTION; CEASE AND DESIST ORDER.
(a) The commissioner may order disciplinary action against a
licensed mortgage loan originator when the commissioner, after
notice and opportunity for a hearing, has determined that the
person:
(1) obtained a license, including a renewal of a
license, under this chapter through a false or fraudulent
representation or made a material misrepresentation in an
application for a license or for the renewal of a license under this
chapter;
(2) published or caused to be published an
advertisement related to the business of a mortgage loan originator
that:
(A) is misleading;
(B) is likely to deceive the public;
(C) in any manner tends to create a misleading
impression;
(D) fails to identify as a licensed mortgage loan
originator the person causing the advertisement to be published; or
(E) violates federal or state law;
(3) while performing an act for which a license under
this chapter is required, engaged in conduct that constitutes
improper, fraudulent, or dishonest dealings;
(4) entered a plea of nolo contendre to or is convicted
of, a criminal offense that is a felony or that involves fraud or
moral turpitude in a court of this or another state or in a federal
court;
(5) failed to use a fee collected in advance of closing
of a residential mortgage loan for a purpose for which the fee was
paid;
(6) failed within a reasonable time to honor a check
issued to the commissioner after the commissioner has mailed a
request for payment by mail to the person's last known business
address as reflected by the commissioner's records;
(7) induced or attempted to induce a party to a
contract to breach the contract so the person may make a residential
mortgage loan;
(8) published or circulated an unjustified or
unwarranted threat of legal proceedings in matters related to the
person's actions or services as a licensed mortgage loan
originator;
(9) aided, abetted, or conspired with a person to
circumvent the requirements of this chapter;
(10) acted in the dual capacity of a licensed mortgage
loan originator and real estate broker, salesperson, or attorney in
a transaction without the knowledge and written consent of the
mortgage applicant or in violation of applicable requirements under
federal law;
(11) discriminated against a prospective borrower on
the basis of race, color, religion, sex, national origin, ancestry,
familial status, or a disability;
(12) failed or refused on demand to:
(A) produce a document, book, or record
concerning a residential mortgage loan transaction conducted by the
licensed mortgage loan originator for inspection by the
commissioner or the commissioner's authorized personnel or
representative;
(B) give the commissioner or the commissioner's
authorized personnel or representative free access to the books or
records relating to the mortgage loan originator's business kept by
any other person or any business entity through which the mortgage
loan originator conducts mortgage origination activities; or
(C) provide information requested by the
commissioner as a result of a formal or informal complaint made to
the commissioner;
(13) failed without just cause to surrender, on
demand, a copy of a document or other instrument coming into the
mortgage loan originator's possession that was provided to the
mortgage loan originator by another person making the demand or
that the person making the demand is under law entitled to receive;
(14) disregarded or violated this chapter, a rule
adopted by the Finance Commission under this chapter, or an order
issued by the commissioner under this chapter;
(15) provided false information to the commissioner
during the course of an investigation or inspection;
(16) during the current term of the license, the
commissioner becomes aware of any fact that would have been grounds
for denial of any original license if the fact had been known by the
commissioner on the date the license was granted;
(17) paid compensation to a person who is not licensed
or exempt under this chapter for acts for which a license under this
chapter is required; or
(18) established an association, by employment or
otherwise, with a person not licensed or exempt under this chapter
who was expected or required to act as a mortgage loan originator.
(b) In addition to disciplinary action by the commissioner
authorized under subsection (a), the commissioner, if the
commissioner has reasonable cause to believe that a licensed
mortgage loan originator has or is about to violate this section,
may issue without notice and hearing an order to cease and desist
continuing a particular action or an order to take affirmative
action, or both, to enforce compliance with this chapter.
(c) An order issued under subsection (b) must contain a
reasonably detailed statement of the facts on which the order is
made. If a mortgage loan originator against whom the order is made
requests a hearing, the commissioner shall set and give notice of a
hearing before the commissioner or an administrative law judge.
The hearing shall be governed by Chapter 2001, Government Code.
Based on the findings of fact, conclusions of law, and
recommendations of the administrative law judge, the commissioner
by order may find a violation has occurred or not occurred.
(d) If a hearing is not requested under subsection (c) not
later that the 30th day after the date on which an order is made, the
order is considered final and not appealable.
(e) The commissioner, after giving notice, may impose
against a mortgage loan originator who violates a cease and desist
order an administrative penalty in an amount not to exceed $1,000
for each day of the violation. In addition to any other remedy
provided by law, the commissioner may institute in district court a
suit for injunctive relief and to collect the administrative
penalty. A bond is not required of the commissioner with respect to
injunctive relief granted under this subsection.
(f) For purposes of subsection (a), a mortgage loan
originator is considered convicted if a sentence is imposed on that
person, that person receives community supervision, including
deferred adjudication community supervision, or the court defers
final disposition of that person's case.
(g) If a mortgage loan originator fails to pay an
administrative penalty that has become final or fails to comply
with an order of the commissioner that has become final, in addition
to any other remedy provided under law the commissioner, on not less
than 10 days' notice to the mortgage loan originator, may without a
prior hearing suspend the mortgage loan originator's license. The
suspension shall continue until the mortgage loan originator has
complied with the administrative order or paid the administrative
penalty. During the period of suspension, the mortgage loan
originator may not originate a residential mortgage loan.
(h) An order of suspension under subsection (g) may be
appealed. An appeal is a contested case governed by Chapter 2001,
Government Code. A hearing of an appeal of an order of suspension
issued under subsection (g) shall be held not later than the 15th
day after the date of receipt of the notice of appeal. The
appellant shall be provide at least three days' notice of the time
and place of the hearing.
(i) An order revoking the license of a mortgage loan
originator may provide that the person is prohibited, without
obtaining prior written consent of the commissioner, from:
(1) engaging in the business of originating or making
residential mortgage loans;
(2) otherwise affiliating with a person for the
purpose of engaging in the business of originating or making
residential mortgage loans; and
(3) being an employee, officer, director, manager,
shareholder, member, agent, contractor, or processor of a mortgage
banker, mortgage broker, or mortgage broker loan officer.
(j) On notice and opportunity for hearing, the commissioner
may suspend the license of a mortgage loan originator under this
chapter if an indictment or information is filed or returned
alleging that the person committed a criminal offense involving
fraud, theft, or dishonesty. The suspension continues until the
criminal case is dismissed or the person is acquitted.
Sec. 157.024. RESTITUTION. The commissioner may order a
mortgage loan originator to make restitution for any amount
received by that person in violation of this chapter.
Sec. 157.025. HEARINGS AND JUDICIAL REVIEW. (a) The
commissioner may employ an enforcement staff to investigate and
prosecute complaints made against mortgage loan originators
licensed under this chapter. The commissioner may employ an
administrative law judge to conduct hearings under this section.
The commissioner may collect and deposit any court costs assessed
pursuant to a final order.
(b) If the commissioner proposes to suspend or revoke a
license of a mortgage loan originator or if the commissioner
refuses to issue or renew a license to an applicant for a mortgage
loan originator license or person requesting a renewal of a
mortgage loan originator license under this chapter, the applicant
or license holder is entitled to a hearing before the commissioner
or an administrative law judge who shall make a proposal for
decision to the commissioner. The commissioner or administrative
law judge shall prescribe the time and place of the hearing. The
hearing is governed by Chapter 2001, Government Code.
(c) The commissioner or administrative law judge may issue
subpoenas for the attendance of witnesses and the production of
records or documents. Process issued by the commissioner of the
administrative law judge to all parts of the state and may be served
by any person designated by the commissioner or administrative law
judge.
(d) An individual aggrieved by a ruling, order, or decision
of the commissioner has the right to appeal to a district court in
the county in which the hearing was held. An appeal under this
subsection is governed by Chapter 2001, Government Code.
Sec. 157.026. CIVIL ACTIONS AND INJUNCTIVE RELIEF. (a) A
residential mortgage loan applicant injured by a violation of this
chapter by a mortgage loan originator may bring an action for
recovery of actual monetary damages and reasonable attorney's fees
and court costs.
(b) The commissioner, the attorney general, or a
residential mortgage loan applicant may bring an action to enjoin a
violation of this chapter by a mortgage loan originator.
(c) A remedy provided by this section is in addition to any
other remedy provided by law.
Sec. 157.027. BURDEN OF PROOF TO ESTABLISH AN EXEMPTION.
The burden of proving an exemption in a proceeding or action brought
under this chapter is on the person claiming the benefit of the
exemption.
Sec. 157.028. RELIANCE ON WRITTEN NOTICES FROM THE
COMMISSIONER. A person does not violate this chapter with respect
to an action taken or omission made in reliance on a written notice,
written interpretation, or written report from the commissioner,
unless a subsequent amendment to this chapter or a rule adopted
under this chapter affects the commissioner's notice,
interpretation, or report.
Sec. 157.029. COMPLETION OF MORTGAGE ORIGINATION SERVICES.
(a) On disbursement of mortgage proceeds to or on behalf of the
residential mortgage loan applicant, the mortgage loan originator
who assisted the residential mortgage loan applicant in obtaining
the residential mortgage loan is considered to have completed the
performance of the mortgage loan originator's services for the
residential mortgage loan applicant and owes no additional duties
or obligations to the residential mortgage loan applicant with
respect to the residential mortgage loan.
(b) This section does not limit or preclude the liability of
a mortgage loan originator for:
(1) failing to comply with this chapter or a rule
adopted under this chapter;
(2) filing to comply with a provision of or duty
arising under an agreement with a residential mortgage loan
applicant under this chapter; or
(3) violating any other state or federal law.
Sec. 157.030. UNLICENSED ACTIVITY. (a) A person who is an
employee of a mortgage banker and who is not exempt under this
chapter and who acts as a mortgage loan originator without first
obtaining a license required under this chapter commits an offense.
An offense under this subsection is a Class B misdemeanor. A second
or subsequent conviction for an offense under this subsection shall
be punished as a Class A misdemeanor.
(b) If the commissioner has reasonable cause to believe that
a person who is not licensed or exempt under this chapter has
engaged, or is about to engage, in an act or practice for which a
license is required under this chapter, the commissioner may issue
without notice and hearing an order to cease and desist from
continuing a particular action or an order to take affirmative
action, or both, to enforce compliance with this chapter. The order
shall contain a reasonably detailed statement of the facts on which
the order is made. The order may assess an administrative penalty
in an amount not to exceed $1,000 per day for each violation and may
require a person to pay to a mortgage applicant any compensation
received by the person from the applicant in violation of this
chapter. If a person against whom the order is made requests a
hearing, the commissioner shall set and give notice of a hearing
before the commissioner or an administrative law judge. The
hearing shall be governed by Chapter 2001, Government Code. An
order under this subsection becomes final unless the person to whom
the order is issued requests a hearing not later than the 30th day
after the date the order is issued.
(c) If a hearing has not been requested under subsection (b)
not later than the 30th day after the date the order is made, the
order is considered final and not appealable. The commissioner,
after giving notice, may impose against a person who violates a
cease and desist order, an administrative penalty in an amount not
to exceed $1,000 for each day of a violation. In addition to any
other remedy provided by law, the commissioner may institute in
district court a suit for injunctive relief and to collect the
administrative penalty. A bond is not required of the commissioner
with respect to injunctive relief granted under this section.
Sec. 157.031. [157.013.] RULEMAKING AUTHORITY. (a) The
Finance Commission of Texas may adopt rules necessary to implement
or fulfill the purpose of this chapter.
(b) The Finance Commission of Texas may by rule adopt
standard forms for, and require the use of the forms by, a mortgage
banker who represents that an applicant for a loan is preapproved or
has prequalified for the loan.
(c) The Finance Commission, for the purpose of enabling
Texas to participate in the Nationwide Mortgage Licensing System
and Registry and comply with the S.A.F.E. Mortgage Licensing Act,
by rule, may waive or modify, in whole or in part, any requirement
of this chapter and establish requirements under this chapter that
are reasonably necessary to accomplish that purpose.
SECTION 2. Section 341.103 is amended to read as follows:
Section 341.103. REGULATION OF SAVINGS INSTITUTIONS [AND],
LICENSED MORTGAGE BROKERS AND LOAN OFFICERS, AND REGISTERED
MORTGAGE BANKERS AND LICENSED LOAN OFFICERS
(a) The savings and mortgage lending commissioner shall
enforce this subtitle relating to the regulation of:
(1) state savings associations operating under this
subtitle;
(2) state savings banks operating under this subtitle;
[and]
(3) persons licensed under Chapter 156[.]; and
(4) persons registered or licensed under Chapter 157.
(b) The official exercising authority over the operation of
federal savings associations equivalent to the authority exercised
by the savings and mortgage lending commissioner over state savings
associations may enforce this subtitle relating to the regulation
of a federal savings association operating under this subtitle.
SECTION 3. This Act takes effect April 1, 2010.