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Texas Senate Bill SB2142

Texas 2009 - 81st Regular

Texas Senate Bill SB2142 Compare Versions

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11 81R14098 T
22 By: Wentworth S.B. No. 2142
33
44
55 A BILL TO BE ENTITLED
66 AN ACT
77 relating to amending the Texas Mortgage Banker Registration Act to
88 provide for licensing and regulation of mortgage banker employees
99 who are residential mortgage originators and providing enforcement
1010 and penalties.
1111 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1212 SECTION 1. Chapter 157 of the Finance Code is amended to
1313 read as follows:
1414 Sec. 157.001. SHORT TITLE. This chapter may be cited as the
1515 Mortgage Banker Registration and Loan Originator License Act.
1616 Sec. 157.002. DEFINITIONS. In this chapter:
1717 (1) "Commissioner" means the savings and mortgage
1818 lending commissioner.
1919 (2) "Disciplinary action" means any order by the
2020 commissioner that requires one or more of the following:
2121 (A) suspension or revocation of a mortgage loan
2222 originator license under this chapter;
2323 (B) probation of a suspension or revocation of a
2424 mortgage loan originator license under this chapter on terms and
2525 conditions that the commissioner determines appropriate;
2626 (C) a reprimand of a person with a mortgage loan
2727 originator license under this chapter; or
2828 (D) an administrative penalty imposed on a person
2929 holding a mortgage loan originator license under this chapter under
3030 Section ___.
3131 (3) "Finance Commission" means the Finance Commission
3232 of Texas.
3333 (4) "Loan processor or underwriter" shall mean an
3434 individual who performs clerical or support duties as an employee
3535 at the direction of and subject to the supervision and instruction
3636 of a person licensed as a mortgage loan originator or exempt from
3737 licensing. Clerical or support duties may include subsequent to
3838 the receipt of a residential mortgage loan application:
3939 (A) the receipt, collection, distribution, and
4040 analysis of information common for the processing or underwriting
4141 of a residential mortgage loan; and
4242 (B) communicating with a consumer to obtain the
4343 information necessary for the processing or underwriting of a loan,
4444 to the extent that such communication does not include offering or
4545 negotiating loan rates or terms, or counseling consumers about
4646 residential mortgage loan rates or terms.
4747 (5) [(2)] "Mortgage banker" means a person who:
4848 (A) accepts an application for a residential
4949 mortgage loan or makes a residential mortgage loan; and
5050 (B) is an approved or authorized:
5151 (i) mortgagee with direct endorsement
5252 underwriting authority granted by the United States Department of
5353 Housing and Urban Development;
5454 (ii) seller or servicer of the Federal
5555 National Mortgage Association or the Federal Home Loan Mortgage
5656 Corporation; or
5757 (iii) issuer for the Government National
5858 Mortgage Association.
5959 (6) "Mortgage loan originator" means a mortgage banker
6060 employee who for compensation or gain or in the expectation of
6161 compensation or gain:
6262 (A) takes a residential mortgage loan
6363 application; or
6464 (B) offers or negotiates terms of a residential
6565 mortgage loan.
6666 The term does not include an individual engaged solely
6767 as a loan processor or underwriter.
6868 (7) "Mortgage loan servicer" means an employee of a
6969 mortgage banker who on behalf of the mortgage banker collects or
7070 receives payments, including payments of principal, interest,
7171 escrow amounts, and other amounts due, on obligations due and owing
7272 to the mortgage banker servicing a residential mortgage loan
7373 including working with the borrower when the borrower is in default
7474 or in reasonably foreseeable likelihood of default to modify either
7575 temporarily or permanently certain terms of those obligations or
7676 otherwise finalizing collection through the foreclosure process.
7777 (8) [(3)] "Residential mortgage [Mortgage] loan"
7878 means a debt secured by a [first] lien on residential real property
7979 designed principally for occupancy by one to four families that is
8080 created by a deed of trust, security deed, or other security
8181 instrument.
8282 (9) "Secure and Fair Enforcement for Mortgage
8383 Licensing Act" refers to Chapter 180 of the Finance Code.
8484 Sec. 157.003. REGISTRATION REQUIRED. (a) A person must
8585 register under this chapter before the person may conduct the
8686 business of a mortgage banker in this state, unless the person is
8787 exempt under this section or Section 157. 004.
8888 (b) To register under this chapter, a mortgage banker shall
8989 file with the commissioner a statement that contains:
9090 (1) the name and address of the mortgage banker;
9191 (2) the name, address, and telephone number of the
9292 representative of the mortgage banker to be contacted regarding a
9393 written complaint; [and]
9494 (3) a list of the locations in this state at which the
9595 person conducts the business of a mortgage banker; and
9696 (4) a list of employees of the mortgage banker who are
9797 residential mortgage loan originators which list will be
9898 continuously updated when there is a change.
9999 (c) An employee of a mortgage banker who is not a
100100 residential mortgage loan originator is not required to register or
101101 be licensed under this chapter.
102102 (d) Except as authorized in Section 157.008(b), the [The]
103103 commissioner may not require a mortgage banker to provide
104104 information other than information contained in the registration
105105 statement.
106106 (e) The registration of a mortgage banker is valid until
107107 withdrawn or revoked. Periodic renewal of the registration is not
108108 required.
109109 Sec. 157.004. EXEMPTIONS. This chapter does not apply to:
110110 (1) a federally insured bank, savings bank, savings
111111 and loan association, Farm Credit System Institution, or credit
112112 union;
113113 (2) A [an affiliate or] subsidiary of a federally
114114 insured bank, savings bank, savings and loan association, Farm
115115 Credit System Institution, or credit union; or
116116 (3) a person licensed as a mortgage broker under
117117 Chapter 156.[; or
118118 [(4) an authorized lender licensed under Chapter 342
119119 if:
120120 [(A) the authorized lender includes with an
121121 application for a mortgage loan a notice that is substantially
122122 similar to the notice required by Section 157.007 and provides the
123123 method of submitting complaints to the consumer credit
124124 commissioner;
125125 [(B) the authorized lender uses the forms adopted
126126 by the Finance Commission of Texas under Section 157.011(b); and
127127 [(C) the Finance Commission of Texas determines
128128 by rule that the consumer credit commissioner may suspend or revoke
129129 a license issued under Chapter 342 if the authorized lender engages
130130 in unlawful or unfair practices while making a mortgage loan.]
131131 Sec. 157.005. UPDATE OF REGISTRATION STATEMENT. A mortgage
132132 banker shall update information contained in the registration
133133 statement not later than the 30th day after the date the information
134134 changes.
135135 Sec. 157.006. REGISTRATION AND ADMINISTRATION FEE. The
136136 commissioner may charge a mortgage banker a reasonable fee to cover
137137 the costs of filing the registration statement and administering
138138 this chapter. The fee may not exceed $500 a year.
139139 Sec. 157.007. DISCLOSURE STATEMENT. A mortgage banker
140140 shall include the following notice to a mortgage loan applicant
141141 with an application for a mortgage loan:
142142 "COMPLAINTS REGARDING MORTGAGE BANKERS SHOULD BE SENT TO THE
143143 DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
144144 ______________________________ (street address of the Department
145145 of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
146146 AVAILABLE AT _______________ (telephone number of the Department of
147147 Savings and Mortgage Lending's toll-free consumer hotline)."
148148 Sec. 157.008. COMPLAINTS. (a) If the Department of
149149 Savings and Mortgage Lending receives a signed written complaint
150150 from a person concerning a mortgage banker, the commissioner shall
151151 notify the representative designated by the mortgage banker under
152152 Section 157.003(b) in writing of the complaint and provide a copy of
153153 the complaint to the representative.
154154 (b) The commissioner may request documentary and other
155155 evidence considered by the commissioner as necessary to effectively
156156 evaluate the complaint, including correspondence, loan documents,
157157 and disclosures. A mortgage banker shall promptly provide any
158158 evidence requested by the commissioner.
159159 (c) The commissioner may require the mortgage banker to
160160 resolve the complaint or to provide the commissioner with a
161161 response to the complaint. The commissioner may direct the
162162 mortgage banker in writing to take specific action to resolve the
163163 complaint.
164164 Sec. 157.009. TERMINATION OF REGISTRATION. (a) A
165165 mortgage banker may withdraw the mortgage banker's registration at
166166 any time.
167167 (b) The commissioner may revoke the registration of a
168168 mortgage banker if the mortgage banker fails to pay the
169169 registration and administration fee and fails to cure the default
170170 before the 30th day after the date the mortgage banker receives
171171 notice of the default from the commissioner.
172172 (c) The commissioner may revoke the registration of a
173173 mortgage banker if the mortgage banker fails or refuses to comply
174174 with the commissioner's written request for a response to a
175175 complaint.
176176 (d) The commissioner may revoke the registration of a
177177 mortgage banker after considering a complaint filed under this
178178 chapter if the commissioner concludes that the mortgage banker has
179179 engaged in an intentional course of conduct to violate federal or
180180 state law or has engaged in an intentional course of conduct that
181181 constitutes improper, fraudulent, or dishonest dealings or has
182182 engaged in a negligent course of conduct exhibited through pattern
183183 or practice. The commissioner shall recite the basis of the
184184 decision in an order revoking the registration.
185185 (e) If the commissioner proposes to revoke a registration
186186 under Subsection (c) or (d), the mortgage banker is entitled to a
187187 hearing before the commissioner or a hearings officer, who shall
188188 propose a decision to the commissioner. The commissioner or
189189 hearings officer shall prescribe the time and place of the hearing.
190190 The hearing is governed by Chapter 2001, Government Code.
191191 (f) A mortgage banker aggrieved by a ruling, order, or
192192 decision of the commissioner is entitled to appeal to a district
193193 court in the county in which the hearing was held. An appeal under
194194 this subsection is governed by Chapter 2001, Government Code.
195195 Sec. 157.010. REREGISTRATION. (a) A mortgage banker
196196 whose registration is revoked by the commissioner may register
197197 again only after receiving the authorization of the commissioner.
198198 The commissioner shall authorize the registration if the
199199 commissioner concludes that the mortgage banker will comply with
200200 state and federal law and will not engage in improper, fraudulent,
201201 or dishonest dealings.
202202 (b) A mortgage banker who seeks registration under this
203203 section may request and is entitled to a hearing before the
204204 commissioner or a hearings officer, who shall propose a decision to
205205 the commissioner. The hearing is governed by Chapter 2001,
206206 Government Code.
207207 (c) If the commissioner denies authorization for the
208208 registration of a mortgage banker under this section, the
209209 commissioner shall recite the basis of the decision in an order
210210 denying the authorization.
211211 (d) If the commissioner denies authorization for the
212212 registration of a mortgage banker under this section, the mortgage
213213 banker is entitled to appeal to a district court in Travis County.
214214 An appeal brought under this subsection is governed by Chapter
215215 2001, Government Code.
216216 Sec. 157.011. LICENSE REQUIRED. (a) An employee of a
217217 mortgage banker may not act in the capacity of a mortgage loan
218218 originator without first obtaining from the commissioner a mortgage
219219 loan originator license pursuant to and in compliance with the
220220 requirements of the Secure and Fair Enforcement for Mortgage
221221 License Act, Chapter 180 of the Finance Code and any rule adopted
222222 under this chapter or Chapter 180.
223223 (b) To be eligible to be licensed as a mortgage loan
224224 originator, an individual must:
225225 (1) satisfy the commissioner as to the individual's
226226 good moral character, including the individual's honesty,
227227 trustworthiness, and integrity;
228228 (2) not be in violation of this chapter or Chapter 180,
229229 Finance Code, or a rule adopted under this chapter or Chapter 180;
230230 and
231231 (3) provide the commissioner with satisfactory
232232 evidence that the individual meets the qualifications provided in
233233 Chapter 180, Finance Code.
234234 (c) The net worth of the mortgage banker who must comply with
235235 the requirements of Section 157.002(5) shall constitute the net
236236 worth requirement for the mortgage banker's mortgage loan
237237 originator employee in compliance with the S.A.F.E Mortgage
238238 Licensing Act in lieu of a surety bond or a recovery fund fee as
239239 otherwise would be required by Section 180.059, Finance Code.
240240 Sec. 157.012. APPLICATION FOR A LICENSE; FEES (a) An
241241 application for a mortgage loan originator license must be:
242242 (1) in writing;
243243 (2) under oath; and
244244 (3) on the form prescribed by the commissioner.
245245 (b) An application for a mortgage loan originator license
246246 must be accompanied by an application fee in an amount determined by
247247 the commissioner not to exceed $500.
248248 (c) An application fee under this section is not refundable
249249 and may not be credited or applied to any other fee or indebtedness
250250 owed by the person paying the fee.
251251 Sec. 157.013. ISSUANCE OF MORTGAGE LOAN ORIGINATOR
252252 LICENSE. (a) The commissioner shall issue a mortgage loan
253253 originator license to an applicant if the commissioner finds that
254254 the applicant meets all requirements and conditions for the
255255 license.
256256 (b) Each mortgage loan originator license shall be issued
257257 for no more than a one year period expiring December 31 of each
258258 calendar year.
259259 (c) Each mortgage loan originator license shall have a
260260 license number or a unique identifier as provided for in Chapter
261261 180, Finance Code.
262262 Sec. 157.014. RENEWALS. (a) A mortgage loan originator
263263 license issued under this chapter is valid for one year and may be
264264 renewed on or before its expiration date.
265265 (b) Each mortgage loan originator license will be renewed
266266 for no more than a one year period expiring December 31 of each
267267 calendar year.
268268 (c) An application for renewal of a mortgage loan originator
269269 license shall meet the requirements of Section 157.012.
270270 (d) An application for renewal of a mortgage loan originator
271271 license must meet all of the standards and qualifications for
272272 license renewal contained in Chapter 180, Finance Code.
273273 (e) The commissioner shall issue a renewal mortgage loan
274274 originator license if the commissioner finds that the applicant
275275 meets all of the requirements and conditions for the license.
276276 (f) The commissioner may deny the renewal application for a
277277 mortgage loan originator license for the same reasons and grounds
278278 upon which the commissioner could have denied an original
279279 application for a license.
280280 (g) The commissioner may deny the renewal application for a
281281 mortgage loan originator license if:
282282 (1) the person seeking the renewal of the mortgage
283283 loan originator license is in violation of this chapter, a rule
284284 adopted under this chapter, or any order previously issued to the
285285 person by the commissioner;
286286 (2) the person seeking renewal of the mortgage loan
287287 originator license is in default in the payment of any
288288 administrative penalty, fee, charge, or other indebtedness owed
289289 under this title;
290290 (3) the person seeking the renewal of the mortgage
291291 loan originator license is in default on a student loan
292292 administered by the Texas Guaranteed Student Loan Corporation,
293293 pursuant to Section 57.492 of the Texas Education Code; or
294294 (4) during the current term of the license, the
295295 commissioner becomes aware of any fact that would have been grounds
296296 for denial of an original license if the fact had been known by the
297297 commissioner on the date the license was granted.
298298 Sec. 157.015. RENEWAL AFTER EXPIRATION; NOTICE. (a) A
299299 person whose mortgage loan originator license has expired may not
300300 engage in activities that require a license until the license has
301301 been renewed.
302302 (b) A person whose mortgage loan originator license has not
303303 been renewed prior to January 1 but who is otherwise eligible to
304304 renew a license, and does so before March 1, may renew the license
305305 by paying the commissioner a reinstatement fee that is equal to 150%
306306 of the normally required renewal fee.
307307 (c) A person whose mortgage loan originator license has not
308308 been renewed prior to March 1 may not renew the license. The person
309309 may obtain a new license by complying with the requirements and
310310 procedures for obtaining an original license.
311311 (d) Not later than the 60th day before the date a person's
312312 mortgage loan originator license is scheduled to expire, the
313313 commissioner or authorized designee shall send written notice of
314314 the impending expiration to the person at the person's last known
315315 address according to the official licensing records.
316316 Sec. 157.016. DENIAL OF APPLICATIONS AND RENEWALS. (a) If
317317 the commissioner declines or fails to issue or renew a mortgage loan
318318 originator license, the commissioner shall promptly give written
319319 notice to the applicant that the application or renewal, as
320320 appropriate, was denied.
321321 (b) Before the applicant or a person requesting the renewal
322322 of a mortgage loan originator license may appeal to a district court
323323 as provided in Section 157.025(d), the applicant or person must
324324 file with the commissioner not later than the 10th day after the
325325 date on which notice under subsection (a) is received, an appeal of
326326 the ruling requesting a time and place for a hearing before an
327327 administrative law judge designated by the commissioner.
328328 (c) The designated administrative law judge shall set the
329329 time and place for a hearing requested under subsection (b) not
330330 later than the 90th day after the date on which the appeal is
331331 received. The administrative law judge shall provide at least 10
332332 days' notice of the hearing to the applicant or person requesting
333333 the renewal. The time of the hearing may be continued periodically
334334 with the consent of the applicant or person requesting the renewal.
335335 After the hearing, the commissioner shall enter an order relative
336336 to the applicant based on the findings of fact, conclusions of law,
337337 and recommendations of the administrative law judge.
338338 (d) If an applicant or person requesting the renewal fails
339339 to request a hearing under this section, the commissioner's refusal
340340 to issue or renew a license is final and may not be subject to a
341341 review by the courts.
342342 (e) A hearing held under this section is governed by Chapter
343343 2001, Government Code. An appeal of a final order issued under this
344344 section may be made in accordance with Section 157.025(d).
345345 (f) A person who requests a hearing under this section shall
346346 be required to pay a deposit to secure the payment of the costs of
347347 the hearing in an amount to be determined by the commissioner not to
348348 exceed $500. The entire deposit shall be refunded to the person if
349349 the person prevails in the contested case hearing. If the person
350350 does not prevail, any portion of the deposit in excess of the costs
351351 of the hearing assessed against that person shall be refundable.
352352 (g) A person whose application for a license has been denied
353353 is not eligible to be licensed for a period of two years after the
354354 date the denial becomes final, or a shorter period determined by the
355355 commissioner after evaluating the specific circumstances of the
356356 person's subsequent application. The Finance Commission may adopt
357357 rules to provide conditions for which the commissioner may shorten
358358 the time for eligibility for a new license.
359359 Sec. 157.017. PROBATIONARY AND PROVISIONAL LICENSES. The
360360 commissioner may issue probationary and provisional license. The
361361 Finance Commission by rule shall adopt reasonable terms and
362362 conditions for probationary and provisional licenses.
363363 Sec. 157.018. MODIFICATION OF LICENSE. (a) Before the 10th
364364 day preceding the effective date of an address change, a mortgage
365365 banker employee who is a mortgage loan originator shall notify the
366366 commissioner or authorized designee in writing of the new address.
367367 (b) A person licensed under this chapter must notify the
368368 commissioner or authorized designee not later than the 10th day
369369 after the date of any change in the person's name for the issuance
370370 of an amended license.
371371 Sec. 157.019. ANNUAL CALL REPORT. (a) Each mortgage banker
372372 shall file an annual call report with the commissioner or
373373 authorized designee on a form prescribed by the commissioner or
374374 authorized designee. The report is a statement of condition of the
375375 mortgage banker and its operations including financial statements
376376 and production activity volumes.
377377 (b) The information contained in the call report related to
378378 residential mortgage loan origination volume or other trade
379379 information is confidential and may not be disclosed by the
380380 commissioner or authorized designee.
381381 Sec. 157.020. INSPECTION; INVESTIGATIONS. (a) The
382382 commissioner may conduct inspections of a person licensed as a
383383 mortgage loan originator as the commissioner determines necessary
384384 to determine whether the person is complying with this chapter and
385385 applicable rules. The inspections may include inspection of the
386386 books, records, documents, operations, and facilities of the
387387 person. The commissioner may request the assistance and
388388 cooperation of the mortgage banker in providing needed documents
389389 and records. The commissioner shall not make a request of the
390390 mortgage banker for documents and records unrelated to the person
391391 being investigated or inspected. The commissioner may share
392392 evidence of criminal activity gathered during an inspection or
393393 investigation with any state or federal law enforcement agency.
394394 (b) On the signed written complaint of a person, the
395395 commissioner shall investigate the actions and records of a person
396396 licensed as a mortgage loan originator if the complaint, or the
397397 complaint and documentary or other evidence presented in connection
398398 with the complaint, provides a reasonable cause. The commissioner,
399399 before commencing an investigation, shall notify the licensed
400400 mortgage loan originator in writing of the complaint and that the
401401 commissioner intends to investigate the matter.
402402 (c) For reasonable cause, the commissioner at any time may
403403 investigate a person licensed as a mortgage loan originator to
404404 determine whether the person is complying with this chapter and
405405 applicable rules.
406406 (d) The commissioner may conduct an undercover or covert
407407 investigation only if the commissioner, after due consideration of
408408 the circumstances, determines that the investigation is necessary
409409 to prevent immediate harm and to carry out the purposes of this
410410 chapter.
411411 (e) The Finance Commission by rule shall provide guidelines
412412 to govern an inspection or investigation, including rules to:
413413 (1) determine the information and records of the
414414 licensed mortgage originator to which the commissioner may demand
415415 access during an inspection or an investigation; and
416416 (2) establish what constitutes reasonable cause for an
417417 investigation.
418418 (f) Information obtained by the commissioner during an
419419 inspection or an investigation is confidential unless disclosure of
420420 the information is permitted or required by other law.
421421 (g) The commissioner may share information gathered during
422422 an investigation or inspection with any state or federal agency
423423 only if the commissioner determines there is a valid reason for the
424424 sharing.
425425 Sec. 157.021. ISSUANCE AND ENFORCEMENT OF SUBPOENA. (a)
426426 During an investigation, the commissioner may issue a subpoena that
427427 is addressed to a peace officer of this state or other person
428428 authorized by law to serve citation or perfect service. The
429429 subpoena may require a person to give a deposition, produce
430430 documents, or both.
431431 (b) If a person disobeys a subpoena or if a person appearing
432432 in a deposition in connection with the investigation refuses to
433433 testify, the commissioner may petition a district court in Travis
434434 County to issue an order requiring the person to obey the subpoena,
435435 testify, or produce documents relating to the matter. The court
436436 shall promptly set an application to enforce a subpoena issued
437437 under subsection (a) for hearing and shall cause notice of the
438438 application and the hearing to be served upon the person to whom the
439439 subpoena is directed.
440440 Sec. 157.022. ADMINISTRATIVE PENALTY. (a) The
441441 commissioner, after notice and opportunity for a hearing, may
442442 impose an administrative penalty on a person licensed as a mortgage
443443 loan originator under this chapter who violates this chapter or a
444444 rule or order adopted under this chapter.
445445 (b) The amount of the penalty may not exceed $2,500, and
446446 each day a violation continues or occurs is a separate violation for
447447 the purpose of imposing a penalty. The amount shall be based on:
448448 (1) the seriousness of the violation, including the
449449 nature, circumstances, extent, and gravity of the violation;
450450 (2) the history of previous violations;
451451 (3) the amount necessary to deter a future violation;
452452 (4) efforts to correct the violation; and
453453 (5) any other matter that justice may require.
454454 (c) The enforcement of the penalty may be stayed during the
455455 time the order is under judicial review if the person pays the
456456 penalty to the clerk of the court or files a supersedes bond with
457457 the court in the amount of the penalty. A person who cannot afford
458458 to pay the penalty or file the bond may stay the enforcement by
459459 filing an affidavit in the manner required by the Texas Rules of
460460 Civil Procedure for a party who cannot afford to file security for
461461 costs, subject to the right of the commissioner to contest the
462462 affidavit as provided by those rules.
463463 (d) The attorney general may sue to collect the penalty.
464464 (e) An appeal of an administrative penalty under this
465465 section is considered to be a contested case under Chapter 2001,
466466 Government Code.
467467 Sec. 157.023. DISCIPLINARY ACTION; CEASE AND DESIST ORDER.
468468 (a) The commissioner may order disciplinary action against a
469469 licensed mortgage loan originator when the commissioner, after
470470 notice and opportunity for a hearing, has determined that the
471471 person:
472472 (1) obtained a license, including a renewal of a
473473 license, under this chapter through a false or fraudulent
474474 representation or made a material misrepresentation in an
475475 application for a license or for the renewal of a license under this
476476 chapter;
477477 (2) published or caused to be published an
478478 advertisement related to the business of a mortgage loan originator
479479 that:
480480 (A) is misleading;
481481 (B) is likely to deceive the public;
482482 (C) in any manner tends to create a misleading
483483 impression;
484484 (D) fails to identify as a licensed mortgage loan
485485 originator the person causing the advertisement to be published; or
486486 (E) violates federal or state law;
487487 (3) while performing an act for which a license under
488488 this chapter is required, engaged in conduct that constitutes
489489 improper, fraudulent, or dishonest dealings;
490490 (4) entered a plea of nolo contendre to or is convicted
491491 of, a criminal offense that is a felony or that involves fraud or
492492 moral turpitude in a court of this or another state or in a federal
493493 court;
494494 (5) failed to use a fee collected in advance of closing
495495 of a residential mortgage loan for a purpose for which the fee was
496496 paid;
497497 (6) failed within a reasonable time to honor a check
498498 issued to the commissioner after the commissioner has mailed a
499499 request for payment by mail to the person's last known business
500500 address as reflected by the commissioner's records;
501501 (7) induced or attempted to induce a party to a
502502 contract to breach the contract so the person may make a residential
503503 mortgage loan;
504504 (8) published or circulated an unjustified or
505505 unwarranted threat of legal proceedings in matters related to the
506506 person's actions or services as a licensed mortgage loan
507507 originator;
508508 (9) aided, abetted, or conspired with a person to
509509 circumvent the requirements of this chapter;
510510 (10) acted in the dual capacity of a licensed mortgage
511511 loan originator and real estate broker, salesperson, or attorney in
512512 a transaction without the knowledge and written consent of the
513513 mortgage applicant or in violation of applicable requirements under
514514 federal law;
515515 (11) discriminated against a prospective borrower on
516516 the basis of race, color, religion, sex, national origin, ancestry,
517517 familial status, or a disability;
518518 (12) failed or refused on demand to:
519519 (A) produce a document, book, or record
520520 concerning a residential mortgage loan transaction conducted by the
521521 licensed mortgage loan originator for inspection by the
522522 commissioner or the commissioner's authorized personnel or
523523 representative;
524524 (B) give the commissioner or the commissioner's
525525 authorized personnel or representative free access to the books or
526526 records relating to the mortgage loan originator's business kept by
527527 any other person or any business entity through which the mortgage
528528 loan originator conducts mortgage origination activities; or
529529 (C) provide information requested by the
530530 commissioner as a result of a formal or informal complaint made to
531531 the commissioner;
532532 (13) failed without just cause to surrender, on
533533 demand, a copy of a document or other instrument coming into the
534534 mortgage loan originator's possession that was provided to the
535535 mortgage loan originator by another person making the demand or
536536 that the person making the demand is under law entitled to receive;
537537 (14) disregarded or violated this chapter, a rule
538538 adopted by the Finance Commission under this chapter, or an order
539539 issued by the commissioner under this chapter;
540540 (15) provided false information to the commissioner
541541 during the course of an investigation or inspection;
542542 (16) during the current term of the license, the
543543 commissioner becomes aware of any fact that would have been grounds
544544 for denial of any original license if the fact had been known by the
545545 commissioner on the date the license was granted;
546546 (17) paid compensation to a person who is not licensed
547547 or exempt under this chapter for acts for which a license under this
548548 chapter is required; or
549549 (18) established an association, by employment or
550550 otherwise, with a person not licensed or exempt under this chapter
551551 who was expected or required to act as a mortgage loan originator.
552552 (b) In addition to disciplinary action by the commissioner
553553 authorized under subsection (a), the commissioner, if the
554554 commissioner has reasonable cause to believe that a licensed
555555 mortgage loan originator has or is about to violate this section,
556556 may issue without notice and hearing an order to cease and desist
557557 continuing a particular action or an order to take affirmative
558558 action, or both, to enforce compliance with this chapter.
559559 (c) An order issued under subsection (b) must contain a
560560 reasonably detailed statement of the facts on which the order is
561561 made. If a mortgage loan originator against whom the order is made
562562 requests a hearing, the commissioner shall set and give notice of a
563563 hearing before the commissioner or an administrative law judge.
564564 The hearing shall be governed by Chapter 2001, Government Code.
565565 Based on the findings of fact, conclusions of law, and
566566 recommendations of the administrative law judge, the commissioner
567567 by order may find a violation has occurred or not occurred.
568568 (d) If a hearing is not requested under subsection (c) not
569569 later that the 30th day after the date on which an order is made, the
570570 order is considered final and not appealable.
571571 (e) The commissioner, after giving notice, may impose
572572 against a mortgage loan originator who violates a cease and desist
573573 order an administrative penalty in an amount not to exceed $1,000
574574 for each day of the violation. In addition to any other remedy
575575 provided by law, the commissioner may institute in district court a
576576 suit for injunctive relief and to collect the administrative
577577 penalty. A bond is not required of the commissioner with respect to
578578 injunctive relief granted under this subsection.
579579 (f) For purposes of subsection (a), a mortgage loan
580580 originator is considered convicted if a sentence is imposed on that
581581 person, that person receives community supervision, including
582582 deferred adjudication community supervision, or the court defers
583583 final disposition of that person's case.
584584 (g) If a mortgage loan originator fails to pay an
585585 administrative penalty that has become final or fails to comply
586586 with an order of the commissioner that has become final, in addition
587587 to any other remedy provided under law the commissioner, on not less
588588 than 10 days' notice to the mortgage loan originator, may without a
589589 prior hearing suspend the mortgage loan originator's license. The
590590 suspension shall continue until the mortgage loan originator has
591591 complied with the administrative order or paid the administrative
592592 penalty. During the period of suspension, the mortgage loan
593593 originator may not originate a residential mortgage loan.
594594 (h) An order of suspension under subsection (g) may be
595595 appealed. An appeal is a contested case governed by Chapter 2001,
596596 Government Code. A hearing of an appeal of an order of suspension
597597 issued under subsection (g) shall be held not later than the 15th
598598 day after the date of receipt of the notice of appeal. The
599599 appellant shall be provide at least three days' notice of the time
600600 and place of the hearing.
601601 (i) An order revoking the license of a mortgage loan
602602 originator may provide that the person is prohibited, without
603603 obtaining prior written consent of the commissioner, from:
604604 (1) engaging in the business of originating or making
605605 residential mortgage loans;
606606 (2) otherwise affiliating with a person for the
607607 purpose of engaging in the business of originating or making
608608 residential mortgage loans; and
609609 (3) being an employee, officer, director, manager,
610610 shareholder, member, agent, contractor, or processor of a mortgage
611611 banker, mortgage broker, or mortgage broker loan officer.
612612 (j) On notice and opportunity for hearing, the commissioner
613613 may suspend the license of a mortgage loan originator under this
614614 chapter if an indictment or information is filed or returned
615615 alleging that the person committed a criminal offense involving
616616 fraud, theft, or dishonesty. The suspension continues until the
617617 criminal case is dismissed or the person is acquitted.
618618 Sec. 157.024. RESTITUTION. The commissioner may order a
619619 mortgage loan originator to make restitution for any amount
620620 received by that person in violation of this chapter.
621621 Sec. 157.025. HEARINGS AND JUDICIAL REVIEW. (a) The
622622 commissioner may employ an enforcement staff to investigate and
623623 prosecute complaints made against mortgage loan originators
624624 licensed under this chapter. The commissioner may employ an
625625 administrative law judge to conduct hearings under this section.
626626 The commissioner may collect and deposit any court costs assessed
627627 pursuant to a final order.
628628 (b) If the commissioner proposes to suspend or revoke a
629629 license of a mortgage loan originator or if the commissioner
630630 refuses to issue or renew a license to an applicant for a mortgage
631631 loan originator license or person requesting a renewal of a
632632 mortgage loan originator license under this chapter, the applicant
633633 or license holder is entitled to a hearing before the commissioner
634634 or an administrative law judge who shall make a proposal for
635635 decision to the commissioner. The commissioner or administrative
636636 law judge shall prescribe the time and place of the hearing. The
637637 hearing is governed by Chapter 2001, Government Code.
638638 (c) The commissioner or administrative law judge may issue
639639 subpoenas for the attendance of witnesses and the production of
640640 records or documents. Process issued by the commissioner of the
641641 administrative law judge to all parts of the state and may be served
642642 by any person designated by the commissioner or administrative law
643643 judge.
644644 (d) An individual aggrieved by a ruling, order, or decision
645645 of the commissioner has the right to appeal to a district court in
646646 the county in which the hearing was held. An appeal under this
647647 subsection is governed by Chapter 2001, Government Code.
648648 Sec. 157.026. CIVIL ACTIONS AND INJUNCTIVE RELIEF. (a) A
649649 residential mortgage loan applicant injured by a violation of this
650650 chapter by a mortgage loan originator may bring an action for
651651 recovery of actual monetary damages and reasonable attorney's fees
652652 and court costs.
653653 (b) The commissioner, the attorney general, or a
654654 residential mortgage loan applicant may bring an action to enjoin a
655655 violation of this chapter by a mortgage loan originator.
656656 (c) A remedy provided by this section is in addition to any
657657 other remedy provided by law.
658658 Sec. 157.027. BURDEN OF PROOF TO ESTABLISH AN EXEMPTION.
659659 The burden of proving an exemption in a proceeding or action brought
660660 under this chapter is on the person claiming the benefit of the
661661 exemption.
662662 Sec. 157.028. RELIANCE ON WRITTEN NOTICES FROM THE
663663 COMMISSIONER. A person does not violate this chapter with respect
664664 to an action taken or omission made in reliance on a written notice,
665665 written interpretation, or written report from the commissioner,
666666 unless a subsequent amendment to this chapter or a rule adopted
667667 under this chapter affects the commissioner's notice,
668668 interpretation, or report.
669669 Sec. 157.029. COMPLETION OF MORTGAGE ORIGINATION SERVICES.
670670 (a) On disbursement of mortgage proceeds to or on behalf of the
671671 residential mortgage loan applicant, the mortgage loan originator
672672 who assisted the residential mortgage loan applicant in obtaining
673673 the residential mortgage loan is considered to have completed the
674674 performance of the mortgage loan originator's services for the
675675 residential mortgage loan applicant and owes no additional duties
676676 or obligations to the residential mortgage loan applicant with
677677 respect to the residential mortgage loan.
678678 (b) This section does not limit or preclude the liability of
679679 a mortgage loan originator for:
680680 (1) failing to comply with this chapter or a rule
681681 adopted under this chapter;
682682 (2) filing to comply with a provision of or duty
683683 arising under an agreement with a residential mortgage loan
684684 applicant under this chapter; or
685685 (3) violating any other state or federal law.
686686 Sec. 157.030. UNLICENSED ACTIVITY. (a) A person who is an
687687 employee of a mortgage banker and who is not exempt under this
688688 chapter and who acts as a mortgage loan originator without first
689689 obtaining a license required under this chapter commits an offense.
690690 An offense under this subsection is a Class B misdemeanor. A second
691691 or subsequent conviction for an offense under this subsection shall
692692 be punished as a Class A misdemeanor.
693693 (b) If the commissioner has reasonable cause to believe that
694694 a person who is not licensed or exempt under this chapter has
695695 engaged, or is about to engage, in an act or practice for which a
696696 license is required under this chapter, the commissioner may issue
697697 without notice and hearing an order to cease and desist from
698698 continuing a particular action or an order to take affirmative
699699 action, or both, to enforce compliance with this chapter. The order
700700 shall contain a reasonably detailed statement of the facts on which
701701 the order is made. The order may assess an administrative penalty
702702 in an amount not to exceed $1,000 per day for each violation and may
703703 require a person to pay to a mortgage applicant any compensation
704704 received by the person from the applicant in violation of this
705705 chapter. If a person against whom the order is made requests a
706706 hearing, the commissioner shall set and give notice of a hearing
707707 before the commissioner or an administrative law judge. The
708708 hearing shall be governed by Chapter 2001, Government Code. An
709709 order under this subsection becomes final unless the person to whom
710710 the order is issued requests a hearing not later than the 30th day
711711 after the date the order is issued.
712712 (c) If a hearing has not been requested under subsection (b)
713713 not later than the 30th day after the date the order is made, the
714714 order is considered final and not appealable. The commissioner,
715715 after giving notice, may impose against a person who violates a
716716 cease and desist order, an administrative penalty in an amount not
717717 to exceed $1,000 for each day of a violation. In addition to any
718718 other remedy provided by law, the commissioner may institute in
719719 district court a suit for injunctive relief and to collect the
720720 administrative penalty. A bond is not required of the commissioner
721721 with respect to injunctive relief granted under this section.
722722 Sec. 157.031. [157.013.] RULEMAKING AUTHORITY. (a) The
723723 Finance Commission of Texas may adopt rules necessary to implement
724724 or fulfill the purpose of this chapter.
725725 (b) The Finance Commission of Texas may by rule adopt
726726 standard forms for, and require the use of the forms by, a mortgage
727727 banker who represents that an applicant for a loan is preapproved or
728728 has prequalified for the loan.
729729 (c) The Finance Commission, for the purpose of enabling
730730 Texas to participate in the Nationwide Mortgage Licensing System
731731 and Registry and comply with the S.A.F.E. Mortgage Licensing Act,
732732 by rule, may waive or modify, in whole or in part, any requirement
733733 of this chapter and establish requirements under this chapter that
734734 are reasonably necessary to accomplish that purpose.
735735 SECTION 2. Section 341.103 is amended to read as follows:
736736 Section 341.103. REGULATION OF SAVINGS INSTITUTIONS [AND],
737737 LICENSED MORTGAGE BROKERS AND LOAN OFFICERS, AND REGISTERED
738738 MORTGAGE BANKERS AND LICENSED LOAN OFFICERS
739739 (a) The savings and mortgage lending commissioner shall
740740 enforce this subtitle relating to the regulation of:
741741 (1) state savings associations operating under this
742742 subtitle;
743743 (2) state savings banks operating under this subtitle;
744744 [and]
745745 (3) persons licensed under Chapter 156[.]; and
746746 (4) persons registered or licensed under Chapter 157.
747747 (b) The official exercising authority over the operation of
748748 federal savings associations equivalent to the authority exercised
749749 by the savings and mortgage lending commissioner over state savings
750750 associations may enforce this subtitle relating to the regulation
751751 of a federal savings association operating under this subtitle.
752752 SECTION 3. This Act takes effect April 1, 2010.