82R4159 ATP-F
By: Carona S.B. No. 17
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of residential mortgage loan servicers;
providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
adding Chapter 158 to read as follows:
CHAPTER 158. RESIDENTIAL MORTGAGE LOAN SERVICERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 158.001. SHORT TITLE. This chapter may be cited as the
Residential Mortgage Loan Servicer Registration Act.
Sec. 158.002. DEFINITIONS. In this chapter:
(1) "Commissioner" means the savings and mortgage
lending commissioner.
(2) "Finance commission" means the Finance Commission
of Texas.
(3) "Person" means an individual, corporation,
company, limited liability company, partnership, or association.
(4) "Registrant" means a person:
(A) registered under this chapter; or
(B) licensed under Chapter 156 or registered or
licensed under Chapter 157 and, through the license or registration
process, authorized to act as a residential mortgage loan servicer.
(5) "Residential mortgage loan" means a loan primarily
for personal, family, or household use that is secured by a
mortgage, deed of trust, or other equivalent consensual security
interest on a dwelling or on residential real estate.
(6) "Residential mortgage loan servicer" means a
person who:
(A) receives scheduled payments from a borrower
under the terms of a residential mortgage loan, including amounts
for escrow accounts; and
(B) makes the payments of principal and interest
to the owner of the loan or other third party and makes any other
payments with respect to the amounts received from the borrower as
may be required under the terms of the servicing loan document or
servicing contract.
(7) "Residential real estate" means real property
located in this state on which a dwelling is constructed or intended
to be constructed.
Sec. 158.003. RULES. (a) The finance commission may adopt
and enforce rules necessary for the intent of or to ensure
compliance with this chapter.
(b) The finance commission shall consult with the
commissioner when proposing and adopting rules under this chapter.
[Sections 158.004-158.050 reserved for expansion]
SUBCHAPTER B. REGISTRATION OF RESIDENTIAL MORTGAGE LOAN SERVICERS
Sec. 158.051. REGISTRATION REQUIRED. A person may not act
as a residential mortgage loan servicer, directly or indirectly,
for a residential mortgage loan secured by a lien on residential
real estate unless the person is:
(1) registered under this chapter;
(2) licensed under Chapter 156 or registered or
licensed under Chapter 157 and, through the license or registration
approval process, is authorized to act as a residential mortgage
loan servicer; or
(3) exempt under Section 158.052.
Sec. 158.052. EXEMPTIONS; APPLICABILITY. (a) This chapter
does not require registration by:
(1) a federal or state depository institution, or a
subsidiary of a federal or state depository institution;
(2) a person licensed under Chapter 156 or 157 and
assigned a unique identifier, as defined by Section 180.002, if the
person does not act as a residential mortgage loan servicer
servicing loans for third parties;
(3) a person licensed under Chapter 342 or regulated
under Chapter 343, if the person does not act as a residential
mortgage loan servicer servicing first-lien secured loans; or
(4) a person making a residential mortgage loan with
the person's own funds, or to secure all or a portion of the
purchase price of real property sold by that person.
(b) This chapter does not apply to the servicing of
commercial loans.
(c) Nothing in this chapter permits a person who is not
otherwise exempt from this chapter to act as a residential mortgage
loan originator, as defined by Section 180.002, without obtaining a
license under the applicable provisions of law.
Sec. 158.053. APPLICATION FOR REGISTRATION; FEE. (a) To
register under this chapter, a residential mortgage loan servicer
shall file with the commissioner an application for registration
that must:
(1) be in writing;
(2) be under oath;
(3) be in the form prescribed by the commissioner; and
(4) contain:
(A) the name and the address of the principal
place of business of the applicant; and
(B) the name, title, and address of the person
authorized by the applicant to respond to complaints.
(b) At the time of making application, the applicant shall
pay to the commissioner a registration fee in an amount not to
exceed $500 as determined by the finance commission.
Sec. 158.054. UPDATE OF REGISTRATION. A registrant
registered under this chapter shall notify the commissioner of a
change in any of the information provided in the registration
application not later than the 30th day after the date the
information changes.
Sec. 158.055. BOND. (a) Before approval of the
registration, an applicant for registration under this chapter
shall file with the commissioner, and shall keep in force while the
registration remains in effect, a surety bond meeting the
requirements of this section.
(b) The bond must be:
(1) in the amount of $200,000; and
(2) payable to the commissioner.
(c) If a registrant fails to comply with a final order of the
commissioner, the commissioner may make a claim on the bond to
recover and pay a consumer the amount to which the consumer was
entitled under the commissioner's order.
(d) When an action is commenced on a registrant's bond, the
commissioner may require the filing of a new acceptable bond.
Immediately on recovery on any action on the bond, the registrant
shall file a new bond.
(e) The bond procedures established by this section are
created to specifically exclude the participation of registrants
registered under this chapter in the recovery fund established
under Chapter 156.
(f) The finance commission may adopt rules establishing the
terms and conditions of the surety bond and the qualifications of
the surety.
Sec. 158.056. APPROVAL OF REGISTRATION. The commissioner
shall approve an application for registration under this chapter on
the applicant's payment of the required fees and the commissioner's
approval of the surety bond.
Sec. 158.057. NOTICE OF CHANGE OF REGISTRANT'S CONDITION.
(a) A registrant shall notify the commissioner in writing not later
than the 10th day after:
(1) the filing for bankruptcy or reorganization of the
registrant;
(2) the filing of a criminal indictment related in any
manner to the registrant's activities; or
(3) the receipt of notification of the issuance of a
final order to cease and desist, a final order of the suspension or
revocation of a license or registration, or another final formal or
informal regulatory action taken against the registrant in this or
another state.
(b) The notification required by Subsection (a)(3) must
include the reasons for a final regulatory action described by that
subdivision.
Sec. 158.058. RENEWAL OF REGISTRATION. (a) On or before
December 31 of each year, a registrant registered under this
chapter shall renew its registration for the next calendar year and
shall pay to the commissioner a renewal fee in an amount not to
exceed $500 as determined by the finance commission. To renew a
registration, a registrant must continue to meet all standards for
registration provided by this chapter.
(b) If a registrant fails to file a renewal and pay the
renewal fee on or before December 31 of a calendar year, the
registrant's registration is considered expired at that time and
the registrant:
(1) must reapply for registration as provided by
Section 158.053; and
(2) may not conduct business as a residential mortgage
loan servicer until the registration is approved.
(c) The commissioner may refuse to renew a registration if
the registrant:
(1) has failed to pay any fees or penalties imposed
under this chapter;
(2) has failed to provide the surety bond required
under this chapter; or
(3) is not in compliance with any final order of the
commissioner.
Sec. 158.059. REVOCATION OF REGISTRATION. The commissioner
may, after notice and hearing, revoke a registration under this
chapter if:
(1) the registrant fails or refuses to comply with the
commissioner's written request for a response to a complaint;
(2) the commissioner determines that the registrant
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 fraudulent, deceptive, or dishonest dealings; or
(3) the registrant is not in compliance with any final
order of the commissioner.
Sec. 158.060. APPEAL OF CERTAIN COMMISSIONER ACTIONS. The
denial, nonrenewal, or revocation by the commissioner of a
registration under this chapter and the appeal of that action are
governed by Chapter 2001, Government Code.
[Sections 158.061-158.100 reserved for expansion]
SUBCHAPTER C. INVESTIGATIONS, COMPLAINTS, AND ACTIONS AGAINST
REGISTRANT
Sec. 158.101. DISCLOSURE STATEMENT. (a) At a residential
mortgage loan servicer's first contact with a consumer, the
servicer shall provide to the consumer a written notice disclosing
the process for filing a complaint with the Department of Savings
and Mortgage Lending. A servicer shall maintain documentation
evidencing the notice was provided to the consumer.
(b) The finance commission may adopt and enforce rules
necessary to ensure compliance with this section.
Sec. 158.102. INVESTIGATION OF COMPLAINTS AGAINST
REGISTRANT; SURCHARGE. (a) On receipt of a signed written
complaint concerning a registrant by the Department of Savings and
Mortgage Lending, the commissioner or the commissioner's designee:
(1) shall notify the representative designated by the
registrant in the registration application in writing of the
complaint and provide a copy of the complaint to the
representative;
(2) may conduct an investigation with authority to
access, receive, and use in the investigation any books, accounts,
records, files, documents, information, or other evidence; and
(3) may request that the registrant provide
documentary and other evidence considered by the commissioner
necessary to effectively evaluate the complaint, including
correspondence, loan documents, and disclosures.
(b) A registrant shall promptly provide any evidence
requested by the commissioner.
(c) Information obtained by the commissioner during an
investigation is confidential unless disclosure of the information
is permitted or required by other law or court order. The
commissioner may share information gathered during an
investigation with any state or federal agency.
(d) In addition to the registration fee, the finance
commission by rule may impose on each registrant a surcharge based
on complaint activity to cover the costs incurred by the Department
of Savings and Mortgage Lending resulting from complaints against
residential mortgage loan servicers.
Sec. 158.103. ACTION ON COMPLAINT. (a) If, after
conducting an investigation, the commissioner determines that the
registrant has violated this chapter or another applicable law, the
commissioner may do one or more of the following:
(1) issue an order to the registrant to resolve the
complaint by paying to the consumer the damages to which the
consumer would be entitled under law; or
(2) order the registrant to cease and desist from the
actions found to be in violation of law.
(b) A registrant may appeal an order issued under this
section. The appeal is a contested case governed by Chapter 2001,
Government Code.
Sec. 158.104. MULTI-STATE EXAMINATION AUTHORITY. To ensure
that residential mortgage loan servicers to whom this chapter
applies operate in this state in compliance with this chapter and
with other law in accordance with this chapter, the commissioner or
the commissioner's designee may participate in multi-state
mortgage examinations as scheduled by the Conference of State Bank
Supervisors Multi-State Mortgage Committee in accordance with the
Conference of State Bank Supervisors protocol for such
examinations.
Sec. 158.105. CEASE AND DESIST ORDER. (a) If the
commissioner has reasonable cause to believe that a person who is
not registered or exempt under this chapter has engaged, or is about
to engage, in an act or practice for which registration 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.
(b) An order issued under Subsection (a) must contain a
reasonably detailed statement of the facts on which the order is
issued.
(c) If, not later than the 30th day after the date an order
is issued under this section, the person against whom the order is
made requests a hearing, the commissioner shall set and give notice
of a hearing before the commissioner or a hearings officer. The
hearing shall be governed by Chapter 2001, Government Code.
(d) If a hearing is not requested under Subsection (c) not
later than the 30th day after the date the order is issued, the
order is considered final and not appealable.
(e) 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 $2,500 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.
Sec. 158.106. RESTITUTION. The commissioner may order a
residential mortgage loan servicer to pay to a complainant any
compensation received by the servicer in a violation cited in a
final order of the commissioner.
SECTION 2. This Act takes effect September 1, 2011.