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Texas Senate Bill SB17

Texas 2011 - 82nd Regular

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11 82R26713 ATP-F
22 By: Carona, et al. S.B. No. 17
33 (Truitt)
44 Substitute the following for S.B. No. 17: No.
55
66
77 A BILL TO BE ENTITLED
88 AN ACT
99 relating to the regulation of residential mortgage loan servicers;
1010 providing an administrative penalty.
1111 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1212 SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
1313 adding Chapter 158 to read as follows:
1414 CHAPTER 158. RESIDENTIAL MORTGAGE LOAN SERVICERS
1515 SUBCHAPTER A. GENERAL PROVISIONS
1616 Sec. 158.001. SHORT TITLE. This chapter may be cited as the
1717 Residential Mortgage Loan Servicer Registration Act.
1818 Sec. 158.002. DEFINITIONS. In this chapter:
1919 (1) "Commissioner" means the savings and mortgage
2020 lending commissioner.
2121 (2) "Finance commission" means the Finance Commission
2222 of Texas.
2323 (3) "Person" means an individual, corporation,
2424 company, limited liability company, partnership, or association.
2525 (4) "Registrant" means a person registered under this
2626 chapter.
2727 (5) "Residential mortgage loan" means a loan primarily
2828 for personal, family, or household use that is secured by a
2929 mortgage, deed of trust, or other equivalent consensual security
3030 interest on a dwelling or on residential real estate.
3131 (6) "Residential mortgage loan servicer" means a
3232 person who:
3333 (A) receives scheduled payments from a borrower
3434 under the terms of a residential mortgage loan, including amounts
3535 for escrow accounts; and
3636 (B) makes the payments of principal and interest
3737 to the owner of the loan or other third party and makes any other
3838 payments with respect to the amounts received from the borrower as
3939 may be required under the terms of the servicing loan document or
4040 servicing contract.
4141 (7) "Residential real estate" means real property
4242 located in this state on which a dwelling designed for occupancy for
4343 one to four families is constructed or intended to be constructed.
4444 Sec. 158.003. PURPOSE; RULES. (a) The purpose of this
4545 chapter is to provide regulatory authority to ensure that
4646 residential mortgage loan servicers registered under this chapter
4747 comply with federal and state laws, rules, and regulations.
4848 (b) The finance commission may adopt and enforce rules
4949 necessary for the purposes of or to ensure compliance with this
5050 chapter.
5151 (c) The finance commission shall consult with the
5252 commissioner when proposing and adopting rules under this chapter.
5353 [Sections 158.004-158.050 reserved for expansion]
5454 SUBCHAPTER B. REGISTRATION OF RESIDENTIAL MORTGAGE LOAN SERVICERS
5555 Sec. 158.051. REGISTRATION REQUIRED. A person may not act
5656 as a residential mortgage loan servicer, directly or indirectly,
5757 for a residential mortgage loan secured by a lien on residential
5858 real estate in this state unless the person is registered under this
5959 chapter or is exempt under Section 158.052.
6060 Sec.158.052.EXEMPTIONS; APPLICABILITY. (a)This chapter
6161 does not require registration by:
6262 (1) a federal or state depository institution, or a
6363 subsidiary or affiliate of a federal or state depository
6464 institution;
6565 (2) a person registered under Chapter 157;
6666 (3) a person licensed under Chapter 342 or regulated
6767 under Chapter 343, if the person does not act as a residential
6868 mortgage loan servicer servicing first-lien secured loans; or
6969 (4) a person making a residential mortgage loan with
7070 the person's own funds, or to secure all or a portion of the
7171 purchase price of real property sold by that person.
7272 (b) This chapter applies only to a residential mortgage loan
7373 servicer that services at least one residential mortgage loan.
7474 (c) Nothing in this chapter permits a person who is not
7575 otherwise exempt from this chapter to act as a residential mortgage
7676 loan originator, as defined by Section 180.002, without obtaining a
7777 license under the applicable provisions of law.
7878 Sec. 158.053. APPLICATION FOR REGISTRATION; FEE. (a) To
7979 register under this chapter, a residential mortgage loan servicer
8080 shall file with the commissioner an application for registration
8181 that must:
8282 (1) be in writing;
8383 (2) be under oath;
8484 (3) be in the form prescribed by the commissioner; and
8585 (4) contain:
8686 (A) the name and the address of the principal
8787 place of business of the applicant; and
8888 (B) the name, title, and address of the person
8989 authorized by the applicant to respond to complaints.
9090 (b) At the time of making application, the applicant shall
9191 pay to the commissioner a registration fee in an amount not to
9292 exceed $500 as determined by the finance commission.
9393 (c) An applicant is not required to pay a registration fee
9494 under Subsection (b) if the applicant:
9595 (1) collects delinquent consumer debts owed on
9696 residential mortgage loans;
9797 (2) does not own the residential mortgage loans for
9898 which the applicant acts as a residential mortgage loan servicer;
9999 and
100100 (3) is a third-party debt collector that has filed a
101101 bond in compliance with Chapter 392.
102102 Sec. 158.054. UPDATE OF REGISTRATION. A registrant shall
103103 notify the commissioner of a change in any of the information
104104 provided in the registration application not later than the 30th
105105 day after the date the information changes.
106106 Sec. 158.055. BOND. (a) Before approval of the
107107 registration, an applicant for registration under this chapter
108108 shall file with the commissioner, and shall keep in force while the
109109 registration remains in effect, a surety bond meeting the
110110 requirements of this section or, if a surety bond is not available
111111 to the applicant from a surety company authorized to do business in
112112 this state, other collateral of like kind as determined by the
113113 commissioner.
114114 (b) The bond must be:
115115 (1) in an amount not to exceed $200,000, except as
116116 provided by Subsection (c); and
117117 (2) payable to the commissioner.
118118 (c) This subsection applies only to an applicant who
119119 services only residential mortgage loans secured by unimproved
120120 residential real estate or services only residential mortgage loans
121121 secured by foreclosed property with a dwelling, or both. If sales
122122 of the property described by this subsection do not exceed $1
123123 million annually, the bond for an applicant described by this
124124 section must be in an amount not to exceed $25,000.
125125 (d) If a registrant fails to comply with a final order of the
126126 commissioner, the commissioner may make a claim on the bond to
127127 recover and pay a consumer the amount to which the consumer was
128128 entitled under the commissioner's order.
129129 (e) When an action is commenced on a registrant's bond, the
130130 commissioner may require the filing of a new acceptable bond.
131131 Immediately on recovery on any action on the bond, the registrant
132132 shall file a new bond.
133133 (f) The bond procedures established by this section are
134134 created to specifically exclude the participation of registrants in
135135 the recovery fund established under Chapter 156.
136136 (g) The finance commission may adopt rules establishing the
137137 terms and conditions of the surety bond and the qualifications of
138138 the surety.
139139 (h) A registrant is not required to file a bond under this
140140 chapter if the registrant:
141141 (1) collects delinquent consumer debts owed on
142142 residential mortgage loans;
143143 (2) does not own the residential mortgage loans for
144144 which the registrant acts as a residential mortgage loan servicer;
145145 and
146146 (3) is a third-party debt collector that has filed a
147147 bond in compliance with Chapter 392.
148148 Sec. 158.056. APPROVAL OF REGISTRATION. The commissioner
149149 shall approve an application for registration under this chapter on
150150 the applicant's payment of the required fees and the commissioner's
151151 approval of the surety bond.
152152 Sec. 158.057. NOTICE OF CHANGE OF REGISTRANT'S CONDITION.
153153 (a) A registrant shall notify the commissioner in writing not
154154 later than the 10th day after:
155155 (1) the filing for bankruptcy or reorganization of the
156156 registrant;
157157 (2) the filing of a criminal indictment related in any
158158 manner to the registrant's activities; or
159159 (3) the receipt of notification of the issuance of a
160160 final order to cease and desist, a final order of the suspension or
161161 revocation of a license or registration, or another final formal or
162162 informal regulatory action taken against the registrant in this or
163163 another state.
164164 (b) The notification required by Subsection (a)(3) must
165165 include the reasons for a final regulatory action described by that
166166 subdivision.
167167 Sec. 158.058. RENEWAL OF REGISTRATION. (a) On or before
168168 December 31 of each year, a registrant shall renew its registration
169169 for the next calendar year and shall pay to the commissioner a
170170 renewal fee in an amount not to exceed $500 as determined by the
171171 finance commission. To renew a registration, a registrant must
172172 continue to meet all standards for registration provided by this
173173 chapter.
174174 (b) If a registrant fails to file a renewal and pay the
175175 renewal fee on or before December 31 of a calendar year, the
176176 registrant's registration is considered expired at that time and
177177 the registrant:
178178 (1) must reapply for registration as provided by
179179 Section 158.053; and
180180 (2) may not conduct business as a residential mortgage
181181 loan servicer until the registration is approved.
182182 (c) The commissioner may refuse to renew a registration if
183183 the registrant:
184184 (1) has failed to pay any fees or penalties imposed
185185 under this chapter;
186186 (2) has failed to provide the surety bond required
187187 under this chapter; or
188188 (3) is not in compliance with any final order of the
189189 commissioner.
190190 Sec. 158.059. REVOCATION OF REGISTRATION. The commissioner
191191 may, after notice and hearing, revoke a registration under this
192192 chapter if:
193193 (1) the registrant fails or refuses to comply with the
194194 commissioner's written request for a response to a complaint;
195195 (2) the commissioner determines that the registrant
196196 has engaged in an intentional course of conduct to violate federal
197197 or state law or has engaged in an intentional course of conduct that
198198 constitutes fraudulent, deceptive, or dishonest dealings; or
199199 (3) the registrant is not in compliance with any final
200200 order of the commissioner.
201201 Sec. 158.060. APPEAL OF CERTAIN COMMISSIONER ACTIONS. The
202202 denial, nonrenewal, or revocation by the commissioner of a
203203 registration under this chapter and the appeal of that action are
204204 governed by Chapter 2001, Government Code.
205205 [Sections 158.061-158.100 reserved for expansion]
206206 SUBCHAPTER C. INVESTIGATIONS, COMPLAINTS, AND ACTIONS AGAINST
207207 REGISTRANT
208208 Sec. 158.101. DISCLOSURE STATEMENT. A registrant shall
209209 provide to the borrower of each residential mortgage loan the
210210 following notice not later than the 30th day after the registrant
211211 commences servicing the loan:
212212 "COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD
213213 BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
214214 ______________________________ (street address of the Department
215215 of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
216216 AVAILABLE AT _______________ (telephone number of the Department of
217217 Savings and Mortgage Lending's toll-free consumer hotline)."
218218 Sec. 158.102. INVESTIGATION OF COMPLAINTS AGAINST
219219 REGISTRANT; SURCHARGE. (a) On receipt of a signed written
220220 complaint concerning a registrant by the Department of Savings and
221221 Mortgage Lending, the commissioner or the commissioner's designee:
222222 (1) shall notify the representative designated by the
223223 registrant in the registration application in writing of the
224224 complaint and provide a copy of the complaint to the
225225 representative;
226226 (2) may conduct an investigation with authority to
227227 access, receive, and use in the investigation any books, accounts,
228228 records, files, documents, information, or other evidence; and
229229 (3) may request that the registrant provide
230230 documentary and other evidence considered by the commissioner
231231 necessary to effectively evaluate the complaint, including
232232 correspondence, loan documents, and disclosures.
233233 (b) A registrant shall promptly provide any evidence
234234 requested by the commissioner.
235235 (c) Information obtained by the commissioner during an
236236 investigation is confidential unless disclosure of the information
237237 is permitted or required by other law or court order. The
238238 commissioner may share information gathered during an
239239 investigation with any state or federal agency.
240240 (d) In addition to the registration fee, the finance
241241 commission by rule may impose a complaint investigation fee on a
242242 registrant based on the costs incurred by the Department of Savings
243243 and Mortgage Lending resulting from the investigation of complaints
244244 against the registrant.
245245 Sec. 158.103. ACTION ON COMPLAINT. (a) If, after
246246 conducting an investigation, the commissioner determines that the
247247 registrant has violated this chapter or another applicable law, the
248248 commissioner may do one or more of the following:
249249 (1) issue an order to the registrant to resolve the
250250 complaint by paying to the consumer the damages to which the
251251 consumer would be entitled under law; or
252252 (2) order the registrant to cease and desist from the
253253 actions found to be in violation of law.
254254 (b) A registrant may appeal an order issued under this
255255 section. The appeal is a contested case governed by Chapter 2001,
256256 Government Code.
257257 Sec. 158.104. MULTI-STATE EXAMINATION AUTHORITY. To ensure
258258 that residential mortgage loan servicers to whom this chapter
259259 applies operate in this state in compliance with this chapter and
260260 with other law in accordance with this chapter, the commissioner or
261261 the commissioner's designee may participate in multi-state
262262 mortgage examinations as scheduled by the Conference of State Bank
263263 Supervisors Multi-State Mortgage Committee in accordance with the
264264 Conference of State Bank Supervisors protocol for such
265265 examinations.
266266 Sec. 158.105. CEASE AND DESIST ORDER. (a) If the
267267 commissioner has reasonable cause to believe that a person who is
268268 not registered or exempt under this chapter has engaged, or is about
269269 to engage, in an act or practice for which registration is required
270270 under this chapter, the commissioner may issue without notice and
271271 hearing an order to cease and desist from continuing a particular
272272 action or an order to take affirmative action, or both, to enforce
273273 compliance with this chapter.
274274 (b) An order issued under Subsection (a) must contain a
275275 reasonably detailed statement of the facts on which the order is
276276 issued.
277277 (c) If, not later than the 30th day after the date an order
278278 is issued under this section, the person against whom the order is
279279 made requests a hearing, the commissioner shall set and give notice
280280 of a hearing before the commissioner or a hearings officer. The
281281 hearing shall be governed by Chapter 2001, Government Code.
282282 (d) If a hearing is not requested under Subsection (c) not
283283 later than the 30th day after the date the order is issued, the
284284 order is considered final and not appealable.
285285 (e) The commissioner, after giving notice, may impose
286286 against a person who violates a cease and desist order an
287287 administrative penalty in an amount not to exceed $2,500 for each
288288 day of the violation. In addition to any other remedy provided by
289289 law, the commissioner may institute in district court a suit for
290290 injunctive relief and to collect the administrative penalty. A
291291 bond is not required of the commissioner with respect to injunctive
292292 relief granted under this subsection.
293293 Sec. 158.106. RESTITUTION. The commissioner may order a
294294 residential mortgage loan servicer to pay to a complainant any
295295 compensation received by the servicer in a violation cited by the
296296 commissioner in a final order.
297297 SECTION 2. Subdivision (4), Section 157.002, Finance Code,
298298 is amended to read as follows:
299299 (4) "Mortgage banker" means a person who:
300300 (A) accepts an application for a residential
301301 mortgage loan, [or] makes a residential mortgage loan, or services
302302 residential mortgage loans; and
303303 (B) is an approved or authorized:
304304 (i) mortgagee with direct endorsement
305305 underwriting authority granted by the United States Department of
306306 Housing and Urban Development;
307307 (ii) seller or servicer of the Federal
308308 National Mortgage Association or the Federal Home Loan Mortgage
309309 Corporation; or
310310 (iii) issuer for the Government National
311311 Mortgage Association.
312312 SECTION 3. Section 157.003, Finance Code, is amended by
313313 adding Subsection (f) to read as follows:
314314 (f) A mortgage banker that services residential mortgage
315315 loans must indicate in its registration that it acts as a
316316 residential mortgage loan servicer.
317317 SECTION 4. Section 157.007, Finance Code, is amended to
318318 read as follows:
319319 Sec. 157.007. DISCLOSURE STATEMENT. (a) A mortgage banker
320320 shall include the following notice to a residential mortgage loan
321321 applicant with an application for a residential mortgage loan:
322322 "COMPLAINTS REGARDING MORTGAGE BANKERS SHOULD BE SENT TO THE
323323 DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
324324 ______________________________ (street address of the Department
325325 of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
326326 AVAILABLE AT _______________ (telephone number of the Department of
327327 Savings and Mortgage Lending's toll-free consumer hotline)."
328328 (b) A mortgage banker that indicates in its registration
329329 that it acts as a residential mortgage loan servicer shall provide
330330 to the borrower of each residential mortgage loan it services the
331331 following notice not later than the 30th day after the date the
332332 mortgage banker commences servicing the loan:
333333 "COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD
334334 BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
335335 ______________________________ (street address of the Department
336336 of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
337337 AVAILABLE AT _______________ (telephone number of the Department of
338338 Savings and Mortgage Lending's toll-free consumer hotline)."
339339 SECTION 5. Chapter 157, Finance Code, is amended by adding
340340 Section 157.0211 to read as follows:
341341 Sec. 157.0211. MULTI-STATE EXAMINATION AUTHORITY OF
342342 RESIDENTIAL MORTGAGE LOAN SERVICER. To ensure that mortgage
343343 bankers that act as residential mortgage loan servicers operate in
344344 this state in compliance with this chapter and with other law in
345345 accordance with this chapter, the commissioner or the
346346 commissioner's designee may participate in multi-state mortgage
347347 examinations as scheduled by the Conference of State Bank
348348 Supervisors Multi-State Mortgage Committee in accordance with the
349349 Conference of State Bank Supervisors protocol for such
350350 examinations.
351351 SECTION 6. This Act takes effect September 1, 2011.