Texas 2013 - 83rd Regular

Texas House Bill HB1601 Compare Versions

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1	1	83R19349 CLG-D
2	2	By: Villarreal H.B. No. 1601
3	3	Substitute the following for H.B. No. 1601:
4	4	By: Villarreal C.S.H.B. No. 1601
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the regulation of residential mortgage loan
10	10	originators, residential mortgage loan companies, mortgage
11	11	bankers, and residential mortgage loan servicers under the
12	12	jurisdiction of the Department of Savings and Mortgage Lending;
13	13	changing a fee.
14	14	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
15	15	SECTION 1. The heading to Chapter 156, Finance Code, is
16	16	amended to read as follows:
17	17	CHAPTER 156. RESIDENTIAL MORTGAGE LOAN COMPANIES [AND RESIDENTIAL
18	18	MORTGAGE LOAN ORIGINATORS]
19	19	SECTION 2. Section 156.001, Finance Code, is amended to
20	20	read as follows:
21	21	Sec. 156.001. SHORT TITLE. This chapter may be cited as
22	22	the Residential Mortgage Loan Company [and Residential Mortgage
23	23	Loan Originator] Licensing and Registration Act.
24	24	SECTION 3. Section 156.002, Finance Code, is amended by
25	25	adding Subdivision (4-b) and amending Subdivisions (10-b) and (11)
26	26	to read as follows:
27	27	(4-b) "Inspection" includes examination.
28	28	(10-b) "Qualifying individual" means an individual
29	29	who is:
30	30	(A) licensed under Chapter 157 [this chapter] as
31	31	a residential mortgage loan originator; and
32	32	(B) [is] designated by a residential mortgage
33	33	loan company as the company's representative [for purposes of the
34	34	Nationwide Mortgage Licensing System and Registry].
35	35	(11) "Registered financial services company" means a
36	36	person registered under Section 156.2012 [156.214].
37	37	SECTION 4. Section 156.003, Finance Code, is amended to
38	38	read as follows:
39	39	Sec. 156.003. SECONDARY MARKET TRANSACTIONS. This chapter
40	40	does not prohibit a residential mortgage loan originator sponsored
41	41	by and conducting business for a licensed or registered residential
42	42	mortgage loan company under this chapter from receiving
43	43	compensation from a party other than the mortgage applicant for the
44	44	sale, transfer, assignment, or release of rights on the closing of a
45	45	mortgage transaction.
46	46	SECTION 5. Section 156.004(a), Finance Code, is amended to
47	47	read as follows:
48	48	(a) At the time an applicant submits an application to a
49	49	residential mortgage loan originator sponsored by and conducting
50	50	business for a licensed or registered residential mortgage loan
51	51	company under this chapter, the residential mortgage loan
52	52	originator shall provide to the applicant a disclosure that
53	53	specifies:
54	54	(1) the nature of the relationship between the
55	55	applicant and the residential mortgage loan originator;
56	56	(2) the duties the residential mortgage loan
57	57	originator has to the applicant; and
58	58	(3) how the residential mortgage loan originator will
59	59	be compensated.
60	60	SECTION 6. Section 156.005, Finance Code, is amended to
61	61	read as follows:
62	62	Sec. 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless
63	63	prohibited by federal or state law, this chapter may not be
64	64	construed to prevent affiliated or controlled business
65	65	arrangements or loan origination services by or between residential
66	66	mortgage loan originators, sponsored by and conducting business for
67	67	a licensed or registered residential mortgage loan company under
68	68	this chapter, and other professionals if the residential mortgage
69	69	loan originator complies with all applicable federal and state laws
70	70	permitting those arrangements or services.
71	71	SECTION 7. The heading to Section 156.101, Finance Code, is
72	72	amended to read as follows:
73	73	Sec. 156.101. ADMINISTRATION AND ENFORCEMENT OF CHAPTER;
74	74	PARTICIPATION IN NATIONWIDE REGISTRY.
75	75	SECTION 8. Section 156.101(a), Finance Code, as amended by
76	76	Chapters 1104 (H.B. 10) and 1317 (H.B. 2774), Acts of the 81st
77	77	Legislature, Regular Session, 2009, is reenacted and amended to
78	78	read as follows:
79	79	(a) The [Except as provided by Subsection (a-2), the]
80	80	commissioner shall administer and enforce this chapter.
81	81	SECTION 9. Section 156.102(a), Finance Code, is amended to
82	82	read as follows:
83	83	(a) The finance commission may adopt and enforce rules
84	84	necessary for the intent of or to ensure compliance with this
85	85	chapter[, except as provided by Section 15.4024 with respect to
86	86	employees of credit union subsidiary organizations subject to
87	87	regulation under Section 156.2015].
88	88	SECTION 10. Sections 156.104(f) and (h), Finance Code, are
89	89	amended to read as follows:
90	90	(f) The commissioner may remove a member of the advisory
91	91	committee if:
92	92	(1) the member does not maintain [have at the time of
93	93	appointment] the qualifications required by Subsection (b); or
94	94	(2) the commissioner determines that the member cannot
95	95	discharge the member's duties for a substantial part of the term for
96	96	which the member is appointed.
97	97	(h) In addition to other powers and duties delegated to the
98	98	advisory committee by the commissioner, the advisory committee
99	99	shall advise the commissioner with respect to:
100	100	(1) the proposal and adoption of rules relating to the
101	101	mortgage industry[:
102	102	[(A) the licensing of residential mortgage loan
103	103	originators or residential mortgage loan companies;
104	104	[(B) the education and experience requirements
105	105	for licensing residential mortgage loan originators; and
106	106	[(C) the conduct and ethics of residential
107	107	mortgage loan originators];
108	108	(2) the form of or format for any applications or other
109	109	documents under this chapter or Chapter 157; and
110	110	(3) the interpretation, implementation, and
111	111	enforcement of this chapter and Chapter 157.
112	112	SECTION 11. Section 156.105, Finance Code, is amended to
113	113	read as follows:
114	114	Sec. 156.105. STANDARD FORMS. (a) The finance
115	115	commission[,] by rule[,] shall adopt one or more standard forms for
116	116	use by a residential mortgage loan originator sponsored by and
117	117	conducting business for a licensed or registered residential
118	118	mortgage loan company under this chapter in representing that an
119	119	applicant for a residential mortgage loan is preapproved or has
120	120	prequalified for the loan.
121	121	(b) The finance commission shall adopt rules requiring a
122	122	residential mortgage loan originator licensed under Chapter 157
123	123	[this chapter] to use the forms adopted by the finance commission
124	124	under Subsection (a).
125	125	SECTION 12. The heading to Subchapter C, Chapter 156,
126	126	Finance Code, is amended to read as follows:
127	127	SUBCHAPTER C. RESIDENTIAL MORTGAGE LOAN COMPANY [AND RESIDENTIAL
128	128	MORTGAGE LOAN ORIGINATOR] LICENSES AND REGISTRATION
129	129	SECTION 13. Sections 156.201(a) and (c), Finance Code, are
130	130	amended to read as follows:
131	131	(a) A person may not act in the capacity of, engage in the
132	132	business of, or advertise or hold that person out as engaging in or
133	133	conducting the business of a residential mortgage loan company in
134	134	this state unless the person holds an active residential mortgage
135	135	loan company license, is registered under Section 156.2012
136	136	[156.214], or is exempt under Section 156.202.
137	137	(c) Each residential mortgage loan company and the
138	138	company's qualifying individual licensed under Chapter 157 [this
139	139	chapter] is responsible to the commissioner and members of the
140	140	public for any act or conduct performed by the residential mortgage
141	141	loan originator sponsored by or acting for the residential mortgage
142	142	loan company in connection with:
143	143	(1) the origination of a residential mortgage loan; or
144	144	(2) a transaction that is related to the origination
145	145	of a residential mortgage loan in which the qualifying individual
146	146	knew or should have known of the transaction.
147	147	SECTION 14. Sections 156.202(a) and (a-1), Finance Code,
148	148	are amended to read as follows:
149	149	(a) In this section, "depository institution," "dwelling,"
150	150	and "federal banking agency[,]" [and "immediate family member"]
151	151	have the meanings assigned by Section 180.002.
152	152	(a-1) The following [individuals or] entities[, and
153	153	employees of those entities when acting for the benefit of those
154	154	entities,] are exempt from this chapter:
155	155	(1) [a registered mortgage loan originator when acting
156	156	for:
157	157	[(A) a depository institution;
158	158	[(B) a subsidiary of a depository institution
159	159	that is:
160	160	[(i) owned and controlled by the depository
161	161	institution; and
162	162	[(ii) regulated by a federal banking
163	163	agency; or
164	164	[(C) an institution regulated by the Farm Credit
165	165	Administration;
166	166	[(2) an individual who offers or negotiates the terms
167	167	of a residential mortgage loan with or on behalf of an immediate
168	168	family member of the individual;
169	169	[(3) a licensed attorney who negotiates the terms of a
170	170	residential mortgage loan on behalf of a client as an ancillary
171	171	matter to the attorney's representation of the client, unless the
172	172	attorney:
173	173	[(A) takes a residential mortgage loan
174	174	application; and
175	175	[(B) offers or negotiates the terms of a
176	176	residential mortgage loan;
177	177	[(4) an individual who offers or negotiates terms of a
178	178	residential mortgage loan secured by a dwelling that serves as the
179	179	individual's residence;
180	180	[(5)] a nonprofit organization providing self-help
181	181	housing that originates zero interest residential mortgage loans
182	182	for borrowers who have provided part of the labor to construct the
183	183	dwelling securing the loan;
184	184	(2) [(6)] a mortgage banker registered under Chapter
185	185	157;
186	186	(3) [(7)] any owner of residential real estate who in
187	187	any 12-consecutive-month period makes no more than five residential
188	188	mortgage loans to purchasers of the property for all or part of the
189	189	purchase price of the residential real estate against which the
190	190	mortgage is secured; and
191	191	(4) [(8)] an entity that is:
192	192	(A) a depository institution;
193	193	(B) a subsidiary of a depository institution that
194	194	is:
195	195	(i) owned and controlled by the depository
196	196	institution; and
197	197	(ii) regulated by a federal banking agency;
198	198	or
199	199	(C) an institution regulated by the Farm Credit
200	200	Administration[; and
201	201	[(9) an individual who is exempt as provided by
202	202	Section 180.003(b)].
203	203	SECTION 15. The heading to Section 156.203, Finance Code,
204	204	is amended to read as follows:
205	205	Sec. 156.203. APPLICATION [FOR A LICENSE]; FEES.
206	206	SECTION 16. Sections 156.203(a-1) and (a-2), Finance Code,
207	207	are amended to read as follows:
208	208	(a-1) An application for a residential mortgage loan
209	209	company license [and a residential mortgage loan originator
210	210	license] must be:
211	211	(1) in writing;
212	212	(2) under oath; and
213	213	(3) on the form prescribed by the commissioner.
214	214	(a-2) An application for a financial services company
215	215	registration under Section 156.2012 [156.214] must be:
216	216	(1) in writing;
217	217	(2) under oath; and
218	218	(3) on the form prescribed by the commissioner.
219	219	SECTION 17. The heading to Section 156.2041, Finance Code,
220	220	is amended to read as follows:
221	221	Sec. 156.2041. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
222	222	[LICENSES]: MORTGAGE COMPANY [AND RESIDENTIAL MORTGAGE LOAN
223	223	ORIGINATORS].
224	224	SECTION 18. Section 156.2041(a), Finance Code, is amended
225	225	to read as follows:
226	226	(a) To be issued a mortgage company license, an applicant
227	227	must:
228	228	(1) submit a completed application together with the
229	229	payment of applicable fees through the Nationwide Mortgage
230	230	Licensing System and Registry;
231	231	(2) designate control persons for the mortgage company
232	232	through the Nationwide Mortgage Licensing System and Registry;
233	233	(3) designate an individual licensed as a residential
234	234	mortgage loan originator under Chapter 157 [this chapter] as the
235	235	company's qualifying individual;
236	236	(4) submit a completed branch application through the
237	237	Nationwide Mortgage Licensing System and Registry for each branch
238	238	office that engages in residential mortgage loan activity on
239	239	residential real estate located in this state;
240	240	(5) not be in violation of this chapter, a rule adopted
241	241	under this chapter, or any order previously issued by the
242	242	commissioner to the applicant;
243	243	(6) have the company name or assumed name properly
244	244	filed with either the secretary of state or with the appropriate
245	245	county clerk's office;
246	246	(7) maintain a physical office in this state; and
247	247	(8) provide financial statements and any other
248	248	information required by the commissioner.
249	249	SECTION 19. The heading to Section 156.2042, Finance Code,
250	250	is amended to read as follows:
251	251	Sec. 156.2042. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
252	252	[LICENSES]: CREDIT UNION SUBSIDIARY ORGANIZATION [AND RESIDENTIAL
253	253	MORTGAGE LOAN ORIGINATORS].
254	254	SECTION 20. Section 156.2042(a), Finance Code, is amended
255	255	to read as follows:
256	256	(a) To be issued a credit union subsidiary organization
257	257	license, an applicant must:
258	258	(1) submit a completed application together with the
259	259	payment of applicable fees through the Nationwide Mortgage
260	260	Licensing System and Registry;
261	261	(2) designate control persons for the organization
262	262	through the Nationwide Mortgage Licensing System and Registry;
263	263	(3) designate an individual licensed as a residential
264	264	mortgage loan originator under Chapter 157 [this chapter] as the
265	265	company's qualifying individual;
266	266	(4) submit a completed branch application through the
267	267	Nationwide Mortgage Licensing System and Registry for each branch
268	268	office that engages in residential mortgage loan activity on
269	269	residential real estate located in this state; [and]
270	270	(5) not be in violation of this chapter, a rule adopted
271	271	under this chapter, or any order previously issued by the
272	272	commissioner to the applicant; and
273	273	(6) maintain a physical office in this state.
274	274	SECTION 21. The heading to Section 156.2043, Finance Code,
275	275	is amended to read as follows:
276	276	Sec. 156.2043. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
277	277	[LICENSES]: AUXILIARY MORTGAGE LOAN ACTIVITY COMPANY [AND
278	278	RESIDENTIAL MORTGAGE LOAN ORIGINATORS].
279	279	SECTION 22. Section 156.2043(a), Finance Code, is amended
280	280	to read as follows:
281	281	(a) To be issued an auxiliary mortgage loan activity company
282	282	license, an applicant must:
283	283	(1) submit a completed application together with the
284	284	payment of applicable fees through the Nationwide Mortgage
285	285	Licensing System and Registry;
286	286	(2) designate control persons for the company through
287	287	the Nationwide Mortgage Licensing System and Registry;
288	288	(3) designate an individual licensed as a residential
289	289	mortgage loan originator under Chapter 157 [this chapter] as the
290	290	company's qualifying individual; and
291	291	(4) not be in violation of this chapter, a rule adopted
292	292	under this chapter, or any order previously issued by the
293	293	commissioner to the applicant.
294	294	SECTION 23. The heading to Section 156.2044, Finance Code,
295	295	is amended to read as follows:
296	296	Sec. 156.2044. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
297	297	[LICENSES]: INDEPENDENT CONTRACTOR LOAN PROCESSOR OR UNDERWRITER
298	298	COMPANY [AND INDIVIDUAL LOAN PROCESSORS OR UNDERWRITERS].
299	299	SECTION 24. Sections 156.2044(a) and (b), Finance Code, are
300	300	amended to read as follows:
301	301	(a) To be issued an independent contractor loan processor or
302	302	underwriter company license under this chapter, an applicant must:
303	303	(1) submit a completed application together with the
304	304	payment of applicable fees through the Nationwide Mortgage
305	305	Licensing System and Registry;
306	306	(2) designate control persons for the company through
307	307	the Nationwide Mortgage Licensing System and Registry;
308	308	(3) designate an individual licensed as a residential
309	309	mortgage loan originator under Chapter 157 [this chapter] as the
310	310	company's qualifying individual; and
311	311	(4) not be in violation of this chapter, a rule adopted
312	312	under this chapter, or any order previously issued by the
313	313	commissioner to the applicant.
314	314	(b) An independent contractor loan processor or underwriter
315	315	company or a sponsored residential mortgage loan originator is not
316	316	authorized to originate residential mortgage loans with a license
317	317	issued under Subsection (a).
318	318	SECTION 25. Section 156.2046, Finance Code, is amended to
319	319	read as follows:
320	320	Sec. 156.2046. CONVICTION OF OFFENSE. A [For the purposes
321	321	of Section 156.2041, 156.2042, 156.2043, 156.2044, or 156.2045, a]
322	322	person is considered to have been convicted of a criminal offense
323	323	if:
324	324	(1) a sentence is imposed on the person;
325	325	(2) the person received probation or community
326	326	supervision, including deferred adjudication or community service;
327	327	or
328	328	(3) the court deferred final disposition of the
329	329	person's case.
330	330	SECTION 26. Sections 156.206(b) and (c), Finance Code, are
331	331	amended to read as follows:
332	332	(b) The commissioner shall conduct criminal background and
333	333	credit history checks on a person required to be licensed under this
334	334	chapter [in accordance with Section 180.054, and, in connection
335	335	with each application for a residential mortgage loan originator
336	336	license or other individual license, the commissioner may conduct a
337	337	criminal background check through the Department of Public Safety].
338	338	(c) The commissioner shall keep confidential any background
339	339	information obtained under this section and may not release or
340	340	disclose the information unless:
341	341	(1) the information is a public record at the time the
342	342	commissioner obtains the information; or
343	343	(2) the commissioner releases the information:
344	344	(A) under order from a court; or
345	345	(B) [with the permission of the applicant;
346	346	[(C) to a person through whom the applicant is
347	347	conducting or will conduct business; or
348	348	[(D)] to a governmental agency.
349	349	SECTION 27. The heading to Section 156.207, Finance Code,
350	350	is amended to read as follows:
351	351	Sec. 156.207. ISSUANCE OF LICENSE[; PROVISIONAL LICENSE].
352	352	SECTION 28. Sections 156.208(a-1) and (c), Finance Code,
353	353	are amended to read as follows:
354	354	(a-1) A residential mortgage loan company license issued
355	355	under this chapter is valid through December 31 of the year of
356	356	issuance and may be renewed on or before its expiration date if the
357	357	residential mortgage loan company:
358	358	(1) pays to the commissioner a renewal fee in an amount
359	359	determined by the commissioner not to exceed $375; [and]
360	360	(2) has not shown a pattern or practice of abusive
361	361	mortgage activity and has no civil judgments or liens that, in the
362	362	commissioner's opinion, directly impact the ability of the
363	363	residential mortgage loan company to conduct business while
364	364	safeguarding and protecting the public interest; and
365	365	(3) continues to meet the minimum requirements for
366	366	license issuance.
367	367	(c) An application for renewal shall be in the [The
368	368	commissioner may require residential mortgage loan originators to
369	369	submit requests for renewal on a] form prescribed by the
370	370	commissioner.
371	371	SECTION 29. Section 156.209(g), Finance Code, is amended to
372	372	read as follows:
373	373	(g) A person whose application for or request to renew a
374	374	license has been denied is not eligible to be licensed for a period
375	375	of two years after the date the denial becomes final, or a shorter
376	376	period as determined by the commissioner after evaluating the
377	377	specific circumstances of the denial [person's subsequent
378	378	application]. The finance commission may adopt rules to provide
379	379	conditions for which the commissioner may shorten the period of
380	380	ineligibility [time of disqualification].
381	381	SECTION 30. Sections 156.211(b) and (b-1), Finance Code,
382	382	are amended to read as follows:
383	383	(b) When the sponsorship of a residential mortgage loan
384	384	originator is terminated, the residential mortgage loan originator
385	385	or [and] the residential mortgage loan company shall immediately
386	386	notify the commissioner. [The residential mortgage loan
387	387	originator's license then becomes inactive. The residential
388	388	mortgage loan originator license may be activated if, before the
389	389	license expires, a residential mortgage loan company files a
390	390	request, accompanied by a $25 fee, notifying the commissioner that
391	391	the residential mortgage loan company will sponsor the residential
392	392	mortgage loan originator and will assume responsibility for the
393	393	actions of the residential mortgage loan originator.]
394	394	(b-1) Not later than the 10th day before a residential
395	395	mortgage loan company begins doing business under an assumed name,
396	396	the residential mortgage loan company shall file with the
397	397	commissioner a copy of an assumed name certificate for each assumed
398	398	name under which the residential mortgage loan company intends to
399	399	conduct business and pay a $25 registration fee for each assumed
400	400	name. [A residential mortgage loan originator may not conduct
401	401	business under any assumed name that is not the registered assumed
402	402	name of the sponsoring residential mortgage loan company.]
403	403	SECTION 31. Section 156.213(a), Finance Code, is amended to
404	404	read as follows:
405	405	(a) Each licensed residential mortgage loan company [or
406	406	licensed residential mortgage loan originator, as required by the
407	407	commissioner,] shall file a mortgage call report with the
408	408	commissioner or the commissioner's authorized designee on a form
409	409	prescribed by the commissioner or authorized designee. The
410	410	report:
411	411	(1) is a statement of condition of the residential
412	412	mortgage loan company and the company's operations[, or a statement
413	413	of condition of the residential mortgage loan originators sponsored
414	414	by the company, as applicable], including financial statements and
415	415	production activity volumes;
416	416	(2) must include any other information required by the
417	417	commissioner; and
418	418	(3) must be filed as frequently as required by the
419	419	commissioner.
420	420	SECTION 32. Section 156.214, Finance Code, is redesignated
421	421	as Section 156.2012, Finance Code, and amended to read as follows:
422	422	Sec. 156.2012 [156.214]. REGISTERED FINANCIAL SERVICES
423	423	COMPANY. (a) A [registered] financial services company may
424	424	perform the services of a [another] residential mortgage loan
425	425	company [as] if the company is registered [were licensed as a
426	426	residential mortgage loan company] under this chapter[, through
427	427	individuals who are the exclusive agents of the registered
428	428	financial services company].
429	429	(b) To be eligible to register as a registered financial
430	430	services company, a person must:
431	431	(1) be a depository institution exempt from this
432	432	chapter under Section 156.202(a-1)(4)(A) [156.202(a-1)(8)(A)] and
433	433	chartered and regulated by [the Office of Thrift Supervision or]
434	434	the Office of the Comptroller of the Currency, or be a subsidiary of
435	435	the institution;
436	436	(2) [provide the commissioner with satisfactory
437	437	evidence of an undertaking of accountability in a form acceptable
438	438	to the commissioner, supported by a surety bond equal to $1 million
439	439	to cover the person's responsibility for residential mortgage loan
440	440	company activities of each exclusive agent;
441	441	[(3)] provide a business plan satisfactory to the
442	442	commissioner that sets forth the person's plan to:
443	443	(A) provide education to its sponsored
444	444	residential mortgage loan originators;
445	445	(B) [exclusive agents,] handle consumer
446	446	complaints relating to its sponsored residential mortgage loan
447	447	originators; and
448	448	(C) [exclusive agents, and] supervise the
449	449	residential mortgage loan origination activities of its sponsored
450	450	residential mortgage loan originators [exclusive agents];
451	451	(3) [(4)] pay a [an annual] registration fee in an
452	452	amount not to exceed $500 [determined as follows:
453	453	[(A) if the registered financial services
454	454	company has 2,000 or fewer exclusive agents acting in this state, an
455	455	amount equal to the lesser of:
456	456	[(i) one-half of the license fee for a
457	457	residential mortgage loan originator under Section 156.203(c)(1),
458	458	multiplied by the number of exclusive agents under contract to act
459	459	for the person in this state; or
460	460	[(ii) $200,000;
461	461	[(B) if the registered financial services
462	462	company has at least 2,001 but not more than 2,500 exclusive agents
463	463	acting in this state, $225,000;
464	464	[(C) if the registered financial services
465	465	company has at least 2,501 but not more than 3,000 exclusive agents
466	466	acting in this state, $250,000;
467	467	[(D) if the registered financial services
468	468	company has at least 3,001 but not more than 5,000 exclusive agents
469	469	acting in this state, $300,000; or
470	470	[(E) if the registered financial services
471	471	company has at least 5,001 exclusive agents acting in this state,
472	472	$350,000]; [and]
473	473	(4) [(5)] designate an officer of the person to be
474	474	responsible for the activities of its sponsored residential
475	475	mortgage loan originators;
476	476	(5) submit a completed application through the
477	477	Nationwide Mortgage Licensing System and Registry together with the
478	478	applicable fee required by Subdivision (3) or Subsection (c);
479	479	(6) obtain preapproval from the commissioner that the
480	480	person meets the eligibility requirements for registration as a
481	481	financial services company; and
482	482	(7) not be in violation of this chapter, a rule adopted
483	483	under this chapter, or any order previously issued by the
484	484	commissioner to the applicant [the exclusive agents].
485	485	(c) If the commissioner determines that a person has met the
486	486	requirements of Subsection (b) [and Section 156.2045(a)], the
487	487	commissioner shall issue a registration to the person. The
488	488	registration is valid for one year, expires on December 31 of each
489	489	year, and must be renewed annually by meeting the requirements
490	490	under Subsection (b) and paying a renewal fee in an amount not to
491	491	exceed $500. A person must renew an expired registration in the
492	492	manner determined by the commissioner.
493	493	(d) A registered financial services company is subject to
494	494	Subchapters D and E as if the company were licensed as a residential
495	495	mortgage loan company.
496	496	SECTION 33. Sections 156.301(a), (b), (c), and (h), Finance
497	497	Code, are amended to read as follows:
498	498	(a) The commissioner may conduct inspections of a person
499	499	licensed under this chapter or a residential mortgage loan
500	500	originator who is licensed under Chapter 157 and sponsored by and
501	501	conducting business for a licensed or registered residential
502	502	mortgage loan company under this chapter as the commissioner
503	503	determines necessary to determine whether the person or the
504	504	residential mortgage loan originator is complying with this chapter
505	505	and applicable rules. The inspections may include inspection of
506	506	the books, records, documents, operations, and facilities of the
507	507	person or the residential mortgage loan originator and access to
508	508	any documents required under rules adopted under this chapter. The
509	509	commissioner may share evidence of criminal activity gathered
510	510	during an inspection or investigation with any state or federal law
511	511	enforcement agency.
512	512	(b) On the signed written complaint of a person, the
513	513	commissioner shall investigate the actions and records of a person
514	514	licensed under this chapter or a residential mortgage loan
515	515	originator who is licensed under Chapter 157 and sponsored by and
516	516	conducting business for a licensed or registered residential
517	517	mortgage loan company under this chapter if the complaint, or the
518	518	complaint and documentary or other evidence presented in connection
519	519	with the complaint, provides reasonable cause. The commissioner,
520	520	before commencing an investigation, shall notify the [a]
521	521	residential mortgage loan company or the residential mortgage loan
522	522	originator in writing of the complaint and that the commissioner
523	523	intends to investigate the matter.
524	524	(c) For reasonable cause, the commissioner at any time may
525	525	investigate a person licensed under this chapter or a residential
526	526	mortgage loan originator who is licensed under Chapter 157 and
527	527	sponsored by and conducting business for a licensed or registered
528	528	residential mortgage loan company under this chapter to determine
529	529	whether the person or the residential mortgage loan originator is
530	530	complying with this chapter and applicable rules.
531	531	(h) The commissioner may require reimbursement of expenses
532	532	[in an amount not to exceed $325] for each examiner [a day] for
533	533	on-site examination or investigation of a license holder
534	534	[residential mortgage loan company] if records are located out of
535	535	state or if the review is considered necessary beyond the routine
536	536	examination process. The finance commission by rule shall set the
537	537	maximum amount for the reimbursement of expenses authorized under
538	538	this subsection.
539	539	SECTION 34. Section 156.303, Finance Code, is amended by
540	540	amending Subsections (a), (a-1), (g), and (i) and adding Subsection
541	541	(k) to read as follows:
542	542	(a) The commissioner may order disciplinary action against
543	543	a licensed or registered residential mortgage loan company [or a
544	544	licensed residential mortgage loan originator] when the
545	545	commissioner, after notice and opportunity for hearing, has
546	546	determined that the company [person]:
547	547	(1) obtained a license or registration, including a
548	548	renewal of a license or registration, under this chapter through a
549	549	false or fraudulent representation or made a material
550	550	misrepresentation in an application for a license or registration
551	551	or for the renewal of a license or registration under this chapter;
552	552	(2) published or caused to be published an
553	553	advertisement related to the business of a residential mortgage
554	554	loan company [or residential mortgage loan originator] that:
555	555	(A) is misleading;
556	556	(B) is likely to deceive the public;
557	557	(C) in any manner tends to create a misleading
558	558	impression;
559	559	(D) fails to identify as a residential mortgage
560	560	loan company [or residential mortgage loan originator] the person
561	561	causing the advertisement to be published; or
562	562	(E) violates federal or state law;
563	563	(3) while performing an act for which a license or
564	564	registration under this chapter is required, engaged in conduct
565	565	that constitutes improper, fraudulent, or dishonest dealings;
566	566	(4) entered a plea of guilty or nolo contendere to, or
567	567	is convicted of, a criminal offense that is a felony or that
568	568	involves fraud or moral turpitude in a court of this or another
569	569	state or in a federal court;
570	570	(5) failed to use a fee collected in advance of closing
571	571	of a residential mortgage loan for a purpose for which the fee was
572	572	paid;
573	573	(6) charged or received, directly or indirectly, a fee
574	574	for assisting a mortgage applicant in obtaining a residential
575	575	mortgage loan before all of the services that the person agreed to
576	576	perform for the mortgage applicant are completed, and the proceeds
577	577	of the residential mortgage loan have been disbursed to or on behalf
578	578	of the mortgage applicant[, except as provided by Section 156.304];
579	579	(7) failed within a reasonable time to honor a credit
580	580	card charge back or a check issued to the commissioner after the
581	581	commissioner has mailed a request for payment, including payment of
582	582	[of the check and] any applicable fees, [by certified mail] to the
583	583	person's last known business address as reflected by the
584	584	commissioner's records;
585	585	(8) paid compensation to a person who is not licensed,
586	586	registered, or exempt under this chapter or Chapter 157 for acts for
587	587	which a license or registration under this chapter or Chapter 157 is
588	588	required;
589	589	(9) induced or attempted to induce a party to a
590	590	contract to breach the contract so the person may make a residential
591	591	mortgage loan;
592	592	(10) published or circulated an unjustified or
593	593	unwarranted threat of legal proceedings in matters related to the
594	594	person's actions or services as a residential mortgage loan company
595	595	[or residential mortgage loan originator, as applicable];
596	596	(11) established an association, by employment or
597	597	otherwise, with a person not licensed, registered, or exempt under
598	598	this chapter or Chapter 157 who was expected or required to act as a
599	599	residential mortgage loan company or residential mortgage loan
600	600	originator;
601	601	(12) aided, abetted, or conspired with a person to
602	602	circumvent the requirements of this chapter or Subchapter D,
603	603	Chapter 157;
604	604	(13) acted in the dual capacity of a residential
605	605	mortgage loan company [or residential mortgage loan originator] and
606	606	real estate broker, salesperson, or attorney in a transaction
607	607	without the knowledge and written consent of the mortgage applicant
608	608	or in violation of applicable requirements under federal law;
609	609	(14) discriminated against a prospective borrower on
610	610	the basis of race, color, religion, sex, national origin, ancestry,
611	611	familial status, or a disability;
612	612	(15) failed or refused on demand to:
613	613	(A) produce a document, book, or record
614	614	concerning a residential mortgage loan transaction conducted by a
615	615	[the] residential mortgage loan originator for inspection by the
616	616	commissioner or the commissioner's authorized personnel or
617	617	representative;
618	618	(B) give the commissioner or the commissioner's
619	619	authorized personnel or representative free access to the books or
620	620	records relating to the person's business kept by an officer,
621	621	agent, or employee of the person or any business entity through
622	622	which the person conducts residential mortgage loan origination
623	623	activities, including a subsidiary or holding company affiliate; or
624	624	(C) provide information requested by the
625	625	commissioner as a result of a formal or informal complaint made to
626	626	the commissioner;
627	627	(16) failed without just cause to surrender, on
628	628	demand, a copy of a document or other instrument coming into the
629	629	person's possession that was provided to the person by another
630	630	person making the demand or that the person making the demand is
631	631	under law entitled to receive;
632	632	(17) disregarded or violated this chapter, a rule
633	633	adopted by the finance commission under this chapter, or an order
634	634	issued by the commissioner under this chapter; or
635	635	(18) provided false information to the commissioner
636	636	during the course of an investigation or inspection.
637	637	(a-1) The commissioner may also order disciplinary action
638	638	after notice and opportunity for hearing against a licensed or
639	639	registered residential mortgage loan company [or a licensed
640	640	residential mortgage loan originator] if the commissioner becomes
641	641	aware during the term of the license of any fact that would have
642	642	been grounds for denial of an original license if the fact had been
643	643	known by the commissioner on the date the license was issued.
644	644	(g) If a person fails to pay an administrative penalty that
645	645	has become final or fails to comply with an order of the
646	646	commissioner that has become final, in addition to any other remedy
647	647	provided under law the commissioner, on not less than 10 days'
648	648	notice to the person, may without a prior hearing suspend the
649	649	person's residential mortgage loan company license or registration
650	650	[or residential mortgage loan originator license]. The suspension
651	651	shall continue until the person has complied with the order or paid
652	652	the administrative penalty. During the period of suspension, the
653	653	person may not originate a residential mortgage loan and all
654	654	compensation received by the person during the period of suspension
655	655	is subject to forfeiture as provided by Section 156.406(b).
656	656	(i) An order revoking the license or registration of a
657	657	residential mortgage loan company [or the license of a residential
658	658	mortgage loan originator] may provide that the person is
659	659	prohibited, without obtaining prior written consent of the
660	660	commissioner, from:
661	661	(1) engaging in the business of originating or making
662	662	residential mortgage loans; or
663	663	(2) [being an employee, officer, director, manager,
664	664	shareholder, member, agent, contractor, or processor of a
665	665	residential mortgage loan company or residential mortgage loan
666	666	originator; or
667	667	[(3)] otherwise affiliating with a person for the
668	668	purpose of engaging in the business of originating or making
669	669	residential mortgage loans.
670	670	(k) The commissioner may, at the commissioner's discretion,
671	671	rescind or vacate any previously issued order.
672	672	SECTION 35. Section 156.304(a), Finance Code, is amended to
673	673	read as follows:
674	674	(a) Before the completion of all services to be performed, a
675	675	residential mortgage loan originator sponsored by and conducting
676	676	business for a licensed or registered residential mortgage loan
677	677	company under this chapter may charge and receive, unless
678	678	prohibited by law, the following fees for services in assisting a
679	679	mortgage applicant to obtain a residential mortgage loan:
680	680	(1) a fee to obtain a credit report;
681	681	(2) a fee for the appraisal of the real estate;
682	682	(3) a fee for processing a residential mortgage loan
683	683	application;
684	684	(4) a fee for taking a residential mortgage loan
685	685	application;
686	686	(5) a fee for automated underwriting;
687	687	(6) a fee for a courier service;
688	688	(7) a fee to issue a loan commitment; or
689	689	(8) subject to Subsection (b), a fee for locking in an
690	690	interest rate.
691	691	SECTION 36. Section 156.305, Finance Code, is amended to
692	692	read as follows:
693	693	Sec. 156.305. RESTITUTION. The commissioner may order a
694	694	person to make restitution for any amount received by that person in
695	695	violation of this chapter. A residential mortgage loan company may
696	696	be required to make restitution for any amount received by a
697	697	sponsored residential mortgage loan originator in violation of
698	698	Chapter 157 [this chapter].
699	699	SECTION 37. Section 156.401(d), Finance Code, is amended to
700	700	read as follows:
701	701	(d) A person [An individual] aggrieved by a ruling, order,
702	702	or decision of the commissioner has the right to appeal to a
703	703	district court in the county in which the hearing was held. An
704	704	appeal under this subsection is governed by Chapter 2001,
705	705	Government Code.
706	706	SECTION 38. Section 156.406(a), Finance Code, is amended to
707	707	read as follows:
708	708	(a) A person, unless otherwise exempt, commits an offense if
709	709	the person conducts regulated activities under this chapter without
710	710	first obtaining a license or registration as required by Section
711	711	156.201, 156.2012, or 157.012, as applicable. [A person who is not
712	712	exempt under this chapter and who acts as a residential mortgage
713	713	loan originator without first obtaining a license required under
714	714	this chapter commits an offense.] An offense under this subsection
715	715	is a Class B misdemeanor. A second or subsequent conviction for an
716	716	offense under this subsection shall be punished as a Class A
717	717	misdemeanor.
718	718	SECTION 39. The heading to Subchapter F, Chapter 156,
719	719	Finance Code, is amended to read as follows:
720	720	SUBCHAPTER F. [MORTGAGE BROKER] RECOVERY FUND
721	721	SECTION 40. Section 156.501(b), Finance Code, is amended to
722	722	read as follows:
723	723	(b) Subject to this subsection, the recovery fund shall be
724	724	used to reimburse residential mortgage loan applicants for actual
725	725	damages incurred because of acts committed by a residential
726	726	mortgage loan originator who was licensed [under this chapter or]
727	727	under Chapter 157 when the act was committed. The use of the fund
728	728	is limited to reimbursement for out-of-pocket losses caused by an
729	729	act by[:
730	730	[(1) a residential mortgage loan originator licensed
731	731	under this chapter that constitutes a violation of Section
732	732	156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13), or
733	733	(16) or 156.304; or
734	734	[(2)] a residential mortgage loan originator licensed
735	735	under Chapter 157 that constitutes a violation of Section
736	736	157.024(a)(2), (3), (5), (7), (8), (9), (10), (13), [or] (16),
737	737	(17), or (18) or 156.304(b).
738	738	SECTION 41. Section 156.502(a), Finance Code, is amended to
739	739	read as follows:
740	740	(a) On an application for an original license or for renewal
741	741	of a license issued under Chapter 157 [this chapter], the
742	742	applicant, in addition to paying the original application fee or
743	743	renewal fee, shall pay a fee in an amount determined by the
744	744	commissioner, not to exceed $20. The fee shall be deposited in the
745	745	recovery fund.
746	746	SECTION 42. Section 156.503(a), Finance Code, is amended to
747	747	read as follows:
748	748	(a) An application for the recovery of actual damages from
749	749	the recovery fund under Section 156.504 may not be filed after the
750	750	fourth [second] anniversary of the date of the alleged act or
751	751	omission causing the actual damages or the date the act or omission
752	752	should reasonably have been discovered.
753	753	SECTION 43. Section 156.504(b), Finance Code, is amended to
754	754	read as follows:
755	755	(b) The residential mortgage loan applicant is required to
756	756	show:
757	757	(1) that the applicant's claim is based on facts
758	758	allowing recovery under Section 156.501; and
759	759	(2) that the applicant:
760	760	(A) is not a spouse of the licensed residential
761	761	mortgage loan originator;
762	762	(B) is not a child, parent, grandchild,
763	763	grandparent, or sibling, including relationships by adoption, of
764	764	the licensed residential mortgage loan originator;
765	765	(C) is not a person sharing living quarters with
766	766	the licensed residential mortgage loan originator or a current or
767	767	former employer, employee, or associate of the licensed residential
768	768	mortgage loan originator;
769	769	(D) is not a person who has aided, abetted, or
770	770	participated other than as a victim with the licensed residential
771	771	mortgage loan originator in any activity that is illegal under
772	772	[Section 156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12),
773	773	(13), or (16), Section 156.304, or] Section 157.024(a)(2), (3),
774	774	(5), (7), (8), (9), (10), (13), [or] (16), (17), or (18) or
775	775	156.304(b), or is not the personal representative of a licensed
776	776	residential mortgage loan originator; and
777	777	(E) is not licensed as a residential mortgage
778	778	loan originator under Chapter 157 [this chapter] who is seeking to
779	779	recover any compensation in the transaction or transactions for
780	780	which the application for payment is made.
781	781	SECTION 44. Section 156.505(b), Finance Code, is amended to
782	782	read as follows:
783	783	(b) A payment from the recovery fund may be made as provided
784	784	by Section 156.504 and this section. A payment for claims:
785	785	(1) arising out of the same transaction, including
786	786	interest, is limited in the aggregate to $25,000, regardless of the
787	787	number of claimants; and
788	788	(2) against a single person licensed as a residential
789	789	mortgage loan originator under [this chapter or] Chapter 157
790	790	arising out of separate transactions, including interest, is
791	791	limited in the aggregate to $50,000 until the fund has been
792	792	reimbursed for all amounts paid.
793	793	SECTION 45. Sections 156.506(a), (c), and (d), Finance
794	794	Code, are amended to read as follows:
795	795	(a) The commissioner may revoke or suspend a license issued
796	796	under Chapter 157 [this chapter] on proof that the commissioner has
797	797	made a payment from the recovery fund of any amount toward
798	798	satisfaction of a claim against a residential mortgage loan
799	799	originator under Chapter 157 [this chapter].
800	800	(c) A person on whose behalf payment was made from the
801	801	recovery fund is not eligible to receive a new license or have a
802	802	suspension lifted under this chapter or Chapter 157 until the
803	803	person has repaid in full, plus interest at the current legal rate,
804	804	the amount paid from the fund on the person's behalf and any costs
805	805	associated with investigating and processing the claim against the
806	806	fund or with collection of reimbursement for payments from the
807	807	fund.
808	808	(d) This section does not limit the authority of the
809	809	commissioner to take disciplinary action against a residential
810	810	mortgage loan originator for a violation of Chapter 157 [this
811	811	chapter] or the rules adopted by the finance commission under that
812	812	[this] chapter. The repayment in full to the recovery fund of all
813	813	obligations of a residential mortgage loan originator does not
814	814	nullify or modify the effect of any other disciplinary proceeding
815	815	brought under Chapter 157 [this chapter].
816	816	SECTION 46. The heading to Chapter 157, Finance Code, is
817	817	amended to read as follows:
818	818	CHAPTER 157. [REGISTRATION OF] MORTGAGE BANKERS AND RESIDENTIAL
819	819	MORTGAGE LOAN ORIGINATORS
820	820	SECTION 47. Sections 157.001 and 157.002, Finance Code, are
821	821	designated as Subchapter A, Chapter 157, Finance Code, and a
822	822	heading is added to that subchapter to read as follows:
823	823	SUBCHAPTER A. GENERAL PROVISIONS
824	824	SECTION 48. Section 157.002, Finance Code, is amended by
825	825	adding Subdivisions (3-a) and (5-a) to read as follows:
826	826	(3-a) "Inspection" includes examination.
827	827	(5-a) "Residential mortgage loan company" has the
828	828	meaning assigned by Section 156.002.
829	829	SECTION 49. Chapter 157, Finance Code, is amended by adding
830	830	Subchapter B to read as follows:
831	831	SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
832	832	Sec. 157.0024. MORTGAGE INDUSTRY ADVISORY COMMITTEE. The
833	833	mortgage industry advisory committee shall advise and assist the
834	834	commissioner with respect to this chapter as provided by Section
835	835	156.104.
836	836	SECTION 50. Sections 157.003, 157.004, 157.005, 157.006,
837	837	157.0061, 157.0062, 157.009, and 157.010, Finance Code, are
838	838	designated as Subchapter C, Chapter 157, Finance Code, and a
839	839	heading is added to that subchapter to read as follows:
840	840	SUBCHAPTER C. REGISTRATION OF MORTGAGE BANKERS
841	841	SECTION 51. Section 157.003(b), Finance Code, is amended to
842	842	read as follows:
843	843	(b) To register under this chapter, a mortgage banker shall:
844	844	(1) enroll with the Nationwide Mortgage Licensing
845	845	System and Registry;
846	846	(2) be in good standing with the secretary of state;
847	847	(3) have a valid federal employer identification
848	848	number;
849	849	(4) meet the qualification requirements for a mortgage
850	850	banker; [and]
851	851	(5) not be in violation of this chapter, a rule adopted
852	852	under this chapter, or any order previously issued by the
853	853	commissioner to the applicant; and
854	854	(6) provide to the commissioner a list of any offices
855	855	that are separate and distinct from the primary office identified
856	856	on the mortgage banker registration and that conduct residential
857	857	mortgage loan business relating to this state, regardless of
858	858	whether the offices are located in this state.
859	859	SECTION 52. Section 157.004, Finance Code, is amended to
860	860	read as follows:
861	861	Sec. 157.004. EXEMPTIONS. This chapter does not apply to:
862	862	(1) a federally insured bank, savings bank, savings
863	863	and loan association, Farm Credit System Institution, or credit
864	864	union;
865	865	(2) a subsidiary of a federally insured bank, savings
866	866	bank, savings and loan association, Farm Credit System Institution,
867	867	or credit union;
868	868	(3) a residential mortgage loan company licensed
869	869	[person licensed as a mortgage broker] under Chapter 156;
870	870	(4) an authorized lender licensed under Chapter 342;
871	871	or
872	872	(5) the state or a governmental agency, political
873	873	subdivision, or other instrumentality of the state, or an employee
874	874	of the state or a governmental agency, political subdivision, or
875	875	instrumentality of the state who is acting within the scope of the
876	876	person's employment.
877	877	SECTION 53. Section 157.005, Finance Code, is amended to
878	878	read as follows:
879	879	Sec. 157.005. UPDATE OF REGISTRATION. A mortgage banker
880	880	shall update information contained in the registration not later
881	881	than the 10th [30th] day after the date the information changes.
882	882	SECTION 54. Sections 157.007 and 157.008, Finance Code, are
883	883	transferred to Subchapter B, Chapter 157, Finance Code, as added by
884	884	this Act, and redesignated as Sections 157.0021 and 157.0022,
885	885	Finance Code, to read as follows:
886	886	Sec. 157.0021 [157.007]. DISCLOSURE STATEMENT. (a) A
887	887	mortgage banker that is a residential mortgage loan originator
888	888	shall include a notice to a residential mortgage loan applicant
889	889	with an application for a residential mortgage loan. The finance
890	890	commission by rule shall adopt a standard disclosure form to be used
891	891	by the mortgage banker. The form must:
892	892	(1) include the name, address, and toll-free telephone
893	893	number for the Department of Savings and Mortgage Lending;
894	894	(2) contain information on how to file a complaint or
895	895	recovery fund claim; and
896	896	(3) prescribe a method for proof of delivery to the
897	897	consumer.
898	898	(b) A mortgage banker that indicates in its registration
899	899	that it acts as a residential mortgage loan servicer shall provide
900	900	to the borrower of each residential mortgage loan it services the
901	901	following notice not later than the 30th day after the date the
902	902	mortgage banker commences servicing the loan:
903	903	"COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD
904	904	BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
905	905	______________________________ (street address of the Department
906	906	of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
907	907	AVAILABLE AT _______________ (telephone number of the Department of
908	908	Savings and Mortgage Lending's toll-free consumer hotline)."
909	909	Sec. 157.0022 [157.008]. COMPLAINTS. (a) If the
910	910	Department of Savings and Mortgage Lending receives a signed
911	911	written complaint from a person concerning a mortgage banker, the
912	912	commissioner shall notify the representative designated by the
913	913	mortgage banker under Section 157.003(b) in writing of the
914	914	complaint and provide a copy of the complaint to the
915	915	representative.
916	916	(b) The commissioner may request documentary and other
917	917	evidence considered by the commissioner as necessary to effectively
918	918	evaluate the complaint, including correspondence, loan documents,
919	919	and disclosures. A mortgage banker shall promptly provide any
920	920	evidence requested by the commissioner.
921	921	(c) The commissioner may require the mortgage banker to
922	922	resolve the complaint or to provide the commissioner with a
923	923	response to the complaint. The commissioner may direct the
924	924	mortgage banker in writing to take specific action to resolve the
925	925	complaint.
926	926	SECTION 55. Section 157.009, Finance Code, is amended by
927	927	adding Subsection (d-1) and amending Subsection (e) to read as
928	928	follows:
929	929	(d-1) The commissioner, after review of the circumstances,
930	930	may revoke the registration of a mortgage banker if the mortgage
931	931	banker has had a license, registration, or other certification
932	932	revoked by a state or federal regulatory authority.
933	933	(e) If the commissioner proposes to revoke a registration
934	934	under Subsection (c), [or] (d), or (d-1), the mortgage banker is
935	935	entitled to a hearing before the commissioner or a hearings
936	936	officer, who shall propose a decision to the commissioner. The
937	937	commissioner or hearings officer shall prescribe the time and place
938	938	of the hearing. The hearing is governed by Chapter 2001, Government
939	939	Code.
940	940	SECTION 56. Section 157.011, Finance Code, is transferred
941	941	to Subchapter B, Chapter 157, Finance Code, as added by this Act,
942	942	and redesignated as Section 157.0023, Finance Code, to read as
943	943	follows:
944	944	Sec. 157.0023 [157.011]. RULEMAKING AUTHORITY. (a) The
945	945	Finance Commission of Texas may adopt rules necessary to implement
946	946	or fulfill the purpose of this chapter.
947	947	(b) The Finance Commission of Texas may by rule adopt
948	948	standard forms for, and require the use of the forms by, a mortgage
949	949	banker who represents that an applicant for a loan is preapproved or
950	950	has prequalified for the loan.
951	951	(c) The finance commission may adopt rules under this
952	952	chapter as required to carry out the intentions of the federal
953	953	Secure and Fair Enforcement for Mortgage Licensing Act of 2008
954	954	(Pub. L. No. 110-289).
955	955	SECTION 57. Sections 157.012, 157.013, 157.014, 157.015,
956	956	157.016, 157.017, 157.019, 157.020, and 157.0201, Finance Code, are
957	957	designated as Subchapter D, Chapter 157, Finance Code, and a
958	958	heading is added to that subchapter to read as follows:
959	959	SUBCHAPTER D. LICENSING OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS;
960	960	DISCLOSURES AND REQUIREMENTS
961	961	SECTION 58. The heading to Section 157.012, Finance Code,
962	962	is amended to read as follows:
963	963	Sec. 157.012. LICENSE REQUIRED FOR RESIDENTIAL MORTGAGE
964	964	LOAN ORIGINATORS [CERTAIN EMPLOYEES OF MORTGAGE BANKERS].
965	965	SECTION 59. Section 157.012, Finance Code, is amended by
966	966	amending Subsections (a) and (c) and adding Subsection (e) to read
967	967	as follows:
968	968	(a) An individual [An employee of a mortgage banker] may not
969	969	act or attempt to act in the capacity of a residential mortgage loan
970	970	originator unless the individual is exempt under Section 157.0121
971	971	or 180.003(b) or [employee]:
972	972	(1) is licensed under this chapter, sponsored by an
973	973	appropriate entity [a registered mortgage banker], and enrolled
974	974	with the Nationwide Mortgage Licensing System and Registry as
975	975	required by Section 180.052; and
976	976	(2) complies with other applicable requirements of
977	977	Chapter 180 and rules adopted by the finance commission under that
978	978	chapter.
979	979	(c) To be eligible to be licensed as a residential mortgage
980	980	loan originator, the individual [an employee of a mortgage banker],
981	981	in addition to meeting the requirements of Subsection (a), must:
982	982	(1) satisfy the commissioner as to the individual's
983	983	[employee's] good moral character, including the individual's
984	984	[employee's] honesty, trustworthiness, and integrity;
985	985	(2) not be in violation of this chapter, Chapter 180,
986	986	or any rules adopted under this chapter or Chapter 180;
987	987	(3) provide the commissioner with satisfactory
988	988	evidence that the individual [employee] meets the qualifications
989	989	provided by Chapter 180; and
990	990	(4) be a citizen of the United States or a lawfully
991	991	admitted alien.
992	992	(e) In this section, "appropriate entity" means an entity:
993	993	(1) that is licensed or registered under this chapter
994	994	or Chapter 156; and
995	995	(2) for which the individual is acting as a
996	996	residential mortgage loan originator.
997	997	SECTION 60. Subchapter D, Chapter 157, Finance Code, as
998	998	added by this Act, is amended by adding Section 157.0121 to read as
999	999	follows:
1000	1000	Sec. 157.0121. EXEMPTIONS FROM RESIDENTIAL MORTGAGE LOAN
1001	1001	ORIGINATOR REQUIREMENTS. (a) In this section, "depository
1002	1002	institution," "dwelling," "federal banking agency," and "immediate
1003	1003	family member" have the meanings assigned by Section 180.002.
1004	1004	(b) The following individuals are exempt from this chapter:
1005	1005	(1) a registered mortgage loan originator when acting
1006	1006	for:
1007	1007	(A) a depository institution;
1008	1008	(B) a subsidiary of a depository institution that
1009	1009	is:
1010	1010	(i) owned and controlled by the depository
1011	1011	institution; and
1012	1012	(ii) regulated by a federal banking agency;
1013	1013	or
1014	1014	(C) an institution regulated by the Farm Credit
1015	1015	Administration;
1016	1016	(2) an individual who offers or negotiates the terms
1017	1017	of a residential mortgage loan with or on behalf of an immediate
1018	1018	family member of the individual;
1019	1019	(3) a licensed attorney who negotiates the terms of a
1020	1020	residential mortgage loan on behalf of a client as an ancillary
1021	1021	matter to the attorney's representation of the client, unless the
1022	1022	attorney:
1023	1023	(A) takes a residential mortgage loan
1024	1024	application; and
1025	1025	(B) offers or negotiates the terms of a
1026	1026	residential mortgage loan;
1027	1027	(4) an individual who offers or negotiates terms of a
1028	1028	residential mortgage loan secured by a dwelling that serves as the
1029	1029	individual's residence;
1030	1030	(5) any owner of residential real estate who in any
1031	1031	12-consecutive-month period makes no more than five residential
1032	1032	mortgage loans to purchasers of the property for all or part of the
1033	1033	purchase price of the residential real estate against which the
1034	1034	mortgage is secured; and
1035	1035	(6) an individual who is exempt as provided by Section
1036	1036	180.003(b).
1037	1037	(c) Employees of the following entities, when acting for the
1038	1038	benefit of those entities, are exempt from the licensing and other
1039	1039	requirements of this chapter applicable to residential mortgage
1040	1040	loan originators:
1041	1041	(1) a nonprofit organization providing self-help
1042	1042	housing that originates zero interest residential mortgage loans
1043	1043	for borrowers who have provided part of the labor to construct the
1044	1044	dwelling securing the loan;
1045	1045	(2) any owner of residential real estate who in any
1046	1046	12-consecutive-month period makes no more than five residential
1047	1047	mortgage loans to purchasers of the property for all or part of the
1048	1048	purchase price of the residential real estate against which the
1049	1049	mortgage is secured; and
1050	1050	(3) an entity that is:
1051	1051	(A) a depository institution;
1052	1052	(B) a subsidiary of a depository institution that
1053	1053	is:
1054	1054	(i) owned and controlled by the depository
1055	1055	institution; and
1056	1056	(ii) regulated by a federal banking agency;
1057	1057	or
1058	1058	(C) an institution regulated by the Farm Credit
1059	1059	Administration.
1060	1060	(d) A person is not required to obtain a license under this
1061	1061	chapter to originate a loan subject to Chapter 342 or a loan
1062	1062	governed by Section 50(a)(6), Article XVI, Texas Constitution, if
1063	1063	the person:
1064	1064	(1) is enrolled in the Nationwide Mortgage Licensing
1065	1065	System and Registry;
1066	1066	(2) is licensed under Chapter 342; and
1067	1067	(3) makes consumer loans subject to:
1068	1068	(A) Subchapter G, Chapter 342; and
1069	1069	(B) Subchapter E or F, Chapter 342.
1070	1070	(e) The finance commission may grant an exemption from the
1071	1071	residential mortgage loan originator licensing requirements of
1072	1072	this chapter to a municipality, county, community development
1073	1073	corporation, or public or private grant administrator to the extent
1074	1074	the entity is administering the Texas HOME Investment Partnerships
1075	1075	program if the commission determines that granting the exemption is
1076	1076	not inconsistent with the intentions of the federal Secure and Fair
1077	1077	Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
1078	1078	110-289).
1079	1079	SECTION 61. Section 157.013, Finance Code, is amended by
1080	1080	amending Subsection (b) and adding Subsection (d) to read as
1081	1081	follows:
1082	1082	(b) An application for a residential mortgage loan
1083	1083	originator license must be accompanied by:
1084	1084	(1) an application fee in an amount determined by the
1085	1085	commissioner, not to exceed $500; [,] and
1086	1086	(2) [by] a recovery fund fee in an amount determined by
1087	1087	the commissioner, not to exceed $20.
1088	1088	(d) In addition to the disciplinary action by the
1089	1089	commissioner authorized under Section 157.024(a)(6), the
1090	1090	commissioner may collect a fee in an amount not to exceed $50 for
1091	1091	any returned check or credit card charge back.
1092	1092	SECTION 62. Subchapter D, Chapter 157, Finance Code, as
1093	1093	added by this Act, is amended by adding Sections 157.0131 and
1094	1094	157.0132 to read as follows:
1095	1095	Sec. 157.0131. CONVICTION OF OFFENSE. A person is
1096	1096	considered to have been convicted of a criminal offense if:
1097	1097	(1) a sentence is imposed on the person;
1098	1098	(2) the person received probation or community
1099	1099	supervision, including deferred adjudication or community service;
1100	1100	or
1101	1101	(3) the court deferred final disposition of the
1102	1102	person's case.
1103	1103	Sec. 157.0132. CRIMINAL AND OTHER BACKGROUND CHECKS.
1104	1104	(a) On receipt of an application for a residential mortgage loan
1105	1105	originator license, the commissioner shall, at a minimum, conduct a
1106	1106	criminal background and credit history check of the applicant.
1107	1107	(b) The commissioner shall conduct criminal background and
1108	1108	credit history checks in accordance with Section 180.054, and, in
1109	1109	connection with each application for a residential mortgage loan
1110	1110	originator license or other individual license, the commissioner
1111	1111	may conduct a criminal background check through the Department of
1112	1112	Public Safety.
1113	1113	(c) The commissioner shall keep confidential any background
1114	1114	information obtained under this section and may not release or
1115	1115	disclose the information unless:
1116	1116	(1) the information is a public record at the time the
1117	1117	commissioner obtains the information; or
1118	1118	(2) the commissioner releases the information:
1119	1119	(A) under order from a court; or
1120	1120	(B) to a governmental agency.
1121	1121	(d) Notwithstanding Subsection (c), criminal history record
1122	1122	information obtained from the Federal Bureau of Investigation may
1123	1123	be released or disclosed only to a governmental entity or as
1124	1124	authorized by federal statute, federal rule, or federal executive
1125	1125	order.
1126	1126	SECTION 63. Subchapter D, Chapter 157, Finance Code, as
1127	1127	added by this Act, is amended by adding Section 157.0141 to read as
1128	1128	follows:
1129	1129	Sec. 157.0141. CONDITIONAL LICENSE. The commissioner may
1130	1130	issue a conditional license. The finance commission by rule shall
1131	1131	adopt reasonable terms and conditions for a conditional license.
1132	1132	SECTION 64. Section 157.015, Finance Code, is amended by
1133	1133	amending Subsections (a), (c), (d), and (g) and adding Subsections
1134	1134	(d-1) and (h) to read as follows:
1135	1135	(a) A residential mortgage loan originator license issued
1136	1136	under this chapter is valid through December 31 of the year of
1137	1137	issuance and may be renewed on or before its expiration date if the
1138	1138	residential mortgage loan originator:
1139	1139	(1) pays to the commissioner a renewal fee in an amount
1140	1140	determined by the commissioner not to exceed $500 and a recovery
1141	1141	fund fee as provided by Section 156.502;
1142	1142	(2) continues to meet the minimum requirements for
1143	1143	license issuance; and
1144	1144	(3) provides the commissioner with satisfactory
1145	1145	evidence that the residential mortgage loan originator has
1146	1146	attended, during the term of the current license, continuing
1147	1147	education courses in accordance with the applicable requirements of
1148	1148	Chapter 180. [A residential mortgage loan originator license issued
1149	1149	under this chapter is valid for one year and may be renewed on or
1150	1150	before its expiration date.]
1151	1151	(c) An application for renewal [of a residential mortgage
1152	1152	loan originator license] shall be in the form prescribed by the
1153	1153	commissioner [meet the requirements of Section 157.013].
1154	1154	(d) On receipt of a request for a renewal of a license issued
1155	1155	under this subchapter, the commissioner may conduct a criminal
1156	1156	background check under Section 157.0132. [An application for
1157	1157	renewal of a residential mortgage loan originator license must meet
1158	1158	all of the standards and qualifications for license renewal under
1159	1159	Chapter 180.]
1160	1160	(d-1) A renewal fee is not refundable and may not be
1161	1161	credited or applied to any other fee or indebtedness owed by the
1162	1162	person paying the fee.
1163	1163	(g) The commissioner may deny the renewal application for a
1164	1164	residential mortgage loan originator license if:
1165	1165	(1) the person seeking the renewal of the residential
1166	1166	mortgage loan originator license is in violation of this chapter,
1167	1167	Chapter 156, or Chapter 180, an applicable rule adopted under this
1168	1168	chapter, Chapter 156, or Chapter 180, or any order previously
1169	1169	issued to the person by the commissioner;
1170	1170	(2) the person seeking renewal of the residential
1171	1171	mortgage loan originator license is in default in the payment of any
1172	1172	administrative penalty, fee, charge, or other indebtedness owed
1173	1173	under this title;
1174	1174	(3) the person seeking the renewal of the residential
1175	1175	mortgage loan originator license is in default on a student loan
1176	1176	administered by the Texas Guaranteed Student Loan Corporation,
1177	1177	under Section 57.491, Education Code; or
1178	1178	(4) during the current term of the license, the
1179	1179	commissioner becomes aware of any fact that would have been grounds
1180	1180	for denial of an original license if the fact had been known by the
1181	1181	commissioner on the date the license was granted.
1182	1182	(h) In addition to the disciplinary action by the
1183	1183	commissioner authorized under Section 157.024(a)(6), the
1184	1184	commissioner may collect a fee in an amount not to exceed $50 for
1185	1185	any returned check or credit card charge back.
1186	1186	SECTION 65. Section 157.016(a), Finance Code, is amended to
1187	1187	read as follows:
1188	1188	(a) A person whose residential mortgage loan originator
1189	1189	license has expired may not engage in activities that require a
1190	1190	license until the license has been reinstated or a new license has
1191	1191	been issued [renewed].
1192	1192	SECTION 66. Section 157.017(g), Finance Code, is amended to
1193	1193	read as follows:
1194	1194	(g) A person whose application for or request to renew a
1195	1195	license has been denied is not eligible to be licensed for a period
1196	1196	of two years after the date the denial becomes final, or a shorter
1197	1197	period as determined by the commissioner after evaluating the
1198	1198	specific circumstances of the denial [person's subsequent
1199	1199	application]. The finance commission may adopt rules to provide
1200	1200	conditions for which the commissioner may shorten the period of
1201	1201	ineligibility [time for eligibility for a new license].
1202	1202	SECTION 67. The heading to Section 157.019, Finance Code,
1203	1203	is amended to read as follows:
1204	1204	Sec. 157.019. MODIFICATION OF LICENSE; CHANGE OF
1205	1205	SPONSORSHIP.
1206	1206	SECTION 68. Section 157.019, Finance Code, is amended by
1207	1207	amending Subsections (a) and (c) and adding Subsections (d) and (e)
1208	1208	to read as follows:
1209	1209	(a) Before the 10th day preceding the effective date of an
1210	1210	address change, [a mortgage banker employee who is] a residential
1211	1211	mortgage loan originator shall notify the commissioner or
1212	1212	authorized designee in writing of the new address.
1213	1213	(c) When the sponsorship of a residential mortgage loan
1214	1214	originator is terminated, the residential mortgage loan originator
1215	1215	or the former sponsoring entity licensed or registered under this
1216	1216	chapter or Chapter 156 shall immediately notify the
1217	1217	commissioner. The residential mortgage loan originator's license
1218	1218	then becomes inactive. The residential mortgage loan originator
1219	1219	license may be activated if, before the license expires, an entity
1220	1220	licensed or registered under this chapter or Chapter 156 files a
1221	1221	request, accompanied by a $25 fee, notifying the commissioner that
1222	1222	the entity will sponsor the residential mortgage loan originator
1223	1223	and will assume responsibility for the actions of the residential
1224	1224	mortgage loan originator. [A mortgage banker employee who is a
1225	1225	residential mortgage loan originator shall notify the commissioner
1226	1226	or authorized designee in writing of a change of sponsorship. The
1227	1227	notice must be accompanied by a fee of $25.]
1228	1228	(d) A residential mortgage loan originator may not conduct
1229	1229	business under any assumed name that is not the registered assumed
1230	1230	name of the entity licensed or registered under this chapter or
1231	1231	Chapter 156 that is sponsoring the originator.
1232	1232	(e) A fee under this section is not refundable and may not be
1233	1233	credited or applied to any other fee or indebtedness owed by the
1234	1234	person paying the fee.
1235	1235	SECTION 69. Section 157.020, Finance Code, is amended by
1236	1236	adding Subsection (a-1) to read as follows:
1237	1237	(a-1) A licensed residential mortgage loan originator, as
1238	1238	required by the commissioner, shall file a mortgage call report
1239	1239	with the commissioner or the commissioner's authorized designee on
1240	1240	a form prescribed by the commissioner or authorized designee. The
1241	1241	report:
1242	1242	(1) is a statement of condition of the residential
1243	1243	mortgage loan originator;
1244	1244	(2) must include any information required by the
1245	1245	commissioner; and
1246	1246	(3) must be filed as frequently as required by the
1247	1247	commissioner.
1248	1248	SECTION 70. Subchapter D, Chapter 157, Finance Code, as
1249	1249	added by this Act, is amended by adding Sections 157.02012,
1250	1250	157.02013, 157.02014, 157.02015, and 157.02016 to read as follows:
1251	1251	Sec. 157.02012. STANDARD FORMS. (a) The finance
1252	1252	commission by rule shall adopt one or more standard forms for use by
1253	1253	a residential mortgage loan originator, sponsored by and conducting
1254	1254	business for a registered mortgage banker under this chapter, in
1255	1255	representing that an applicant for a residential mortgage loan is
1256	1256	preapproved or has prequalified for the loan.
1257	1257	(b) The finance commission shall adopt rules requiring a
1258	1258	residential mortgage loan originator licensed under this chapter to
1259	1259	use the forms adopted by the finance commission under Subsection
1260	1260	(a).
1261	1261	Sec. 157.02013. SECONDARY MARKET TRANSACTIONS. This
1262	1262	chapter does not prohibit a residential mortgage loan originator
1263	1263	sponsored by and conducting business for a registered mortgage
1264	1264	banker under this chapter from receiving compensation from a party
1265	1265	other than the mortgage applicant for the sale, transfer,
1266	1266	assignment, or release of rights on the closing of a mortgage
1267	1267	transaction.
1268	1268	Sec. 157.02014. AFFILIATED BUSINESS ARRANGEMENTS. Unless
1269	1269	prohibited by federal or state law, this chapter may not be
1270	1270	construed to prevent affiliated or controlled business
1271	1271	arrangements or loan origination services by or between residential
1272	1272	mortgage loan originators sponsored by and conducting business for
1273	1273	a registered mortgage banker under this chapter and other
1274	1274	professionals if the residential mortgage loan originator complies
1275	1275	with all applicable federal and state laws permitting those
1276	1276	arrangements or services.
1277	1277	Sec. 157.02015. RULEMAKING AUTHORITY WITH RESPECT TO
1278	1278	RESIDENTIAL MORTGAGE LOAN ORIGINATORS. (a) The finance
1279	1279	commission may adopt rules to prohibit false, misleading, or
1280	1280	deceptive practices by residential mortgage loan originators but
1281	1281	may not adopt any other rules restricting competitive bidding or
1282	1282	advertising by residential mortgage loan originators. When
1283	1283	adopting rules under this subsection, the finance commission may
1284	1284	not restrict:
1285	1285	(1) the use of any medium for an advertisement;
1286	1286	(2) the personal appearance of or voice of a person in
1287	1287	an advertisement;
1288	1288	(3) the size or duration of an advertisement; or
1289	1289	(4) a residential mortgage loan originator's
1290	1290	advertisement under a trade name.
1291	1291	(b) The finance commission may adopt rules regarding books
1292	1292	and records that a residential mortgage loan originator licensed
1293	1293	under this chapter is required to keep, including the location at
1294	1294	which the books and records must be kept.
1295	1295	(c) The finance commission shall consult with the
1296	1296	commissioner when proposing and adopting rules under this section.
1297	1297	Sec. 157.02016. ADMINISTRATION OF SUBCHAPTER. The
1298	1298	commissioner shall administer and enforce this subchapter.
1299	1299	SECTION 71. Sections 157.021, 157.0211, 157.022, 157.023,
1300	1300	157.024, 157.0241, 157.025, 157.026, 157.027, 157.028, 157.029,
1301	1301	157.030, and 157.031, Finance Code, are designated as Subchapter E,
1302	1302	Chapter 157, Finance Code, and a heading is added to that subchapter
1303	1303	to read as follows:
1304	1304	SUBCHAPTER E. ENFORCEMENT
1305	1305	SECTION 72. Section 157.021, Finance Code, is amended by
1306	1306	amending Subsection (a) and adding Subsection (h) to read as
1307	1307	follows:
1308	1308	(a) The commissioner may conduct an inspection of a person
1309	1309	licensed as a residential mortgage loan originator as the
1310	1310	commissioner determines necessary to determine whether the person
1311	1311	is complying with this chapter, Chapter 180, and applicable rules.
1312	1312	An inspection under this subsection may include inspection of the
1313	1313	books, records, documents, operations, and facilities of the
1314	1314	person. The commissioner may request the assistance and
1315	1315	cooperation of the sponsoring mortgage banker in providing needed
1316	1316	documents and records. The commissioner may not make a request of
1317	1317	the sponsoring mortgage banker for documents and records unrelated
1318	1318	to the person being investigated or inspected. The commissioner
1319	1319	may share evidence of criminal activity gathered during an
1320	1320	inspection or investigation with any state or federal law
1321	1321	enforcement agency.
1322	1322	(h) The commissioner may require reimbursement of expenses
1323	1323	for each examiner for an on-site examination or inspection of a
1324	1324	licensed residential mortgage loan originator if records are
1325	1325	located out of state and are not made available for examination or
1326	1326	inspection by the examiner in this state. The finance commission by
1327	1327	rule shall set the maximum amount for the reimbursement of expenses
1328	1328	authorized under this subsection.
1329	1329	SECTION 73. Section 157.0211, Finance Code, is amended to
1330	1330	read as follows:
1331	1331	Sec. 157.0211. MULTI-STATE EXAMINATION AUTHORITY OF
1332	1332	RESIDENTIAL MORTGAGE LOAN SERVICER. To ensure that mortgage
1333	1333	bankers that act as residential mortgage loan servicers operate in
1334	1334	this state in compliance with this chapter and with other law in
1335	1335	accordance with this chapter, the commissioner or the
1336	1336	commissioner's designee may participate in multi-state mortgage
1337	1337	examinations as scheduled by the Conference of State Bank
1338	1338	Supervisors Multi-State Mortgage Committee or by the Consumer
1339	1339	Financial Protection Bureau in accordance with the [Conference of
1340	1340	State Bank Supervisors] protocol for such examinations.
1341	1341	SECTION 74. Section 157.023(a), Finance Code, is amended to
1342	1342	read as follows:
1343	1343	(a) The commissioner, after notice and opportunity for a
1344	1344	hearing, may impose an administrative penalty on an individual who
1345	1345	is licensed or required to be licensed under this chapter as a
1346	1346	residential mortgage loan originator and who violates this chapter,
1347	1347	Chapter 156, or a rule or order adopted under this chapter or
1348	1348	Chapter 156.
1349	1349	SECTION 75. Sections 157.024(a), (h), and (j), Finance
1350	1350	Code, are amended to read as follows:
1351	1351	(a) The commissioner may order disciplinary action against
1352	1352	a licensed residential mortgage loan originator when the
1353	1353	commissioner, after notice and opportunity for a hearing, has
1354	1354	determined that the person:
1355	1355	(1) obtained a license, including a renewal of a
1356	1356	license, under this chapter through a false or fraudulent
1357	1357	representation or made a material misrepresentation in an
1358	1358	application for a license or for the renewal of a license under this
1359	1359	chapter;
1360	1360	(2) published or caused to be published an
1361	1361	advertisement related to the business of a residential mortgage
1362	1362	loan originator that:
1363	1363	(A) was misleading;
1364	1364	(B) was likely to deceive the public;
1365	1365	(C) in any manner tended to create a misleading
1366	1366	impression;
1367	1367	(D) failed to identify as a licensed residential
1368	1368	mortgage loan originator the person causing the advertisement to be
1369	1369	published; or
1370	1370	(E) violated federal or state law;
1371	1371	(3) while performing an act for which a license under
1372	1372	this chapter or Chapter 156 is required, engaged in conduct that
1373	1373	constitutes improper, fraudulent, or dishonest dealings;
1374	1374	(4) entered a plea of nolo contendere to or was
1375	1375	convicted of a criminal offense that is a felony or that involves
1376	1376	fraud or moral turpitude in a court of this or another state or in a
1377	1377	federal court;
1378	1378	(5) failed to use a fee collected in advance of closing
1379	1379	a residential mortgage loan for a purpose for which the fee was
1380	1380	paid;
1381	1381	(6) failed within a reasonable time to honor a credit
1382	1382	card charge back or a check issued to the commissioner after the
1383	1383	commissioner mailed a request for payment, including any applicable
1384	1384	fees, by mail to the person's last known home [business] address as
1385	1385	reflected in the commissioner's records;
1386	1386	(7) induced or attempted to induce a party to a
1387	1387	contract to breach the contract so the person could make a
1388	1388	residential mortgage loan;
1389	1389	(8) published or circulated an unjustified or
1390	1390	unwarranted threat of legal proceedings in matters related to the
1391	1391	person's actions or services as a licensed residential mortgage
1392	1392	loan originator;
1393	1393	(9) aided, abetted, or conspired with a person to
1394	1394	circumvent the requirements of this chapter or Chapter 156;
1395	1395	(10) acted in the dual capacity of a licensed
1396	1396	residential mortgage loan originator and real estate broker,
1397	1397	salesperson, or attorney in a transaction without the knowledge and
1398	1398	written consent of the mortgage applicant or in violation of
1399	1399	applicable requirements under federal law;
1400	1400	(11) discriminated against a prospective borrower on
1401	1401	the basis of race, color, religion, sex, national origin, ancestry,
1402	1402	familial status, or disability;
1403	1403	(12) failed or refused on demand to:
1404	1404	(A) produce a document, book, or record
1405	1405	concerning a residential mortgage loan transaction conducted by the
1406	1406	licensed residential mortgage loan originator for inspection by the
1407	1407	commissioner or the commissioner's authorized personnel or
1408	1408	representative;
1409	1409	(B) give the commissioner or the commissioner's
1410	1410	authorized personnel or representative free access to the books or
1411	1411	records relating to the residential mortgage loan originator's
1412	1412	business kept by any other person or any business entity through
1413	1413	which the residential mortgage loan originator conducts
1414	1414	residential mortgage loan origination activities; or
1415	1415	(C) provide information requested by the
1416	1416	commissioner as a result of a formal or informal complaint made to
1417	1417	the commissioner;
1418	1418	(13) failed without just cause to surrender, on
1419	1419	demand, a copy of a document or other instrument coming into the
1420	1420	residential mortgage loan originator's possession that was
1421	1421	provided to the residential mortgage loan originator by another
1422	1422	person making the demand or that the person making the demand is
1423	1423	under law entitled to receive;
1424	1424	(14) disregarded or violated this chapter, Chapter
1425	1425	156, a rule adopted under this chapter or Chapter 156, or an order
1426	1426	issued by the commissioner under this chapter or Chapter 156;
1427	1427	(15) provided false information to the commissioner
1428	1428	during the course of an investigation or inspection;
1429	1429	(16) paid compensation to a person who is not licensed
1430	1430	or exempt under this chapter for acts for which a license under this
1431	1431	chapter or Chapter 156 is required; [or]
1432	1432	(17) established an association, by employment or
1433	1433	otherwise, with a person not licensed, registered, or exempt under
1434	1434	this chapter or Chapter 156 who was expected or required to act as a
1435	1435	residential mortgage loan originator or residential mortgage loan
1436	1436	company; or
1437	1437	(18) charged or received, directly or indirectly, a
1438	1438	fee for assisting a mortgage applicant in obtaining a residential
1439	1439	mortgage loan under Chapter 156 before all of the services that the
1440	1440	person agreed to perform for the mortgage applicant are completed,
1441	1441	and the proceeds of the residential mortgage loan have been
1442	1442	disbursed to or on behalf of the mortgage applicant, except as
1443	1443	provided by Section 156.304.
1444	1444	(h) If a residential mortgage loan originator fails to pay
1445	1445	an administrative penalty that has become final or fails to comply
1446	1446	with an order of the commissioner that has become final, in addition
1447	1447	to any other remedy provided under law, the commissioner, on not
1448	1448	less than 10 days' notice to the residential mortgage loan
1449	1449	originator, may without a prior hearing suspend the residential
1450	1450	mortgage loan originator's license. The suspension continues
1451	1451	until the residential mortgage loan originator has complied with
1452	1452	the administrative order or paid the administrative
1453	1453	penalty. During the period of suspension, the residential
1454	1454	mortgage loan originator may not originate a residential mortgage
1455	1455	loan and all compensation received by the residential mortgage loan
1456	1456	originator during the period of suspension is subject to forfeiture
1457	1457	as provided by Section 157.031(a-1) [, as defined by Section
1458	1458	180.002].
1459	1459	(j) An order revoking the license of a residential mortgage
1460	1460	loan originator may provide that the person is prohibited, without
1461	1461	previously obtaining written consent of the commissioner, from:
1462	1462	(1) engaging in the business of originating or making
1463	1463	residential mortgage loans[, as defined by Section 180.002];
1464	1464	(2) otherwise affiliating with a person for the
1465	1465	purpose of engaging in the business of originating or making
1466	1466	residential mortgage loans[, as defined by Section 180.002]; and
1467	1467	(3) being an employee, officer, director, manager,
1468	1468	shareholder, member, agent, contractor, or processor of a mortgage
1469	1469	banker, residential mortgage loan company, or residential mortgage
1470	1470	loan originator for a residential mortgage loan company.
1471	1471	SECTION 76. Section 157.0241(e), Finance Code, is amended
1472	1472	to read as follows:
1473	1473	(e) This section does not limit the authority of the
1474	1474	commissioner to take disciplinary action against a residential
1475	1475	mortgage loan originator for a violation of this chapter, Chapter
1476	1476	156, or the rules adopted by the finance commission under this
1477	1477	chapter or Chapter 156. The repayment in full to the recovery fund
1478	1478	of all obligations of a residential mortgage loan originator does
1479	1479	not nullify or modify the effect of any other disciplinary
1480	1480	proceeding brought under this chapter or Chapter 156.
1481	1481	SECTION 77. Section 157.025, Finance Code, is amended to
1482	1482	read as follows:
1483	1483	Sec. 157.025. RESTITUTION. The commissioner may order a
1484	1484	residential mortgage loan originator to make restitution for any
1485	1485	amount received by that person in violation of this chapter or
1486	1486	Chapter 156.
1487	1487	SECTION 78. Section 157.026, Finance Code, is amended by
1488	1488	amending Subsection (b) and adding Subsection (e) to read as
1489	1489	follows:
1490	1490	(b) If the commissioner proposes to suspend or revoke a
1491	1491	license of a residential mortgage loan originator or if the
1492	1492	commissioner refuses to issue or renew [a license to an applicant
1493	1493	for] a residential mortgage loan originator license [or person
1494	1494	requesting a renewal of a residential mortgage loan originator
1495	1495	license] under this chapter, the applicant or license holder is
1496	1496	entitled to a hearing before the commissioner or an administrative
1497	1497	law judge who shall make a proposal for decision to the
1498	1498	commissioner. The commissioner or administrative law judge shall
1499	1499	prescribe the time and place of the hearing. The hearing is
1500	1500	governed by Chapter 2001, Government Code.
1501	1501	(e) The commissioner may, in the commissioner's discretion,
1502	1502	rescind or vacate any previously issued revocation order.
1503	1503	SECTION 79. Section 157.027(a), Finance Code, is amended to
1504	1504	read as follows:
1505	1505	(a) A residential mortgage loan applicant injured by a
1506	1506	violation of this chapter or Chapter 156 by a residential mortgage
1507	1507	loan originator may bring an action for recovery of actual monetary
1508	1508	damages and reasonable attorney's fees and court costs.
1509	1509	SECTION 80. Section 157.030(b), Finance Code, is amended to
1510	1510	read as follows:
1511	1511	(b) This section does not limit or preclude the liability of
1512	1512	a residential mortgage loan originator for:
1513	1513	(1) failing to comply with this chapter, Chapter 156,
1514	1514	or a rule adopted under this chapter or Chapter 156;
1515	1515	(2) failing to comply with a provision of or duty
1516	1516	arising under an agreement with a residential mortgage loan
1517	1517	applicant under this chapter or Chapter 156; or
1518	1518	(3) violating any other state or federal law.
1519	1519	SECTION 81. Section 157.031, Finance Code, is amended by
1520	1520	amending Subsection (a) and adding Subsection (a-1) to read as
1521	1521	follows:
1522	1522	(a) An individual who is not exempt under this chapter or
1523	1523	other applicable law and who acts as a residential mortgage loan
1524	1524	originator without first obtaining a license required under this
1525	1525	chapter commits an offense. [A person commits an offense if the
1526	1526	person is an employee of a mortgage banker, is not exempt under this
1527	1527	chapter, and acts as a residential mortgage loan originator without
1528	1528	first obtaining a license required under this chapter.] An offense
1529	1529	under this subsection is a Class B misdemeanor. A second or
1530	1530	subsequent conviction for an offense under this subsection is a
1531	1531	Class A misdemeanor.
1532	1532	(a-1) An individual who received money, or the equivalent of
1533	1533	money, as a fee or profit because of or in consequence of the
1534	1534	individual acting as a residential mortgage loan originator without
1535	1535	an active license or being exempt under this chapter is liable for
1536	1536	damages in an amount that is not less than the amount of the fee or
1537	1537	profit received and not to exceed three times the amount of the fee
1538	1538	or profit received, as may be determined by the court. An aggrieved
1539	1539	person may recover damages under this subsection in a court.
1540	1540	SECTION 82. Subchapter E, Chapter 157, Finance Code, as
1541	1541	added by this Act, is amended by adding Section 157.032 to read as
1542	1542	follows:
1543	1543	Sec. 157.032. POWERS OF COMMISSIONER. (a) In addition to
1544	1544	any other action, proceeding, or remedy authorized by law, the
1545	1545	commissioner may institute an action in the commissioner's name to
1546	1546	enjoin a violation of Subchapter D or a rule adopted under
1547	1547	Subchapter D. To sustain an action filed under this subsection, it
1548	1548	is not necessary to allege or prove that an adequate remedy at law
1549	1549	does not exist or that substantial or irreparable damage would
1550	1550	result from a continued violation of Subchapter D.
1551	1551	(b) The commissioner is not required to provide an appeal
1552	1552	bond in any action or proceeding to enforce Subchapter D.
1553	1553	(c) The commissioner may authorize specific employees to
1554	1554	conduct hearings and make recommendations for final decisions in
1555	1555	contested cases.
1556	1556	SECTION 83. Section 158.104, Finance Code, is amended to
1557	1557	read as follows:
1558	1558	Sec. 158.104. MULTI-STATE EXAMINATION AUTHORITY. To
1559	1559	ensure that residential mortgage loan servicers to whom this
1560	1560	chapter applies operate in this state in compliance with this
1561	1561	chapter and with other law in accordance with this chapter, the
1562	1562	commissioner or the commissioner's designee may participate in
1563	1563	multi-state mortgage examinations as scheduled by the Conference of
1564	1564	State Bank Supervisors Multi-State Mortgage Committee or by the
1565	1565	Consumer Financial Protection Bureau in accordance with the
1566	1566	[Conference of State Bank Supervisors] protocol for such
1567	1567	examinations.
1568	1568	SECTION 84. Sections 180.002(17) and (21), Finance Code,
1569	1569	are amended to read as follows:
1570	1570	(17) "Regulatory official" means:
1571	1571	(A) with respect to Subtitles A, F, and G of this
1572	1572	title, the banking commissioner of Texas;
1573	1573	(B) with respect to Chapters 156 and 157 [except
1574	1574	as provided by Paragraph (D)], the savings and mortgage lending
1575	1575	commissioner; and
1576	1576	(C) with respect to Chapters 342, 347, 348, and
1577	1577	351, the consumer credit commissioner[; and
1578	1578	[(D) with respect to credit unions, to the
1579	1579	examination, investigation, or inspection of employees of credit
1580	1580	union subsidiary organizations licensed under Chapter 156, and to
1581	1581	the enforcement of compliance with this chapter and Chapter 156 by
1582	1582	those employees, the credit union commissioner].
1583	1583	(21) "Rulemaking authority" means[:
1584	1584	[(A)] the finance commission[, except as
1585	1585	provided by Paragraph (B); or
1586	1586	[(B) with respect to credit unions and the
1587	1587	rulemaking authority granted by Section 15.4024, the Credit Union
1588	1588	Commission].
1589	1589	SECTION 85. Section 180.056(a), Finance Code, is amended to
1590	1590	read as follows:
1591	1591	(a) An applicant for a residential mortgage loan originator
1592	1592	license must complete education courses that include[, at a
1593	1593	minimum,] at least the minimum number of hours and type of courses
1594	1594	required by the S.A.F.E. Mortgage Licensing Act and the minimum
1595	1595	number of hours of training related to lending standards for the
1596	1596	nontraditional mortgage product marketplace required by that Act
1597	1597	and any additional requirements established by the regulatory
1598	1598	official and adopted by rule of the rulemaking authority.
1599	1599	SECTION 86. Section 180.251(a), Finance Code, is amended to
1600	1600	read as follows:
1601	1601	(a) The [Except as provided by Subsection (b), the] savings
1602	1602	and mortgage lending commissioner shall administer and enforce this
1603	1603	chapter with respect to individuals licensed under Chapter [156 or]
1604	1604	157.
1605	1605	SECTION 87. The following provisions of the Finance Code
1606	1606	are repealed:
1607	1607	(1) Section 15.4024;
1608	1608	(2) Sections 156.2015, 156.205, and 156.405;
1609	1609	(3) Sections 156.101(a-1) and (a-2);
1610	1610	(4) Sections 156.201(b), (b-1), and (b-2);
1611	1611	(5) Sections 156.102(b), 156.202(c), 156.203(c),
1612	1612	156.2041(b), 156.2042(b), 156.2043(b), 156.2044(c), 156.2045,
1613	1613	156.206(a), 156.207(b), (c), and (d), and 156.2081(c);
1614	1614	(6) Sections 156.208(b-1), (b-2), and (j);
1615	1615	(7) Section 157.003(f), Finance Code, as added by
1616	1616	Chapter 655 (S.B. 1124), Acts of the 82nd Legislature, Regular
1617	1617	Session, 2011;
1618	1618	(8) Sections 157.012(d) and 157.015(b); and
1619	1619	(9) Section 180.251(b).
1620	1620	SECTION 88. The changes in law made by this Act do not
1621	1621	affect any pending proceeding or action brought under Subchapter D,
1622	1622	Chapter 156, Finance Code, as that subchapter existed immediately
1623	1623	before amendment by this Act, and the former law is continued in
1624	1624	effect for that purpose.
1625	1625	SECTION 89. The changes in law made by this Act apply only
1626	1626	to a license or registration issued or renewed on or after the
1627	1627	effective date of this Act. A license or registration issued or
1628	1628	renewed before the effective date of this Act is governed by the law
1629	1629	in effect on the date the license or registration was issued or
1630	1630	renewed, and the former law is continued in effect for that purpose.
1631	1631	SECTION 90. This Act takes effect September 1, 2013.