By: Carona S.B. No. 1004
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of residential mortgage loan
originators, residential mortgage loan companies, mortgage
bankers, and residential mortgage loan servicers under the
jurisdiction of the Department of Savings and Mortgage Lending;
changing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 156, Finance Code, is
amended to read as follows:
CHAPTER 156. RESIDENTIAL MORTGAGE LOAN COMPANIES [AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS]
SECTION 2. Section 156.001, Finance Code, is amended to
read as follows:
Sec. 156.001. SHORT TITLE. This chapter may be cited as
the Residential Mortgage Loan Company [and Residential Mortgage
Loan Originator] Licensing and Registration Act.
SECTION 3. Section 156.002, Finance Code, is amended by
adding Subdivision (4-b) and amending Subdivisions (10-b) and (11)
to read as follows:
(4-b) "Inspection" includes examination.
(10-b) "Qualifying individual" means an individual
who is:
(A) licensed under Chapter 157 [this chapter] as
a residential mortgage loan originator; and
(B) [is] designated by a residential mortgage
loan company as the company's representative [for purposes of the
Nationwide Mortgage Licensing System and Registry].
(11) "Registered financial services company" means a
person registered under Section 156.2012 [156.214].
SECTION 4. Section 156.003, Finance Code, is amended to
read as follows:
Sec. 156.003. SECONDARY MARKET TRANSACTIONS. This chapter
does not prohibit a residential mortgage loan originator sponsored
by and conducting business for a licensed or registered residential
mortgage loan company under this chapter from receiving
compensation from a party other than the mortgage applicant for the
sale, transfer, assignment, or release of rights on the closing of a
mortgage transaction.
SECTION 5. Subsection (a), Section 156.004, Finance Code,
is amended to read as follows:
(a) At the time an applicant submits an application to a
residential mortgage loan originator sponsored by and conducting
business for a licensed or registered residential mortgage loan
company under this chapter, the residential mortgage loan
originator shall provide to the applicant a disclosure that
specifies:
(1) the nature of the relationship between the
applicant and the residential mortgage loan originator;
(2) the duties the residential mortgage loan
originator has to the applicant; and
(3) how the residential mortgage loan originator will
be compensated.
SECTION 6. Section 156.005, Finance Code, is amended to
read as follows:
Sec. 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless
prohibited by federal or state law, this chapter may not be
construed to prevent affiliated or controlled business
arrangements or loan origination services by or between residential
mortgage loan originators, sponsored by and conducting business for
a licensed or registered residential mortgage loan company under
this chapter, and other professionals if the residential mortgage
loan originator complies with all applicable federal and state laws
permitting those arrangements or services.
SECTION 7. The heading to Section 156.101, Finance Code, is
amended to read as follows:
Sec. 156.101. ADMINISTRATION AND ENFORCEMENT OF CHAPTER;
PARTICIPATION IN NATIONWIDE REGISTRY.
SECTION 8. Subsection (a), Section 156.101, Finance Code,
as amended by Chapters 1104 (H.B. 10) and 1317 (H.B. 2774), Acts of
the 81st Legislature, Regular Session, 2009, is reenacted and
amended to read as follows:
(a) The [Except as provided by Subsection (a-2), the]
commissioner shall administer and enforce this chapter.
SECTION 9. Subsection (a), Section 156.102, Finance Code,
is amended to read as follows:
(a) The finance commission may adopt and enforce rules
necessary for the intent of or to ensure compliance with this
chapter[, except as provided by Section 15.4024 with respect to
employees of credit union subsidiary organizations subject to
regulation under Section 156.2015].
SECTION 10. Subsections (f) and (h), Section 156.104,
Finance Code, are amended to read as follows:
(f) The commissioner may remove a member of the advisory
committee if:
(1) the member does not maintain [have at the time of
appointment] the qualifications required by Subsection (b); or
(2) the commissioner determines that the member cannot
discharge the member's duties for a substantial part of the term for
which the member is appointed.
(h) In addition to other powers and duties delegated to the
advisory committee by the commissioner, the advisory committee
shall advise the commissioner with respect to:
(1) the proposal and adoption of rules relating to the
mortgage industry[:
[(A) the licensing of residential mortgage loan
originators or residential mortgage loan companies;
[(B) the education and experience requirements
for licensing residential mortgage loan originators; and
[(C) the conduct and ethics of residential
mortgage loan originators];
(2) the form of or format for any applications or other
documents under this chapter or Chapter 157; and
(3) the interpretation, implementation, and
enforcement of this chapter and Chapter 157.
SECTION 11. Section 156.105, Finance Code, is amended to
read as follows:
Sec. 156.105. STANDARD FORMS. (a) The finance
commission[,] by rule[,] shall adopt one or more standard forms for
use by a residential mortgage loan originator sponsored by and
conducting business for a licensed or registered residential
mortgage loan company under this chapter in representing that an
applicant for a residential mortgage loan is preapproved or has
prequalified for the loan.
(b) The finance commission shall adopt rules requiring a
residential mortgage loan originator licensed under Chapter 157
[this chapter] to use the forms adopted by the finance commission
under Subsection (a).
SECTION 12. The heading to Subchapter C, Chapter 156,
Finance Code, is amended to read as follows:
SUBCHAPTER C. RESIDENTIAL MORTGAGE LOAN COMPANY [AND RESIDENTIAL
MORTGAGE LOAN ORIGINATOR] LICENSES AND REGISTRATION
SECTION 13. Subsections (a) and (c), Section 156.201,
Finance Code, are amended to read as follows:
(a) A person may not act in the capacity of, engage in the
business of, or advertise or hold that person out as engaging in or
conducting the business of a residential mortgage loan company in
this state unless the person holds an active residential mortgage
loan company license, is registered under Section 156.2012
[156.214], or is exempt under Section 156.202.
(c) Each residential mortgage loan company and the
company's qualifying individual licensed under Chapter 157 [this
chapter] is responsible to the commissioner and members of the
public for any act or conduct performed by the residential mortgage
loan originator sponsored by or acting for the residential mortgage
loan company in connection with:
(1) the origination of a residential mortgage loan; or
(2) a transaction that is related to the origination
of a residential mortgage loan in which the qualifying individual
knew or should have known of the transaction.
SECTION 14. Subsections (a) and (a-1), Section 156.202,
Finance Code, are amended to read as follows:
(a) In this section, "depository institution," "dwelling,"
and "federal banking agency[,]" [and "immediate family member"]
have the meanings assigned by Section 180.002.
(a-1) The following [individuals or] entities[, and
employees of those entities when acting for the benefit of those
entities,] are exempt from this chapter:
(1) [a registered mortgage loan originator when acting
for:
[(A) a depository institution;
[(B) a subsidiary of a depository institution
that is:
[(i) owned and controlled by the depository
institution; and
[(ii) regulated by a federal banking
agency; or
[(C) an institution regulated by the Farm Credit
Administration;
[(2) an individual who offers or negotiates the terms
of a residential mortgage loan with or on behalf of an immediate
family member of the individual;
[(3) a licensed attorney who negotiates the terms of a
residential mortgage loan on behalf of a client as an ancillary
matter to the attorney's representation of the client, unless the
attorney:
[(A) takes a residential mortgage loan
application; and
[(B) offers or negotiates the terms of a
residential mortgage loan;
[(4) an individual who offers or negotiates terms of a
residential mortgage loan secured by a dwelling that serves as the
individual's residence;
[(5)] a nonprofit organization providing self-help
housing that originates zero interest residential mortgage loans
for borrowers who have provided part of the labor to construct the
dwelling securing the loan;
(2) [(6)] a mortgage banker registered under Chapter
157;
(3) [(7)] any owner of residential real estate who in
any 12-consecutive-month period makes no more than five residential
mortgage loans to purchasers of the property for all or part of the
purchase price of the residential real estate against which the
mortgage is secured; and
(4) [(8)] an entity that is:
(A) a depository institution;
(B) a subsidiary of a depository institution that
is:
(i) owned and controlled by the depository
institution; and
(ii) regulated by a federal banking agency;
or
(C) an institution regulated by the Farm Credit
Administration[; and
[(9) an individual who is exempt as provided by
Section 180.003(b)].
SECTION 15. The heading to Section 156.203, Finance Code,
is amended to read as follows:
Sec. 156.203. APPLICATION [FOR A LICENSE]; FEES.
SECTION 16. Subsections (a-1) and (a-2), Section 156.203,
Finance Code, are amended to read as follows:
(a-1) An application for a residential mortgage loan
company license [and a residential mortgage loan originator
license] must be:
(1) in writing;
(2) under oath; and
(3) on the form prescribed by the commissioner.
(a-2) An application for a financial services company
registration under Section 156.2012 [156.214] must be:
(1) in writing;
(2) under oath; and
(3) on the form prescribed by the commissioner.
SECTION 17. The heading to Section 156.2041, Finance Code,
is amended to read as follows:
Sec. 156.2041. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
[LICENSES]: MORTGAGE COMPANY [AND RESIDENTIAL MORTGAGE LOAN
ORIGINATORS].
SECTION 18. Subsection (a), Section 156.2041, Finance Code,
is amended to read as follows:
(a) To be issued a mortgage company license, an applicant
must:
(1) submit a completed application together with the
payment of applicable fees through the Nationwide Mortgage
Licensing System and Registry;
(2) designate control persons for the mortgage company
through the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under Chapter 157 [this chapter] as the
company's qualifying individual;
(4) submit a completed branch application through the
Nationwide Mortgage Licensing System and Registry for each branch
office that engages in residential mortgage loan activity on
residential real estate located in this state;
(5) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant;
(6) have the company name or assumed name properly
filed with either the secretary of state or with the appropriate
county clerk's office;
(7) maintain a physical office in this state; and
(8) provide financial statements and any other
information required by the commissioner.
SECTION 19. The heading to Section 156.2042, Finance Code,
is amended to read as follows:
Sec. 156.2042. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
[LICENSES]: CREDIT UNION SUBSIDIARY ORGANIZATION [AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS].
SECTION 20. Subsection (a), Section 156.2042, Finance Code,
is amended to read as follows:
(a) To be issued a credit union subsidiary organization
license, an applicant must:
(1) submit a completed application together with the
payment of applicable fees through the Nationwide Mortgage
Licensing System and Registry;
(2) designate control persons for the organization
through the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under Chapter 157 [this chapter] as the
company's qualifying individual;
(4) submit a completed branch application through the
Nationwide Mortgage Licensing System and Registry for each branch
office that engages in residential mortgage loan activity on
residential real estate located in this state; [and]
(5) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant; and
(6) maintain a physical office in this state.
SECTION 21. The heading to Section 156.2043, Finance Code,
is amended to read as follows:
Sec. 156.2043. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
[LICENSES]: AUXILIARY MORTGAGE LOAN ACTIVITY COMPANY [AND
RESIDENTIAL MORTGAGE LOAN ORIGINATORS].
SECTION 22. Subsection (a), Section 156.2043, Finance Code,
is amended to read as follows:
(a) To be issued an auxiliary mortgage loan activity company
license, an applicant must:
(1) submit a completed application together with the
payment of applicable fees through the Nationwide Mortgage
Licensing System and Registry;
(2) designate control persons for the company through
the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under Chapter 157 [this chapter] as the
company's qualifying individual; and
(4) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant.
SECTION 23. The heading to Section 156.2044, Finance Code,
is amended to read as follows:
Sec. 156.2044. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
[LICENSES]: INDEPENDENT CONTRACTOR LOAN PROCESSOR OR UNDERWRITER
COMPANY [AND INDIVIDUAL LOAN PROCESSORS OR UNDERWRITERS].
SECTION 24. Subsections (a) and (b), Section 156.2044,
Finance Code, are amended to read as follows:
(a) To be issued an independent contractor loan processor or
underwriter company license under this chapter, an applicant must:
(1) submit a completed application together with the
payment of applicable fees through the Nationwide Mortgage
Licensing System and Registry;
(2) designate control persons for the company through
the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under Chapter 157 [this chapter] as the
company's qualifying individual; and
(4) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant.
(b) An independent contractor loan processor or underwriter
company or a sponsored residential mortgage loan originator is not
authorized to originate residential mortgage loans with a license
issued under Subsection (a).
SECTION 25. Section 156.2046, Finance Code, is amended to
read as follows:
Sec. 156.2046. CONVICTION OF OFFENSE. A [For the purposes
of Section 156.2041, 156.2042, 156.2043, 156.2044, or 156.2045, a]
person is considered to have been convicted of a criminal offense
if:
(1) a sentence is imposed on the person;
(2) the person received probation or community
supervision, including deferred adjudication or community service;
or
(3) the court deferred final disposition of the
person's case.
SECTION 26. Subsections (b) and (c), Section 156.206,
Finance Code, are amended to read as follows:
(b) The commissioner shall conduct criminal background and
credit history checks on a person required to be licensed under this
chapter [in accordance with Section 180.054, and, in connection
with each application for a residential mortgage loan originator
license or other individual license, the commissioner may conduct a
criminal background check through the Department of Public Safety].
(c) The commissioner shall keep confidential any background
information obtained under this section and may not release or
disclose the information unless:
(1) the information is a public record at the time the
commissioner obtains the information; or
(2) the commissioner releases the information:
(A) under order from a court; or
(B) [with the permission of the applicant;
[(C) to a person through whom the applicant is
conducting or will conduct business; or
[(D)] to a governmental agency.
SECTION 27. The heading to Section 156.207, Finance Code,
is amended to read as follows:
Sec. 156.207. ISSUANCE OF LICENSE[; PROVISIONAL LICENSE].
SECTION 28. Subsections (a-1) and (c), Section 156.208,
Finance Code, are amended to read as follows:
(a-1) A residential mortgage loan company license issued
under this chapter is valid through December 31 of the year of
issuance and may be renewed on or before its expiration date if the
residential mortgage loan company:
(1) pays to the commissioner a renewal fee in an amount
determined by the commissioner not to exceed $375; [and]
(2) has not shown a pattern or practice of abusive
mortgage activity and has no civil judgments or liens that, in the
commissioner's opinion, directly impact the ability of the
residential mortgage loan company to conduct business while
safeguarding and protecting the public interest; and
(3) continues to meet the minimum requirements for
license issuance.
(c) An application for renewal shall be in the [The
commissioner may require residential mortgage loan originators to
submit requests for renewal on a] form prescribed by the
commissioner.
SECTION 29. Subsection (g), Section 156.209, Finance Code,
is amended to read as follows:
(g) A person whose application for or request to renew a
license has been denied is not eligible to be licensed for a period
of two years after the date the denial becomes final, or a shorter
period as determined by the commissioner after evaluating the
specific circumstances of the denial [person's subsequent
application]. The finance commission may adopt rules to provide
conditions for which the commissioner may shorten the period of
ineligibility [time of disqualification].
SECTION 30. Subsections (b) and (b-1), Section 156.211,
Finance Code, are amended to read as follows:
(b) When the sponsorship of a residential mortgage loan
originator is terminated, the residential mortgage loan originator
or [and] the residential mortgage loan company shall immediately
notify the commissioner. [The residential mortgage loan
originator's license then becomes inactive. The residential
mortgage loan originator license may be activated if, before the
license expires, a residential mortgage loan company files a
request, accompanied by a $25 fee, notifying the commissioner that
the residential mortgage loan company will sponsor the residential
mortgage loan originator and will assume responsibility for the
actions of the residential mortgage loan originator.]
(b-1) Not later than the 10th day before a residential
mortgage loan company begins doing business under an assumed name,
the residential mortgage loan company shall file with the
commissioner a copy of an assumed name certificate for each assumed
name under which the residential mortgage loan company intends to
conduct business and pay a $25 registration fee for each assumed
name. [A residential mortgage loan originator may not conduct
business under any assumed name that is not the registered assumed
name of the sponsoring residential mortgage loan company.]
SECTION 31. Subsection (a), Section 156.213, Finance Code,
is amended to read as follows:
(a) Each licensed residential mortgage loan company [or
licensed residential mortgage loan originator, as required by the
commissioner,] shall file a mortgage call report with the
commissioner or the commissioner's authorized designee on a form
prescribed by the commissioner or authorized designee. The report:
(1) is a statement of condition of the residential
mortgage loan company and the company's operations[, or a statement
of condition of the residential mortgage loan originators sponsored
by the company, as applicable], including financial statements and
production activity volumes;
(2) must include any other information required by the
commissioner; and
(3) must be filed as frequently as required by the
commissioner.
SECTION 32. Section 156.214, Finance Code, is redesignated
as Section 156.2012, Finance Code, and amended to read as follows:
Sec. 156.2012 [156.214]. REGISTERED FINANCIAL SERVICES
COMPANY. (a) A [registered] financial services company may
perform the services of a [another] residential mortgage loan
company [as] if the company is registered [were licensed as a
residential mortgage loan company] under this chapter[, through
individuals who are the exclusive agents of the registered
financial services company].
(b) To be eligible to register as a registered financial
services company, a person must:
(1) be a depository institution exempt from this
chapter under Section 156.202(a-1)(4)(A) [156.202(a-1)(8)(A)] and
chartered and regulated by [the Office of Thrift Supervision or]
the Office of the Comptroller of the Currency, or be a subsidiary of
the institution;
(2) [provide the commissioner with satisfactory
evidence of an undertaking of accountability in a form acceptable
to the commissioner, supported by a surety bond equal to $1 million
to cover the person's responsibility for residential mortgage loan
company activities of each exclusive agent;
[(3)] provide a business plan satisfactory to the
commissioner that sets forth the person's plan to:
(A) provide education to its sponsored
residential mortgage loan originators;
(B) [exclusive agents,] handle consumer
complaints relating to its sponsored residential mortgage loan
originators; and
(C) [exclusive agents, and] supervise the
residential mortgage loan origination activities of its sponsored
residential mortgage loan originators [exclusive agents];
(3) [(4)] pay a [an annual] registration fee in an
amount not to exceed $500 [determined as follows:
[(A) if the registered financial services
company has 2,000 or fewer exclusive agents acting in this state, an
amount equal to the lesser of:
[(i) one-half of the license fee for a
residential mortgage loan originator under Section 156.203(c)(1),
multiplied by the number of exclusive agents under contract to act
for the person in this state; or
[(ii) $200,000;
[(B) if the registered financial services
company has at least 2,001 but not more than 2,500 exclusive agents
acting in this state, $225,000;
[(C) if the registered financial services
company has at least 2,501 but not more than 3,000 exclusive agents
acting in this state, $250,000;
[(D) if the registered financial services
company has at least 3,001 but not more than 5,000 exclusive agents
acting in this state, $300,000; or
[(E) if the registered financial services
company has at least 5,001 exclusive agents acting in this state,
$350,000];
(4) [and
[(5)] designate an officer of the person to be
responsible for the activities of its sponsored residential
mortgage loan originators;
(5) submit a completed application through the
Nationwide Mortgage Licensing System and Registry together with the
applicable fee required by Subdivision (3) or Subsection (c);
(6) obtain preapproval from the commissioner that the
person meets the eligibility requirements for registration as a
financial services company; and
(7) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant [the exclusive agents].
(c) If the commissioner determines that a person has met the
requirements of Subsection (b) [and Section 156.2045(a)], the
commissioner shall issue a registration to the person. The
registration is valid for one year, expires on December 31 of each
year, and must be renewed annually by meeting the requirements
under Subsection (b) and paying a renewal fee in an amount not to
exceed $500. A person must renew an expired registration in the
manner determined by the commissioner.
(d) A registered financial services company is subject to
Subchapters D and E as if the company were licensed as a residential
mortgage loan company.
SECTION 33. Subsections (a), (b), (c), and (h), Section
156.301, Finance Code, are amended to read as follows:
(a) The commissioner may conduct inspections of a person
licensed under this chapter or a residential mortgage loan
originator who is licensed under Chapter 157 and sponsored by and
conducting business for a licensed or registered residential
mortgage loan company under this chapter as the commissioner
determines necessary to determine whether the person or the
residential mortgage loan originator is complying with this chapter
and applicable rules. The inspections may include inspection of
the books, records, documents, operations, and facilities of the
person or the residential mortgage loan originator and access to
any documents required under rules adopted under this chapter. The
commissioner may share evidence of criminal activity gathered
during an inspection or investigation with any state or federal law
enforcement agency.
(b) On the signed written complaint of a person, the
commissioner shall investigate the actions and records of a person
licensed under this chapter or a residential mortgage loan
originator who is licensed under Chapter 157 and sponsored by and
conducting business for a licensed or registered residential
mortgage loan company under this chapter if the complaint, or the
complaint and documentary or other evidence presented in connection
with the complaint, provides reasonable cause. The commissioner,
before commencing an investigation, shall notify the [a]
residential mortgage loan company or the residential mortgage loan
originator in writing of the complaint and that the commissioner
intends to investigate the matter.
(c) For reasonable cause, the commissioner at any time may
investigate a person licensed under this chapter or a residential
mortgage loan originator who is licensed under Chapter 157 and
sponsored by and conducting business for a licensed or registered
residential mortgage loan company under this chapter to determine
whether the person or the residential mortgage loan originator is
complying with this chapter and applicable rules.
(h) The commissioner may require reimbursement of expenses
[in an amount not to exceed $325] for each examiner [a day] for
on-site examination or investigation of a license holder
[residential mortgage loan company] if records are located out of
state or if the review is considered necessary beyond the routine
examination process. The finance commission by rule shall set the
maximum amount for the reimbursement of expenses authorized under
this subsection.
SECTION 34. Section 156.303, Finance Code, is amended by
amending Subsections (a), (a-1), (g), and (i) and adding Subsection
(k) to read as follows:
(a) The commissioner may order disciplinary action against
a licensed or registered residential mortgage loan company [or a
licensed residential mortgage loan originator] when the
commissioner, after notice and opportunity for hearing, has
determined that the company [person]:
(1) obtained a license or registration, including a
renewal of a license or registration, under this chapter through a
false or fraudulent representation or made a material
misrepresentation in an application for a license or registration
or for the renewal of a license or registration under this chapter;
(2) published or caused to be published an
advertisement related to the business of a residential mortgage
loan company [or residential mortgage loan originator] that:
(A) is misleading;
(B) is likely to deceive the public;
(C) in any manner tends to create a misleading
impression;
(D) fails to identify as a residential mortgage
loan company [or residential mortgage loan originator] the person
causing the advertisement to be published; or
(E) violates federal or state law;
(3) while performing an act for which a license or
registration under this chapter is required, engaged in conduct
that constitutes improper, fraudulent, or dishonest dealings;
(4) entered a plea of guilty or nolo contendere to, or
is convicted of, a criminal offense that is a felony or that
involves fraud or moral turpitude in a court of this or another
state or in a federal court;
(5) failed to use a fee collected in advance of closing
of a residential mortgage loan for a purpose for which the fee was
paid;
(6) charged or received, directly or indirectly, a fee
for assisting a mortgage applicant in obtaining a residential
mortgage loan before all of the services that the person agreed to
perform for the mortgage applicant are completed, and the proceeds
of the residential mortgage loan have been disbursed to or on behalf
of the mortgage applicant[, except as provided by Section 156.304];
(7) failed within a reasonable time to honor a credit
card charge back or a check issued to the commissioner after the
commissioner has mailed a request for payment, including payment of
[of the check and] any applicable fees, [by certified mail] to the
person's last known business address as reflected by the
commissioner's records;
(8) paid compensation to a person who is not licensed,
registered, or exempt under this chapter or Chapter 157 for acts for
which a license or registration under this chapter or Chapter 157 is
required;
(9) induced or attempted to induce a party to a
contract to breach the contract so the person may make a residential
mortgage loan;
(10) published or circulated an unjustified or
unwarranted threat of legal proceedings in matters related to the
person's actions or services as a residential mortgage loan company
[or residential mortgage loan originator, as applicable];
(11) established an association, by employment or
otherwise, with a person not licensed, registered, or exempt under
this chapter or Chapter 157 who was expected or required to act as a
residential mortgage loan company or residential mortgage loan
originator;
(12) aided, abetted, or conspired with a person to
circumvent the requirements of this chapter or Subchapter D,
Chapter 157;
(13) acted in the dual capacity of a residential
mortgage loan company [or residential mortgage loan originator] and
real estate broker, salesperson, or attorney in a transaction
without the knowledge and written consent of the mortgage applicant
or in violation of applicable requirements under federal law;
(14) discriminated against a prospective borrower on
the basis of race, color, religion, sex, national origin, ancestry,
familial status, or a disability;
(15) failed or refused on demand to:
(A) produce a document, book, or record
concerning a residential mortgage loan transaction conducted by a
[the] residential mortgage loan originator for inspection by the
commissioner or the commissioner's authorized personnel or
representative;
(B) give the commissioner or the commissioner's
authorized personnel or representative free access to the books or
records relating to the person's business kept by an officer,
agent, or employee of the person or any business entity through
which the person conducts residential mortgage loan origination
activities, including a subsidiary or holding company affiliate; or
(C) provide information requested by the
commissioner as a result of a formal or informal complaint made to
the commissioner;
(16) failed without just cause to surrender, on
demand, a copy of a document or other instrument coming into the
person's possession that was provided to the person by another
person making the demand or that the person making the demand is
under law entitled to receive;
(17) disregarded or violated this chapter, a rule
adopted by the finance commission under this chapter, or an order
issued by the commissioner under this chapter; or
(18) provided false information to the commissioner
during the course of an investigation or inspection.
(a-1) The commissioner may also order disciplinary action
after notice and opportunity for hearing against a licensed or
registered residential mortgage loan company [or a licensed
residential mortgage loan originator] if the commissioner becomes
aware during the term of the license of any fact that would have
been grounds for denial of an original license if the fact had been
known by the commissioner on the date the license was issued.
(g) If a person fails to pay an administrative penalty that
has become final or fails to comply with an order of the
commissioner that has become final, in addition to any other remedy
provided under law the commissioner, on not less than 10 days'
notice to the person, may without a prior hearing suspend the
person's residential mortgage loan company license or registration
[or residential mortgage loan originator license]. The suspension
shall continue until the person has complied with the order or paid
the administrative penalty. During the period of suspension, the
person may not originate a residential mortgage loan and all
compensation received by the person during the period of suspension
is subject to forfeiture as provided by Section 156.406(b).
(i) An order revoking the license or registration of a
residential mortgage loan company [or the license of a residential
mortgage loan originator] may provide that the person is
prohibited, without obtaining prior written consent of the
commissioner, from:
(1) engaging in the business of originating or making
residential mortgage loans; or
(2) [being an employee, officer, director, manager,
shareholder, member, agent, contractor, or processor of a
residential mortgage loan company or residential mortgage loan
originator; or
[(3)] otherwise affiliating with a person for the
purpose of engaging in the business of originating or making
residential mortgage loans.
(k) The commissioner may, at the commissioner's discretion,
rescind or vacate any previously issued order.
SECTION 35. Subsection (a), Section 156.304, Finance Code,
is amended to read as follows:
(a) Before the completion of all services to be performed, a
residential mortgage loan originator sponsored by and conducting
business for a licensed or registered residential mortgage loan
company under this chapter may charge and receive, unless
prohibited by law, the following fees for services in assisting a
mortgage applicant to obtain a residential mortgage loan:
(1) a fee to obtain a credit report;
(2) a fee for the appraisal of the real estate;
(3) a fee for processing a residential mortgage loan
application;
(4) a fee for taking a residential mortgage loan
application;
(5) a fee for automated underwriting;
(6) a fee for a courier service;
(7) a fee to issue a loan commitment; or
(8) subject to Subsection (b), a fee for locking in an
interest rate.
SECTION 36. Section 156.305, Finance Code, is amended to
read as follows:
Sec. 156.305. RESTITUTION. The commissioner may order a
person to make restitution for any amount received by that person in
violation of this chapter. A residential mortgage loan company may
be required to make restitution for any amount received by a
sponsored residential mortgage loan originator in violation of
Chapter 157 [this chapter].
SECTION 37. Subsection (d), Section 156.401, Finance Code,
is amended to read as follows:
(d) A person [An individual] aggrieved by a ruling, order,
or decision of the commissioner has the right to appeal to a
district court in the county in which the hearing was held. An
appeal under this subsection is governed by Chapter 2001,
Government Code.
SECTION 38. Subsection (a), Section 156.406, Finance Code,
is amended to read as follows:
(a) A person, unless otherwise exempt, commits an offense if
the person conducts regulated activities under this chapter without
first obtaining a license or registration as required by Section
156.201, 156.2012, or 157.012, as applicable. [A person who is not
exempt under this chapter and who acts as a residential mortgage
loan originator without first obtaining a license required under
this chapter commits an offense.] An offense under this subsection
is a Class B misdemeanor. A second or subsequent conviction for an
offense under this subsection shall be punished as a Class A
misdemeanor.
SECTION 39. The heading to Subchapter F, Chapter 156,
Finance Code, is amended to read as follows:
SUBCHAPTER F. [MORTGAGE BROKER] RECOVERY FUND
SECTION 40. Subsection (b), Section 156.501, Finance Code,
is amended to read as follows:
(b) Subject to this subsection, the recovery fund shall be
used to reimburse residential mortgage loan applicants for actual
damages incurred because of acts committed by a residential
mortgage loan originator who was licensed [under this chapter or]
under Chapter 157 when the act was committed. The use of the fund
is limited to reimbursement for out-of-pocket losses caused by an
act by[:
[(1) a residential mortgage loan originator licensed
under this chapter that constitutes a violation of Section
156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13), or
(16) or 156.304; or
[(2)] a residential mortgage loan originator licensed
under Chapter 157 that constitutes a violation of Section
157.024(a)(2), (3), (5), (7), (8), (9), (10), (13), [or] (16),
(17), or (18) or 156.304(b).
SECTION 41. Subsection (a), Section 156.502, Finance Code,
is amended to read as follows:
(a) On an application for an original license or for renewal
of a license issued under Chapter 157 [this chapter], the
applicant, in addition to paying the original application fee or
renewal fee, shall pay a fee in an amount determined by the
commissioner, not to exceed $20. The fee shall be deposited in the
recovery fund.
SECTION 42. Subsection (a), Section 156.503, Finance Code,
is amended to read as follows:
(a) An application for the recovery of actual damages from
the recovery fund under Section 156.504 may not be filed after the
fourth [second] anniversary of the date of the alleged act or
omission causing the actual damages or the date the act or omission
should reasonably have been discovered.
SECTION 43. Subsection (b), Section 156.504, Finance Code,
is amended to read as follows:
(b) The residential mortgage loan applicant is required to
show:
(1) that the applicant's claim is based on facts
allowing recovery under Section 156.501; and
(2) that the applicant:
(A) is not a spouse of the licensed residential
mortgage loan originator;
(B) is not a child, parent, grandchild,
grandparent, or sibling, including relationships by adoption, of
the licensed residential mortgage loan originator;
(C) is not a person sharing living quarters with
the licensed residential mortgage loan originator or a current or
former employer, employee, or associate of the licensed residential
mortgage loan originator;
(D) is not a person who has aided, abetted, or
participated other than as a victim with the licensed residential
mortgage loan originator in any activity that is illegal under
[Section 156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12),
(13), or (16), Section 156.304, or] Section 157.024(a)(2), (3),
(5), (7), (8), (9), (10), (13), [or] (16), (17), or (18) or
156.304(b), or is not the personal representative of a licensed
residential mortgage loan originator; and
(E) is not licensed as a residential mortgage
loan originator under Chapter 157 [this chapter] who is seeking to
recover any compensation in the transaction or transactions for
which the application for payment is made.
SECTION 44. Subsection (b), Section 156.505, Finance Code,
is amended to read as follows:
(b) A payment from the recovery fund may be made as provided
by Section 156.504 and this section. A payment for claims:
(1) arising out of the same transaction, including
interest, is limited in the aggregate to $25,000, regardless of the
number of claimants; and
(2) against a single person licensed as a residential
mortgage loan originator under [this chapter or] Chapter 157
arising out of separate transactions, including interest, is
limited in the aggregate to $50,000 until the fund has been
reimbursed for all amounts paid.
SECTION 45. Subsections (a), (c), and (d), Section 156.506,
Finance Code, are amended to read as follows:
(a) The commissioner may revoke or suspend a license issued
under Chapter 157 [this chapter] on proof that the commissioner has
made a payment from the recovery fund of any amount toward
satisfaction of a claim against a residential mortgage loan
originator under Chapter 157 [this chapter].
(c) A person on whose behalf payment was made from the
recovery fund is not eligible to receive a new license or have a
suspension lifted under this chapter or Chapter 157 until the
person has repaid in full, plus interest at the current legal rate,
the amount paid from the fund on the person's behalf and any costs
associated with investigating and processing the claim against the
fund or with collection of reimbursement for payments from the
fund.
(d) This section does not limit the authority of the
commissioner to take disciplinary action against a residential
mortgage loan originator for a violation of Chapter 157 [this
chapter] or the rules adopted by the finance commission under that
[this] chapter. The repayment in full to the recovery fund of all
obligations of a residential mortgage loan originator does not
nullify or modify the effect of any other disciplinary proceeding
brought under Chapter 157 [this chapter].
SECTION 46. The heading to Chapter 157, Finance Code, is
amended to read as follows:
CHAPTER 157. [REGISTRATION OF] MORTGAGE BANKERS AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS
SECTION 47. Sections 157.001 and 157.002, Finance Code, are
designated as Subchapter A, Chapter 157, Finance Code, and a
heading is added to that subchapter to read as follows:
SUBCHAPTER A. GENERAL PROVISIONS
SECTION 48. Section 157.002, Finance Code, is amended by
adding Subdivisions (3-a) and (5-a) to read as follows:
(3-a) "Inspection" includes examination.
(5-a) "Residential mortgage loan company" has the
meaning assigned by Section 156.002.
SECTION 49. Chapter 157, Finance Code, is amended by adding
Subchapter B to read as follows:
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 157.0024. MORTGAGE INDUSTRY ADVISORY COMMITTEE. The
mortgage industry advisory committee shall advise and assist the
commissioner with respect to this chapter as provided by Section
156.104.
SECTION 50. Sections 157.003, 157.004, 157.005, 157.006,
157.0061, 157.0062, 157.009, and 157.010, Finance Code, are
designated as Subchapter C, Chapter 157, Finance Code, and a
heading is added to that subchapter to read as follows:
SUBCHAPTER C. REGISTRATION OF MORTGAGE BANKERS
SECTION 51. Subsection (b), Section 157.003, Finance Code,
is amended to read as follows:
(b) To register under this chapter, a mortgage banker shall:
(1) enroll with the Nationwide Mortgage Licensing
System and Registry;
(2) be in good standing with the secretary of state;
(3) have a valid federal employer identification
number;
(4) meet the qualification requirements for a mortgage
banker; [and]
(5) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant; and
(6) provide to the commissioner a list of any offices
that are separate and distinct from the primary office identified
on the mortgage banker registration and that conduct residential
mortgage loan business relating to this state, regardless of
whether the offices are located in this state.
SECTION 52. Section 157.004, Finance Code, is amended to
read as follows:
Sec. 157.004. EXEMPTIONS. This chapter does not apply to:
(1) a federally insured bank, savings bank, savings
and loan association, Farm Credit System Institution, or credit
union;
(2) a subsidiary of a federally insured bank, savings
bank, savings and loan association, Farm Credit System Institution,
or credit union;
(3) a residential mortgage loan company licensed
[person licensed as a mortgage broker] under Chapter 156;
(4) an authorized lender licensed under Chapter 342;
or
(5) the state or a governmental agency, political
subdivision, or other instrumentality of the state, or an employee
of the state or a governmental agency, political subdivision, or
instrumentality of the state who is acting within the scope of the
person's employment.
SECTION 53. Section 157.005, Finance Code, is amended to
read as follows:
Sec. 157.005. UPDATE OF REGISTRATION. A mortgage banker
shall update information contained in the registration not later
than the 10th [30th] day after the date the information changes.
SECTION 54. Sections 157.007 and 157.008, Finance Code, are
transferred to Subchapter B, Chapter 157, Finance Code, as added by
this Act, and redesignated as Sections 157.0021 and 157.0022,
Finance Code, to read as follows:
Sec. 157.0021 [157.007]. DISCLOSURE STATEMENT. (a) A
mortgage banker that is a residential mortgage loan originator
shall include a notice to a residential mortgage loan applicant
with an application for a residential mortgage loan. The finance
commission by rule shall adopt a standard disclosure form to be used
by the mortgage banker. The form must:
(1) include the name, address, and toll-free telephone
number for the Department of Savings and Mortgage Lending;
(2) contain information on how to file a complaint or
recovery fund claim; and
(3) prescribe a method for proof of delivery to the
consumer.
(b) A mortgage banker that indicates in its registration
that it acts as a residential mortgage loan servicer shall provide
to the borrower of each residential mortgage loan it services the
following notice not later than the 30th day after the date the
mortgage banker commences servicing the loan:
"COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD
BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
______________________________ (street address of the Department
of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
AVAILABLE AT _______________ (telephone number of the Department of
Savings and Mortgage Lending's toll-free consumer hotline)."
Sec. 157.0022 [157.008]. COMPLAINTS. (a) If the
Department of Savings and Mortgage Lending receives a signed
written complaint from a person concerning a mortgage banker, the
commissioner shall notify the representative designated by the
mortgage banker under Section 157.003(b) in writing of the
complaint and provide a copy of the complaint to the
representative.
(b) The commissioner may request documentary and other
evidence considered by the commissioner as necessary to effectively
evaluate the complaint, including correspondence, loan documents,
and disclosures. A mortgage banker shall promptly provide any
evidence requested by the commissioner.
(c) The commissioner may require the mortgage banker to
resolve the complaint or to provide the commissioner with a
response to the complaint. The commissioner may direct the
mortgage banker in writing to take specific action to resolve the
complaint.
SECTION 55. Section 157.009, Finance Code, is amended by
adding Subsection (d-1) and amending Subsection (e) to read as
follows:
(d-1) The commissioner, after review of the circumstances,
may revoke the registration of a mortgage banker if the mortgage
banker has had a license, registration, or other certification
revoked by a state or federal regulatory authority.
(e) If the commissioner proposes to revoke a registration
under Subsection (c), [or] (d), or (d-1), the mortgage banker is
entitled to a hearing before the commissioner or a hearings
officer, who shall propose a decision to the commissioner. The
commissioner or hearings officer shall prescribe the time and place
of the hearing. The hearing is governed by Chapter 2001, Government
Code.
SECTION 56. Section 157.011, Finance Code, is transferred
to Subchapter B, Chapter 157, Finance Code, as added by this Act,
and redesignated as Section 157.0023, Finance Code, to read as
follows:
Sec. 157.0023 [157.011]. RULEMAKING AUTHORITY. (a) The
Finance Commission of Texas may adopt rules necessary to implement
or fulfill the purpose of this chapter.
(b) The Finance Commission of Texas may by rule adopt
standard forms for, and require the use of the forms by, a mortgage
banker who represents that an applicant for a loan is preapproved or
has prequalified for the loan.
(c) The finance commission may adopt rules under this
chapter as required to carry out the intentions of the federal
Secure and Fair Enforcement for Mortgage Licensing Act of 2008
(Pub. L. No. 110-289).
SECTION 57. Sections 157.012, 157.013, 157.014, 157.015,
157.016, 157.017, 157.019, 157.020, and 157.0201, Finance Code, are
designated as Subchapter D, Chapter 157, Finance Code, and a
heading is added to that subchapter to read as follows:
SUBCHAPTER D. LICENSING OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS;
DISCLOSURES AND REQUIREMENTS
SECTION 58. The heading to Section 157.012, Finance Code,
is amended to read as follows:
Sec. 157.012. LICENSE REQUIRED FOR RESIDENTIAL MORTGAGE
LOAN ORIGINATORS [CERTAIN EMPLOYEES OF MORTGAGE BANKERS].
SECTION 59. Section 157.012, Finance Code, is amended by
amending Subsections (a) and (c) and adding Subsection (e) to read
as follows:
(a) An individual [An employee of a mortgage banker] may not
act or attempt to act in the capacity of a residential mortgage loan
originator unless the individual is exempt under Section 157.0121
or 180.003(b) or [employee]:
(1) is licensed under this chapter, sponsored by an
appropriate entity [a registered mortgage banker], and enrolled
with the Nationwide Mortgage Licensing System and Registry as
required by Section 180.052; and
(2) complies with other applicable requirements of
Chapter 180 and rules adopted by the finance commission under that
chapter.
(c) To be eligible to be licensed as a residential mortgage
loan originator, the individual [an employee of a mortgage banker],
in addition to meeting the requirements of Subsection (a), must:
(1) satisfy the commissioner as to the individual's
[employee's] good moral character, including the individual's
[employee's] honesty, trustworthiness, and integrity;
(2) not be in violation of this chapter, Chapter 180,
or any rules adopted under this chapter or Chapter 180;
(3) provide the commissioner with satisfactory
evidence that the individual [employee] meets the qualifications
provided by Chapter 180; and
(4) be a citizen of the United States or a lawfully
admitted alien.
(e) In this section, "appropriate entity" means an entity:
(1) that is licensed or registered under this chapter
or Chapter 156; and
(2) for which the individual is acting as a
residential mortgage loan originator.
SECTION 60. Subchapter D, Chapter 157, Finance Code, as
added by this Act, is amended by adding Section 157.0121 to read as
follows:
Sec. 157.0121. EXEMPTIONS FROM RESIDENTIAL MORTGAGE LOAN
ORIGINATOR REQUIREMENTS. (a) In this section, "depository
institution," "dwelling," "federal banking agency," and "immediate
family member" have the meanings assigned by Section 180.002.
(b) The following individuals are exempt from this chapter:
(1) a registered mortgage loan originator when acting
for:
(A) a depository institution;
(B) a subsidiary of a depository institution that
is:
(i) owned and controlled by the depository
institution; and
(ii) regulated by a federal banking agency;
or
(C) an institution regulated by the Farm Credit
Administration;
(2) an individual who offers or negotiates the terms
of a residential mortgage loan with or on behalf of an immediate
family member of the individual;
(3) a licensed attorney who negotiates the terms of a
residential mortgage loan on behalf of a client as an ancillary
matter to the attorney's representation of the client, unless the
attorney:
(A) takes a residential mortgage loan
application; and
(B) offers or negotiates the terms of a
residential mortgage loan;
(4) an individual who offers or negotiates terms of a
residential mortgage loan secured by a dwelling that serves as the
individual's residence;
(5) any owner of residential real estate who in any
12-consecutive-month period makes no more than five residential
mortgage loans to purchasers of the property for all or part of the
purchase price of the residential real estate against which the
mortgage is secured; and
(6) an individual who is exempt as provided by Section
180.003(b).
(c) Employees of the following entities, when acting for the
benefit of those entities, are exempt from the licensing and other
requirements of this chapter applicable to residential mortgage
loan originators:
(1) a nonprofit organization providing self-help
housing that originates zero interest residential mortgage loans
for borrowers who have provided part of the labor to construct the
dwelling securing the loan;
(2) any owner of residential real estate who in any
12-consecutive-month period makes no more than five residential
mortgage loans to purchasers of the property for all or part of the
purchase price of the residential real estate against which the
mortgage is secured; and
(3) an entity that is:
(A) a depository institution;
(B) a subsidiary of a depository institution that
is:
(i) owned and controlled by the depository
institution; and
(ii) regulated by a federal banking agency;
or
(C) an institution regulated by the Farm Credit
Administration.
(d) A person is not required to obtain a license under this
chapter to originate a loan subject to Chapter 342 or a loan
governed by Section 50(a)(6), Article XVI, Texas Constitution, if
the person:
(1) is enrolled in the Nationwide Mortgage Licensing
System and Registry;
(2) is licensed under Chapter 342; and
(3) makes consumer loans subject to:
(A) Subchapter G, Chapter 342; and
(B) Subchapter E or F, Chapter 342.
(e) The finance commission may grant an exemption from the
residential mortgage loan originator licensing requirements of
this chapter to a municipality, county, community development
corporation, or public or private grant administrator to the extent
the entity is administering the Texas HOME Investment Partnerships
program if the commission determines that granting the exemption is
not inconsistent with the intentions of the federal Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
110-289).
SECTION 61. Section 157.013, Finance Code, is amended by
amending Subsection (b) and adding Subsection (d) to read as
follows:
(b) An application for a residential mortgage loan
originator license must be accompanied by:
(1) an application fee in an amount determined by the
commissioner, not to exceed $500;[,] and
(2) [by] a recovery fund fee in an amount determined by
the commissioner, not to exceed $20.
(d) In addition to the disciplinary action by the
commissioner authorized under Section 157.024(a)(6), the
commissioner may collect a fee in an amount not to exceed $50 for
any returned check or credit card charge back.
SECTION 62. Subchapter D, Chapter 157, Finance Code, as
added by this Act, is amended by adding Sections 157.0131 and
157.0132 to read as follows:
Sec. 157.0131. CONVICTION OF OFFENSE. A person is
considered to have been convicted of a criminal offense if:
(1) a sentence is imposed on the person;
(2) the person received probation or community
supervision, including deferred adjudication or community service;
or
(3) the court deferred final disposition of the
person's case.
Sec. 157.0132. CRIMINAL AND OTHER BACKGROUND CHECKS.
(a) On receipt of an application for a residential mortgage loan
originator license, the commissioner shall, at a minimum, conduct a
criminal background and credit history check of the applicant.
(b) The commissioner shall conduct criminal background and
credit history checks in accordance with Section 180.054, and, in
connection with each application for a residential mortgage loan
originator license or other individual license, the commissioner
may conduct a criminal background check through the Department of
Public Safety.
(c) The commissioner shall keep confidential any background
information obtained under this section and may not release or
disclose the information unless:
(1) the information is a public record at the time the
commissioner obtains the information; or
(2) the commissioner releases the information:
(A) under order from a court; or
(B) to a governmental agency.
(d) Notwithstanding Subsection (c), criminal history record
information obtained from the Federal Bureau of Investigation may
be released or disclosed only to a governmental entity or as
authorized by federal statute, federal rule, or federal executive
order.
SECTION 63. Subchapter D, Chapter 157, Finance Code, as
added by this Act, is amended by adding Section 157.0141 to read as
follows:
Sec. 157.0141. CONDITIONAL LICENSE. The commissioner may
issue a conditional license. The finance commission by rule shall
adopt reasonable terms and conditions for a conditional license.
SECTION 64. Section 157.015, Finance Code, is amended by
amending Subsections (a), (c), (d), and (g) and adding Subsections
(d-1) and (h) to read as follows:
(a) A residential mortgage loan originator license issued
under this chapter is valid through December 31 of the year of
issuance and may be renewed on or before its expiration date if the
residential mortgage loan originator:
(1) pays to the commissioner a renewal fee in an amount
determined by the commissioner not to exceed $500 and a recovery
fund fee as provided by Section 156.502;
(2) continues to meet the minimum requirements for
license issuance; and
(3) provides the commissioner with satisfactory
evidence that the residential mortgage loan originator has
attended, during the term of the current license, continuing
education courses in accordance with the applicable requirements of
Chapter 180 [A residential mortgage loan originator license issued
under this chapter is valid for one year and may be renewed on or
before its expiration date].
(c) An application for renewal [of a residential mortgage
loan originator license] shall be in the form prescribed by the
commissioner [meet the requirements of Section 157.013].
(d) On receipt of a request for a renewal of a license issued
under this subchapter, the commissioner may conduct a criminal
background check under Section 157.0132 [An application for renewal
of a residential mortgage loan originator license must meet all of
the standards and qualifications for license renewal under Chapter
180].
(d-1) A renewal fee is not refundable and may not be
credited or applied to any other fee or indebtedness owed by the
person paying the fee.
(g) The commissioner may deny the renewal application for a
residential mortgage loan originator license if:
(1) the person seeking the renewal of the residential
mortgage loan originator license is in violation of this chapter,
Chapter 156, or Chapter 180, an applicable rule adopted under this
chapter, Chapter 156, or Chapter 180, or any order previously
issued to the person by the commissioner;
(2) the person seeking renewal of the residential
mortgage loan originator license is in default in the payment of any
administrative penalty, fee, charge, or other indebtedness owed
under this title;
(3) the person seeking the renewal of the residential
mortgage loan originator license is in default on a student loan
administered by the Texas Guaranteed Student Loan Corporation,
under Section 57.491, Education Code; or
(4) during the current term of the license, the
commissioner becomes aware of any fact that would have been grounds
for denial of an original license if the fact had been known by the
commissioner on the date the license was granted.
(h) In addition to the disciplinary action by the
commissioner authorized under Section 157.024(a)(6), the
commissioner may collect a fee in an amount not to exceed $50 for
any returned check or credit card charge back.
SECTION 65. Subsection (a), Section 157.016, Finance Code,
is amended to read as follows:
(a) A person whose residential mortgage loan originator
license has expired may not engage in activities that require a
license until the license has been reinstated or a new license has
been issued [renewed].
SECTION 66. Subsection (g), Section 157.017, Finance Code,
is amended to read as follows:
(g) A person whose application for or request to renew a
license has been denied is not eligible to be licensed for a period
of two years after the date the denial becomes final, or a shorter
period as determined by the commissioner after evaluating the
specific circumstances of the denial [person's subsequent
application]. The finance commission may adopt rules to provide
conditions for which the commissioner may shorten the period of
ineligibility [time for eligibility for a new license].
SECTION 67. The heading to Section 157.019, Finance Code,
is amended to read as follows:
Sec. 157.019. MODIFICATION OF LICENSE; CHANGE OF
SPONSORSHIP.
SECTION 68. Section 157.019, Finance Code, is amended by
amending Subsections (a) and (c) and adding Subsections (d) and (e)
to read as follows:
(a) Before the 10th day preceding the effective date of an
address change, [a mortgage banker employee who is] a residential
mortgage loan originator shall notify the commissioner or
authorized designee in writing of the new address.
(c) When the sponsorship of a residential mortgage loan
originator is terminated, the residential mortgage loan originator
or the former sponsoring entity licensed or registered under this
chapter or Chapter 156 shall immediately notify the
commissioner. The residential mortgage loan originator's license
then becomes inactive. The residential mortgage loan originator
license may be activated if, before the license expires, an entity
licensed or registered under this chapter or Chapter 156 files a
request, accompanied by a $25 fee, notifying the commissioner that
the entity will sponsor the residential mortgage loan originator
and will assume responsibility for the actions of the residential
mortgage loan originator [A mortgage banker employee who is a
residential mortgage loan originator shall notify the commissioner
or authorized designee in writing of a change of sponsorship. The
notice must be accompanied by a fee of $25].
(d) A residential mortgage loan originator may not conduct
business under any assumed name that is not the registered assumed
name of the entity licensed or registered under this chapter or
Chapter 156 that is sponsoring the originator.
(e) A fee under this section is not refundable and may not be
credited or applied to any other fee or indebtedness owed by the
person paying the fee.
SECTION 69. Section 157.020, Finance Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) A licensed residential mortgage loan originator, as
required by the commissioner, shall file a mortgage call report
with the commissioner or the commissioner's authorized designee on
a form prescribed by the commissioner or authorized designee. The
report:
(1) is a statement of condition of the residential
mortgage loan originator;
(2) must include any information required by the
commissioner; and
(3) must be filed as frequently as required by the
commissioner.
SECTION 70. Subchapter D, Chapter 157, Finance Code, as
added by this Act, is amended by adding Sections 157.02012,
157.02013, 157.02014, 157.02015, and 157.02016 to read as follows:
Sec. 157.02012. STANDARD FORMS. (a) The finance
commission by rule shall adopt one or more standard forms for use by
a residential mortgage loan originator, sponsored by and conducting
business for a registered mortgage banker under this chapter, in
representing that an applicant for a residential mortgage loan is
preapproved or has prequalified for the loan.
(b) The finance commission shall adopt rules requiring a
residential mortgage loan originator licensed under this chapter to
use the forms adopted by the finance commission under Subsection
(a).
Sec. 157.02013. SECONDARY MARKET TRANSACTIONS. This
chapter does not prohibit a residential mortgage loan originator
sponsored by and conducting business for a registered mortgage
banker under this chapter from receiving compensation from a party
other than the mortgage applicant for the sale, transfer,
assignment, or release of rights on the closing of a mortgage
transaction.
Sec. 157.02014. AFFILIATED BUSINESS ARRANGEMENTS. Unless
prohibited by federal or state law, this chapter may not be
construed to prevent affiliated or controlled business
arrangements or loan origination services by or between residential
mortgage loan originators sponsored by and conducting business for
a registered mortgage banker under this chapter and other
professionals if the residential mortgage loan originator complies
with all applicable federal and state laws permitting those
arrangements or services.
Sec. 157.02015. RULEMAKING AUTHORITY WITH RESPECT TO
RESIDENTIAL MORTGAGE LOAN ORIGINATORS. (a) The finance
commission may adopt rules to prohibit false, misleading, or
deceptive practices by residential mortgage loan originators but
may not adopt any other rules restricting competitive bidding or
advertising by residential mortgage loan originators. When
adopting rules under this subsection, the finance commission may
not restrict:
(1) the use of any medium for an advertisement;
(2) the personal appearance of or voice of a person in
an advertisement;
(3) the size or duration of an advertisement; or
(4) a residential mortgage loan originator's
advertisement under a trade name.
(b) The finance commission may adopt rules regarding books
and records that a residential mortgage loan originator licensed
under this chapter is required to keep, including the location at
which the books and records must be kept.
(c) The finance commission shall consult with the
commissioner when proposing and adopting rules under this section.
Sec. 157.02016. ADMINISTRATION OF SUBCHAPTER. The
commissioner shall administer and enforce this subchapter.
SECTION 71. Sections 157.021, 157.0211, 157.022, 157.023,
157.024, 157.0241, 157.025, 157.026, 157.027, 157.028, 157.029,
157.030, and 157.031, Finance Code, are designated as Subchapter E,
Chapter 157, Finance Code, and a heading is added to that subchapter
to read as follows:
SUBCHAPTER E. ENFORCEMENT
SECTION 72. Section 157.021, Finance Code, is amended by
amending Subsection (a) and adding Subsection (h) to read as
follows:
(a) The commissioner may conduct an inspection of a person
licensed as a residential mortgage loan originator as the
commissioner determines necessary to determine whether the person
is complying with this chapter, Chapter 180, and applicable rules.
An inspection under this subsection may include inspection of the
books, records, documents, operations, and facilities of the
person. The commissioner may request the assistance and
cooperation of the sponsoring mortgage banker in providing needed
documents and records. The commissioner may not make a request of
the sponsoring mortgage banker for documents and records unrelated
to the person being investigated or inspected. The commissioner
may share evidence of criminal activity gathered during an
inspection or investigation with any state or federal law
enforcement agency.
(h) The commissioner may require reimbursement of expenses
for each examiner for an on-site examination or inspection of a
licensed residential mortgage loan originator if records are
located out of state and are not made available for examination or
inspection by the examiner in this state. The finance commission by
rule shall set the maximum amount for the reimbursement of expenses
authorized under this subsection.
SECTION 73. Section 157.0211, Finance Code, is amended to
read as follows:
Sec. 157.0211. MULTI-STATE EXAMINATION AUTHORITY OF
RESIDENTIAL MORTGAGE LOAN SERVICER. To ensure that mortgage
bankers that act as residential mortgage loan servicers operate in
this state in compliance with this chapter and with other law in
accordance with this chapter, the commissioner or the
commissioner's designee may participate in multi-state mortgage
examinations as scheduled by the Conference of State Bank
Supervisors Multi-State Mortgage Committee or by the Consumer
Financial Protection Bureau in accordance with the [Conference of
State Bank Supervisors] protocol for such examinations.
SECTION 74. Subsection (a), Section 157.023, Finance Code,
is amended to read as follows:
(a) The commissioner, after notice and opportunity for a
hearing, may impose an administrative penalty on an individual who
is licensed or required to be licensed under this chapter as a
residential mortgage loan originator and who violates this chapter,
Chapter 156, or a rule or order adopted under this chapter or
Chapter 156.
SECTION 75. Subsections (a), (h), and (j), Section 157.024,
Finance Code, are amended to read as follows:
(a) The commissioner may order disciplinary action against
a licensed residential mortgage loan originator when the
commissioner, after notice and opportunity for a hearing, has
determined that the person:
(1) obtained a license, including a renewal of a
license, under this chapter through a false or fraudulent
representation or made a material misrepresentation in an
application for a license or for the renewal of a license under this
chapter;
(2) published or caused to be published an
advertisement related to the business of a residential mortgage
loan originator that:
(A) was misleading;
(B) was likely to deceive the public;
(C) in any manner tended to create a misleading
impression;
(D) failed to identify as a licensed residential
mortgage loan originator the person causing the advertisement to be
published; or
(E) violated federal or state law;
(3) while performing an act for which a license under
this chapter or Chapter 156 is required, engaged in conduct that
constitutes improper, fraudulent, or dishonest dealings;
(4) entered a plea of nolo contendere to or was
convicted of a criminal offense that is a felony or that involves
fraud or moral turpitude in a court of this or another state or in a
federal court;
(5) failed to use a fee collected in advance of closing
a residential mortgage loan for a purpose for which the fee was
paid;
(6) failed within a reasonable time to honor a credit
card charge back or a check issued to the commissioner after the
commissioner mailed a request for payment, including any applicable
fees, by mail to the person's last known home [business] address as
reflected in the commissioner's records;
(7) induced or attempted to induce a party to a
contract to breach the contract so the person could make a
residential mortgage loan;
(8) published or circulated an unjustified or
unwarranted threat of legal proceedings in matters related to the
person's actions or services as a licensed residential mortgage
loan originator;
(9) aided, abetted, or conspired with a person to
circumvent the requirements of this chapter or Chapter 156;
(10) acted in the dual capacity of a licensed
residential mortgage loan originator and real estate broker,
salesperson, or attorney in a transaction without the knowledge and
written consent of the mortgage applicant or in violation of
applicable requirements under federal law;
(11) discriminated against a prospective borrower on
the basis of race, color, religion, sex, national origin, ancestry,
familial status, or disability;
(12) failed or refused on demand to:
(A) produce a document, book, or record
concerning a residential mortgage loan transaction conducted by the
licensed residential mortgage loan originator for inspection by the
commissioner or the commissioner's authorized personnel or
representative;
(B) give the commissioner or the commissioner's
authorized personnel or representative free access to the books or
records relating to the residential mortgage loan originator's
business kept by any other person or any business entity through
which the residential mortgage loan originator conducts
residential mortgage loan origination activities; or
(C) provide information requested by the
commissioner as a result of a formal or informal complaint made to
the commissioner;
(13) failed without just cause to surrender, on
demand, a copy of a document or other instrument coming into the
residential mortgage loan originator's possession that was
provided to the residential mortgage loan originator by another
person making the demand or that the person making the demand is
under law entitled to receive;
(14) disregarded or violated this chapter, Chapter
156, a rule adopted under this chapter or Chapter 156, or an order
issued by the commissioner under this chapter or Chapter 156;
(15) provided false information to the commissioner
during the course of an investigation or inspection;
(16) paid compensation to a person who is not licensed
or exempt under this chapter for acts for which a license under this
chapter or Chapter 156 is required; [or]
(17) established an association, by employment or
otherwise, with a person not licensed, registered, or exempt under
this chapter or Chapter 156 who was expected or required to act as a
residential mortgage loan originator or residential mortgage loan
company; or
(18) charged or received, directly or indirectly, a
fee for assisting a mortgage applicant in obtaining a residential
mortgage loan under Chapter 156 before all of the services that the
person agreed to perform for the mortgage applicant are completed,
and the proceeds of the residential mortgage loan have been
disbursed to or on behalf of the mortgage applicant, except as
provided by Section 156.304.
(h) If a residential mortgage loan originator fails to pay
an administrative penalty that has become final or fails to comply
with an order of the commissioner that has become final, in addition
to any other remedy provided under law, the commissioner, on not
less than 10 days' notice to the residential mortgage loan
originator, may without a prior hearing suspend the residential
mortgage loan originator's license. The suspension continues until
the residential mortgage loan originator has complied with the
administrative order or paid the administrative penalty. During
the period of suspension, the residential mortgage loan originator
may not originate a residential mortgage loan and all compensation
received by the residential mortgage loan originator during the
period of suspension is subject to forfeiture as provided by
Section 157.031(a-1)[, as defined by Section 180.002].
(j) An order revoking the license of a residential mortgage
loan originator may provide that the person is prohibited, without
previously obtaining written consent of the commissioner, from:
(1) engaging in the business of originating or making
residential mortgage loans[, as defined by Section 180.002];
(2) otherwise affiliating with a person for the
purpose of engaging in the business of originating or making
residential mortgage loans[, as defined by Section 180.002]; and
(3) being an employee, officer, director, manager,
shareholder, member, agent, contractor, or processor of a mortgage
banker, residential mortgage loan company, or residential mortgage
loan originator for a residential mortgage loan company.
SECTION 76. Subsection (e), Section 157.0241, Finance Code,
is amended to read as follows:
(e) This section does not limit the authority of the
commissioner to take disciplinary action against a residential
mortgage loan originator for a violation of this chapter, Chapter
156, or the rules adopted by the finance commission under this
chapter or Chapter 156. The repayment in full to the recovery fund
of all obligations of a residential mortgage loan originator does
not nullify or modify the effect of any other disciplinary
proceeding brought under this chapter or Chapter 156.
SECTION 77. Section 157.025, Finance Code, is amended to
read as follows:
Sec. 157.025. RESTITUTION. The commissioner may order a
residential mortgage loan originator to make restitution for any
amount received by that person in violation of this chapter or
Chapter 156.
SECTION 78. Section 157.026, Finance Code, is amended by
amending Subsection (b) and adding Subsection (e) to read as
follows:
(b) If the commissioner proposes to suspend or revoke a
license of a residential mortgage loan originator or if the
commissioner refuses to issue or renew [a license to an applicant
for] a residential mortgage loan originator license [or person
requesting a renewal of a residential mortgage loan originator
license] under this chapter, the applicant or license holder is
entitled to a hearing before the commissioner or an administrative
law judge who shall make a proposal for decision to the
commissioner. The commissioner or administrative law judge shall
prescribe the time and place of the hearing. The hearing is
governed by Chapter 2001, Government Code.
(e) The commissioner may, in the commissioner's discretion,
rescind or vacate any previously issued revocation order.
SECTION 79. Subsection (a), Section 157.027, Finance Code,
is amended to read as follows:
(a) A residential mortgage loan applicant injured by a
violation of this chapter or Chapter 156 by a residential mortgage
loan originator may bring an action for recovery of actual monetary
damages and reasonable attorney's fees and court costs.
SECTION 80. Subsection (b), Section 157.030, Finance Code,
is amended to read as follows:
(b) This section does not limit or preclude the liability of
a residential mortgage loan originator for:
(1) failing to comply with this chapter, Chapter 156,
or a rule adopted under this chapter or Chapter 156;
(2) failing to comply with a provision of or duty
arising under an agreement with a residential mortgage loan
applicant under this chapter or Chapter 156; or
(3) violating any other state or federal law.
SECTION 81. Section 157.031, Finance Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) An individual who is not exempt under this chapter or
other applicable law and who acts as a residential mortgage loan
originator without first obtaining a license required under this
chapter commits an offense [A person commits an offense if the
person is an employee of a mortgage banker, is not exempt under this
chapter, and acts as a residential mortgage loan originator without
first obtaining a license required under this chapter]. An offense
under this subsection is a Class B misdemeanor. A second or
subsequent conviction for an offense under this subsection is a
Class A misdemeanor.
(a-1) An individual who received money, or the equivalent of
money, as a fee or profit because of or in consequence of the
individual acting as a residential mortgage loan originator without
an active license or being exempt under this chapter is liable for
damages in an amount that is not less than the amount of the fee or
profit received and not to exceed three times the amount of the fee
or profit received, as may be determined by the court. An aggrieved
person may recover damages under this subsection in a court.
SECTION 82. Subchapter E, Chapter 157, Finance Code, as
added by this Act, is amended by adding Section 157.032 to read as
follows:
Sec. 157.032. POWERS OF COMMISSIONER. (a) In addition to
any other action, proceeding, or remedy authorized by law, the
commissioner may institute an action in the commissioner's name to
enjoin a violation of Subchapter D or a rule adopted under
Subchapter D. To sustain an action filed under this subsection, it
is not necessary to allege or prove that an adequate remedy at law
does not exist or that substantial or irreparable damage would
result from a continued violation of Subchapter D.
(b) The commissioner is not required to provide an appeal
bond in any action or proceeding to enforce Subchapter D.
(c) The commissioner may authorize specific employees to
conduct hearings and make recommendations for final decisions in
contested cases.
SECTION 83. Section 158.104, Finance Code, is amended to
read as follows:
Sec. 158.104. MULTI-STATE EXAMINATION AUTHORITY. To ensure
that residential mortgage loan servicers to whom this chapter
applies operate in this state in compliance with this chapter and
with other law in accordance with this chapter, the commissioner or
the commissioner's designee may participate in multi-state
mortgage examinations as scheduled by the Conference of State Bank
Supervisors Multi-State Mortgage Committee or by the Consumer
Financial Protection Bureau in accordance with the [Conference of
State Bank Supervisors] protocol for such examinations.
SECTION 84. Subdivisions (17) and (21), Section 180.002,
Finance Code, are amended to read as follows:
(17) "Regulatory official" means:
(A) with respect to Subtitles A, F, and G of this
title, the banking commissioner of Texas;
(B) with respect to Chapters 156 and 157 [except
as provided by Paragraph (D)], the savings and mortgage lending
commissioner; and
(C) with respect to Chapters 342, 347, 348, and
351, the consumer credit commissioner[; and
[(D) with respect to credit unions, to the
examination, investigation, or inspection of employees of credit
union subsidiary organizations licensed under Chapter 156, and to
the enforcement of compliance with this chapter and Chapter 156 by
those employees, the credit union commissioner].
(21) "Rulemaking authority" means[:
[(A)] the finance commission[, except as
provided by Paragraph (B); or
[(B) with respect to credit unions and the
rulemaking authority granted by Section 15.4024, the Credit Union
Commission].
SECTION 85. Subsection (a), Section 180.056, Finance Code,
is amended to read as follows:
(a) An applicant for a residential mortgage loan originator
license must complete education courses that include[, at a
minimum,] at least the minimum number of hours and type of courses
required by the S.A.F.E. Mortgage Licensing Act and the minimum
number of hours of training related to lending standards for the
nontraditional mortgage product marketplace required by that Act
and any additional requirements established by the regulatory
official and adopted by rule of the rulemaking authority.
SECTION 86. Subsection (a), Section 180.251, Finance Code,
is amended to read as follows:
(a) The [Except as provided by Subsection (b), the] savings
and mortgage lending commissioner shall administer and enforce this
chapter with respect to individuals licensed under Chapter [156 or]
157.
SECTION 87. The following provisions of the Finance Code
are repealed:
(1) Section 15.4024;
(2) Sections 156.2015, 156.205, and 156.405;
(3) Subsections (a-1) and (a-2), Section 156.101;
(4) Subsections (b), (b-1), and (b-2), Section
156.201;
(5) Subsection (b), Section 156.102, Subsection (c),
Section 156.202, Subsection (c), Section 156.203, Subsection (b),
Section 156.2041, Subsection (b), Section 156.2042, Subsection
(b), Section 156.2043, Subsection (c), Section 156.2044, Section
156.2045, Subsection (a), Section 156.206, Subsections (b), (c),
and (d), Section 156.207, and Subsection (c), Section 156.2081;
(6) Subsections (b-1), (b-2), and (j), Section
156.208;
(7) Subsection (f), Section 157.003, Finance Code, as
added by Chapter 655 (Senate Bill No. 1124), Acts of the 82nd
Legislature, Regular Session, 2011;
(8) Subsection (d), Section 157.012, and Subsection
(b), Section 157.015; and
(9) Subsection (b), Section 180.251.
SECTION 88. The changes in law made by this Act do not
affect any pending proceeding or action brought under Subchapter D,
Chapter 156, Finance Code, as that subchapter existed immediately
before amendment by this Act, and the former law is continued in
effect for that purpose.
SECTION 89. The changes in law made by this Act apply only
to a license or registration issued or renewed on or after the
effective date of this Act. A license or registration issued or
renewed before the effective date of this Act is governed by the law
in effect on the date the license or registration was issued or
renewed, and the former law is continued in effect for that purpose.
SECTION 90. This Act takes effect September 1, 2013.