Texas 2013 - 83rd Regular

Texas Senate Bill SB1004 Compare Versions

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1	1	By: Carona S.B. No. 1004
2	2	(Villarreal)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of residential mortgage loan
8	8	originators, residential mortgage loan companies, mortgage
9	9	bankers, and residential mortgage loan servicers under the
10	10	jurisdiction of the Department of Savings and Mortgage Lending;
11	11	changing a fee.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. The heading to Chapter 156, Finance Code, is
14	14	amended to read as follows:
15	15	CHAPTER 156. RESIDENTIAL MORTGAGE LOAN COMPANIES [AND RESIDENTIAL
16	16	MORTGAGE LOAN ORIGINATORS]
17	17	SECTION 2. Section 156.001, Finance Code, is amended to
18	18	read as follows:
19	19	Sec. 156.001. SHORT TITLE. This chapter may be cited as
20	20	the Residential Mortgage Loan Company [and Residential Mortgage
21	21	Loan Originator] Licensing and Registration Act.
22	22	SECTION 3. Section 156.002, Finance Code, is amended by
23	23	adding Subdivision (4-b) and amending Subdivisions (10-b) and (11)
24	24	to read as follows:
25	25	(4-b) "Inspection" includes examination.
26	26	(10-b) "Qualifying individual" means an individual
27	27	who is:
28	28	(A) licensed under Chapter 157 [this chapter] as
29	29	a residential mortgage loan originator; and
30	30	(B) [is] designated by a residential mortgage
31	31	loan company as the company's representative [for purposes of the
32	32	Nationwide Mortgage Licensing System and Registry].
33	33	(11) "Registered financial services company" means a
34	34	person registered under Section 156.2012 [156.214].
35	35	SECTION 4. Section 156.003, Finance Code, is amended to
36	36	read as follows:
37	37	Sec. 156.003. SECONDARY MARKET TRANSACTIONS. This chapter
38	38	does not prohibit a residential mortgage loan originator sponsored
39	39	by and conducting business for a licensed or registered residential
40	40	mortgage loan company under this chapter from receiving
41	41	compensation from a party other than the mortgage applicant for the
42	42	sale, transfer, assignment, or release of rights on the closing of a
43	43	mortgage transaction.
44	44	SECTION 5. Subsection (a), Section 156.004, Finance Code,
45	45	is amended to read as follows:
46	46	(a) At the time an applicant submits an application to a
47	47	residential mortgage loan originator sponsored by and conducting
48	48	business for a licensed or registered residential mortgage loan
49	49	company under this chapter, the residential mortgage loan
50	50	originator shall provide to the applicant a disclosure that
51	51	specifies:
52	52	(1) the nature of the relationship between the
53	53	applicant and the residential mortgage loan originator;
54	54	(2) the duties the residential mortgage loan
55	55	originator has to the applicant; and
56	56	(3) how the residential mortgage loan originator will
57	57	be compensated.
58	58	SECTION 6. Section 156.005, Finance Code, is amended to
59	59	read as follows:
60	60	Sec. 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless
61	61	prohibited by federal or state law, this chapter may not be
62	62	construed to prevent affiliated or controlled business
63	63	arrangements or loan origination services by or between residential
64	64	mortgage loan originators, sponsored by and conducting business for
65	65	a licensed or registered residential mortgage loan company under
66	66	this chapter, and other professionals if the residential mortgage
67	67	loan originator complies with all applicable federal and state laws
68	68	permitting those arrangements or services.
69	69	SECTION 7. The heading to Section 156.101, Finance Code, is
70	70	amended to read as follows:
71	71	Sec. 156.101. ADMINISTRATION AND ENFORCEMENT OF CHAPTER;
72	72	PARTICIPATION IN NATIONWIDE REGISTRY.
73	73	SECTION 8. Subsection (a), Section 156.101, Finance Code,
74	74	as amended by Chapters 1104 (H.B. 10) and 1317 (H.B. 2774), Acts of
75	75	the 81st Legislature, Regular Session, 2009, is reenacted and
76	76	amended to read as follows:
77	77	(a) The [Except as provided by Subsection (a-2), the]
78	78	commissioner shall administer and enforce this chapter.
79	79	SECTION 9. Subsection (a), Section 156.102, Finance Code,
80	80	is amended to read as follows:
81	81	(a) The finance commission may adopt and enforce rules
82	82	necessary for the intent of or to ensure compliance with this
83	83	chapter[, except as provided by Section 15.4024 with respect to
84	84	employees of credit union subsidiary organizations subject to
85	85	regulation under Section 156.2015].
86	86	SECTION 10. Subsections (f) and (h), Section 156.104,
87	87	Finance Code, are amended to read as follows:
88	88	(f) The commissioner may remove a member of the advisory
89	89	committee if:
90	90	(1) the member does not maintain [have at the time of
91	91	appointment] the qualifications required by Subsection (b); or
92	92	(2) the commissioner determines that the member cannot
93	93	discharge the member's duties for a substantial part of the term for
94	94	which the member is appointed.
95	95	(h) In addition to other powers and duties delegated to the
96	96	advisory committee by the commissioner, the advisory committee
97	97	shall advise the commissioner with respect to:
98	98	(1) the proposal and adoption of rules relating to the
99	99	mortgage industry[:
100	100	[(A) the licensing of residential mortgage loan
101	101	originators or residential mortgage loan companies;
102	102	[(B) the education and experience requirements
103	103	for licensing residential mortgage loan originators; and
104	104	[(C) the conduct and ethics of residential
105	105	mortgage loan originators];
106	106	(2) the form of or format for any applications or other
107	107	documents under this chapter or Chapter 157; and
108	108	(3) the interpretation, implementation, and
109	109	enforcement of this chapter and Chapter 157.
110	110	SECTION 11. Section 156.105, Finance Code, is amended to
111	111	read as follows:
112	112	Sec. 156.105. STANDARD FORMS. (a) The finance
113	113	commission[,] by rule[,] shall adopt one or more standard forms for
114	114	use by a residential mortgage loan originator sponsored by and
115	115	conducting business for a licensed or registered residential
116	116	mortgage loan company under this chapter in representing that an
117	117	applicant for a residential mortgage loan is preapproved or has
118	118	prequalified for the loan.
119	119	(b) The finance commission shall adopt rules requiring a
120	120	residential mortgage loan originator licensed under Chapter 157
121	121	[this chapter] to use the forms adopted by the finance commission
122	122	under Subsection (a).
123	123	SECTION 12. The heading to Subchapter C, Chapter 156,
124	124	Finance Code, is amended to read as follows:
125	125	SUBCHAPTER C. RESIDENTIAL MORTGAGE LOAN COMPANY [AND RESIDENTIAL
126	126	MORTGAGE LOAN ORIGINATOR] LICENSES AND REGISTRATION
127	127	SECTION 13. Subsections (a) and (c), Section 156.201,
128	128	Finance Code, are amended to read as follows:
129	129	(a) A person may not act in the capacity of, engage in the
130	130	business of, or advertise or hold that person out as engaging in or
131	131	conducting the business of a residential mortgage loan company in
132	132	this state unless the person holds an active residential mortgage
133	133	loan company license, is registered under Section 156.2012
134	134	[156.214], or is exempt under Section 156.202.
135	135	(c) Each residential mortgage loan company and the
136	136	company's qualifying individual licensed under Chapter 157 [this
137	137	chapter] is responsible to the commissioner and members of the
138	138	public for any act or conduct performed by the residential mortgage
139	139	loan originator sponsored by or acting for the residential mortgage
140	140	loan company in connection with:
141	141	(1) the origination of a residential mortgage loan; or
142	142	(2) a transaction that is related to the origination
143	143	of a residential mortgage loan in which the qualifying individual
144	144	knew or should have known of the transaction.
145	145	SECTION 14. Subsections (a) and (a-1), Section 156.202,
146	146	Finance Code, are amended to read as follows:
147	147	(a) In this section, "depository institution," "dwelling,"
148	148	and "federal banking agency[,]" [and "immediate family member"]
149	149	have the meanings assigned by Section 180.002.
150	150	(a-1) The following [individuals or] entities[, and
151	151	employees of those entities when acting for the benefit of those
152	152	entities,] are exempt from this chapter:
153	153	(1) [a registered mortgage loan originator when acting
154	154	for:
155	155	[(A) a depository institution;
156	156	[(B) a subsidiary of a depository institution
157	157	that is:
158	158	[(i) owned and controlled by the depository
159	159	institution; and
160	160	[(ii) regulated by a federal banking
161	161	agency; or
162	162	[(C) an institution regulated by the Farm Credit
163	163	Administration;
164	164	[(2) an individual who offers or negotiates the terms
165	165	of a residential mortgage loan with or on behalf of an immediate
166	166	family member of the individual;
167	167	[(3) a licensed attorney who negotiates the terms of a
168	168	residential mortgage loan on behalf of a client as an ancillary
169	169	matter to the attorney's representation of the client, unless the
170	170	attorney:
171	171	[(A) takes a residential mortgage loan
172	172	application; and
173	173	[(B) offers or negotiates the terms of a
174	174	residential mortgage loan;
175	175	[(4) an individual who offers or negotiates terms of a
176	176	residential mortgage loan secured by a dwelling that serves as the
177	177	individual's residence;
178	178	[(5)] a nonprofit organization providing self-help
179	179	housing that originates zero interest residential mortgage loans
180	180	for borrowers who have provided part of the labor to construct the
181	181	dwelling securing the loan;
182	182	(2) [(6)] a mortgage banker registered under Chapter
183	183	157;
184	184	(3) [(7)] any owner of residential real estate who in
185	185	any 12-consecutive-month period makes no more than five residential
186	186	mortgage loans to purchasers of the property for all or part of the
187	187	purchase price of the residential real estate against which the
188	188	mortgage is secured; and
189	189	(4) [(8)] an entity that is:
190	190	(A) a depository institution;
191	191	(B) a subsidiary of a depository institution that
192	192	is:
193	193	(i) owned and controlled by the depository
194	194	institution; and
195	195	(ii) regulated by a federal banking agency;
196	196	or
197	197	(C) an institution regulated by the Farm Credit
198	198	Administration[; and
199	199	[(9) an individual who is exempt as provided by
200	200	Section 180.003(b)].
201	201	SECTION 15. The heading to Section 156.203, Finance Code,
202	202	is amended to read as follows:
203	203	Sec. 156.203. APPLICATION [FOR A LICENSE]; FEES.
204	204	SECTION 16. Subsections (a-1) and (a-2), Section 156.203,
205	205	Finance Code, are amended to read as follows:
206	206	(a-1) An application for a residential mortgage loan
207	207	company license [and a residential mortgage loan originator
208	208	license] must be:
209	209	(1) in writing;
210	210	(2) under oath; and
211	211	(3) on the form prescribed by the commissioner.
212	212	(a-2) An application for a financial services company
213	213	registration under Section 156.2012 [156.214] must be:
214	214	(1) in writing;
215	215	(2) under oath; and
216	216	(3) on the form prescribed by the commissioner.
217	217	SECTION 17. The heading to Section 156.2041, Finance Code,
218	218	is amended to read as follows:
219	219	Sec. 156.2041. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
220	220	[LICENSES]: MORTGAGE COMPANY [AND RESIDENTIAL MORTGAGE LOAN
221	221	ORIGINATORS].
222	222	SECTION 18. Subsection (a), Section 156.2041, Finance Code,
223	223	is amended to read as follows:
224	224	(a) To be issued a mortgage company license, an applicant
225	225	must:
226	226	(1) submit a completed application together with the
227	227	payment of applicable fees through the Nationwide Mortgage
228	228	Licensing System and Registry;
229	229	(2) designate control persons for the mortgage company
230	230	through the Nationwide Mortgage Licensing System and Registry;
231	231	(3) designate an individual licensed as a residential
232	232	mortgage loan originator under Chapter 157 [this chapter] as the
233	233	company's qualifying individual;
234	234	(4) submit a completed branch application through the
235	235	Nationwide Mortgage Licensing System and Registry for each branch
236	236	office that engages in residential mortgage loan activity on
237	237	residential real estate located in this state;
238	238	(5) not be in violation of this chapter, a rule adopted
239	239	under this chapter, or any order previously issued by the
240	240	commissioner to the applicant;
241	241	(6) have the company name or assumed name properly
242	242	filed with either the secretary of state or with the appropriate
243	243	county clerk's office;
244	244	(7) maintain a physical office in this state; and
245	245	(8) provide financial statements and any other
246	246	information required by the commissioner.
247	247	SECTION 19. The heading to Section 156.2042, Finance Code,
248	248	is amended to read as follows:
249	249	Sec. 156.2042. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
250	250	[LICENSES]: CREDIT UNION SUBSIDIARY ORGANIZATION [AND RESIDENTIAL
251	251	MORTGAGE LOAN ORIGINATORS].
252	252	SECTION 20. Subsection (a), Section 156.2042, Finance Code,
253	253	is amended to read as follows:
254	254	(a) To be issued a credit union subsidiary organization
255	255	license, an applicant must:
256	256	(1) submit a completed application together with the
257	257	payment of applicable fees through the Nationwide Mortgage
258	258	Licensing System and Registry;
259	259	(2) designate control persons for the organization
260	260	through the Nationwide Mortgage Licensing System and Registry;
261	261	(3) designate an individual licensed as a residential
262	262	mortgage loan originator under Chapter 157 [this chapter] as the
263	263	company's qualifying individual;
264	264	(4) submit a completed branch application through the
265	265	Nationwide Mortgage Licensing System and Registry for each branch
266	266	office that engages in residential mortgage loan activity on
267	267	residential real estate located in this state; [and]
268	268	(5) not be in violation of this chapter, a rule adopted
269	269	under this chapter, or any order previously issued by the
270	270	commissioner to the applicant; and
271	271	(6) maintain a physical office in this state.
272	272	SECTION 21. The heading to Section 156.2043, Finance Code,
273	273	is amended to read as follows:
274	274	Sec. 156.2043. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
275	275	[LICENSES]: AUXILIARY MORTGAGE LOAN ACTIVITY COMPANY [AND
276	276	RESIDENTIAL MORTGAGE LOAN ORIGINATORS].
277	277	SECTION 22. Subsection (a), Section 156.2043, Finance Code,
278	278	is amended to read as follows:
279	279	(a) To be issued an auxiliary mortgage loan activity company
280	280	license, an applicant must:
281	281	(1) submit a completed application together with the
282	282	payment of applicable fees through the Nationwide Mortgage
283	283	Licensing System and Registry;
284	284	(2) designate control persons for the company through
285	285	the Nationwide Mortgage Licensing System and Registry;
286	286	(3) designate an individual licensed as a residential
287	287	mortgage loan originator under Chapter 157 [this chapter] as the
288	288	company's qualifying individual; and
289	289	(4) not be in violation of this chapter, a rule adopted
290	290	under this chapter, or any order previously issued by the
291	291	commissioner to the applicant.
292	292	SECTION 23. The heading to Section 156.2044, Finance Code,
293	293	is amended to read as follows:
294	294	Sec. 156.2044. QUALIFICATIONS AND REQUIREMENTS FOR LICENSE
295	295	[LICENSES]: INDEPENDENT CONTRACTOR LOAN PROCESSOR OR UNDERWRITER
296	296	COMPANY [AND INDIVIDUAL LOAN PROCESSORS OR UNDERWRITERS].
297	297	SECTION 24. Subsections (a) and (b), Section 156.2044,
298	298	Finance Code, are amended to read as follows:
299	299	(a) To be issued an independent contractor loan processor or
300	300	underwriter company license under this chapter, an applicant must:
301	301	(1) submit a completed application together with the
302	302	payment of applicable fees through the Nationwide Mortgage
303	303	Licensing System and Registry;
304	304	(2) designate control persons for the company through
305	305	the Nationwide Mortgage Licensing System and Registry;
306	306	(3) designate an individual licensed as a residential
307	307	mortgage loan originator under Chapter 157 [this chapter] as the
308	308	company's qualifying individual; and
309	309	(4) not be in violation of this chapter, a rule adopted
310	310	under this chapter, or any order previously issued by the
311	311	commissioner to the applicant.
312	312	(b) An independent contractor loan processor or underwriter
313	313	company or a sponsored residential mortgage loan originator is not
314	314	authorized to originate residential mortgage loans with a license
315	315	issued under Subsection (a).
316	316	SECTION 25. Section 156.2046, Finance Code, is amended to
317	317	read as follows:
318	318	Sec. 156.2046. CONVICTION OF OFFENSE. A [For the purposes
319	319	of Section 156.2041, 156.2042, 156.2043, 156.2044, or 156.2045, a]
320	320	person is considered to have been convicted of a criminal offense
321	321	if:
322	322	(1) a sentence is imposed on the person;
323	323	(2) the person received probation or community
324	324	supervision, including deferred adjudication or community service;
325	325	or
326	326	(3) the court deferred final disposition of the
327	327	person's case.
328	328	SECTION 26. Subsections (b) and (c), Section 156.206,
329	329	Finance Code, are amended to read as follows:
330	330	(b) The commissioner shall conduct criminal background and
331	331	credit history checks on a person required to be licensed under this
332	332	chapter [in accordance with Section 180.054, and, in connection
333	333	with each application for a residential mortgage loan originator
334	334	license or other individual license, the commissioner may conduct a
335	335	criminal background check through the Department of Public Safety].
336	336	(c) The commissioner shall keep confidential any background
337	337	information obtained under this section and may not release or
338	338	disclose the information unless:
339	339	(1) the information is a public record at the time the
340	340	commissioner obtains the information; or
341	341	(2) the commissioner releases the information:
342	342	(A) under order from a court; or
343	343	(B) [with the permission of the applicant;
344	344	[(C) to a person through whom the applicant is
345	345	conducting or will conduct business; or
346	346	[(D)] to a governmental agency.
347	347	SECTION 27. The heading to Section 156.207, Finance Code,
348	348	is amended to read as follows:
349	349	Sec. 156.207. ISSUANCE OF LICENSE[; PROVISIONAL LICENSE].
350	350	SECTION 28. Subsections (a-1) and (c), Section 156.208,
351	351	Finance Code, are amended to read as follows:
352	352	(a-1) A residential mortgage loan company license issued
353	353	under this chapter is valid through December 31 of the year of
354	354	issuance and may be renewed on or before its expiration date if the
355	355	residential mortgage loan company:
356	356	(1) pays to the commissioner a renewal fee in an amount
357	357	determined by the commissioner not to exceed $375; [and]
358	358	(2) has not shown a pattern or practice of abusive
359	359	mortgage activity and has no civil judgments or liens that, in the
360	360	commissioner's opinion, directly impact the ability of the
361	361	residential mortgage loan company to conduct business while
362	362	safeguarding and protecting the public interest; and
363	363	(3) continues to meet the minimum requirements for
364	364	license issuance.
365	365	(c) An application for renewal shall be in the [The
366	366	commissioner may require residential mortgage loan originators to
367	367	submit requests for renewal on a] form prescribed by the
368	368	commissioner.
369	369	SECTION 29. Subsection (g), Section 156.209, Finance Code,
370	370	is amended to read as follows:
371	371	(g) A person whose application for or request to renew a
372	372	license has been denied is not eligible to be licensed for a period
373	373	of two years after the date the denial becomes final, or a shorter
374	374	period as determined by the commissioner after evaluating the
375	375	specific circumstances of the denial [person's subsequent
376	376	application]. The finance commission may adopt rules to provide
377	377	conditions for which the commissioner may shorten the period of
378	378	ineligibility [time of disqualification].
379	379	SECTION 30. Subsections (b) and (b-1), Section 156.211,
380	380	Finance Code, are amended to read as follows:
381	381	(b) When the sponsorship of a residential mortgage loan
382	382	originator is terminated, the residential mortgage loan originator
383	383	or [and] the residential mortgage loan company shall immediately
384	384	notify the commissioner. [The residential mortgage loan
385	385	originator's license then becomes inactive. The residential
386	386	mortgage loan originator license may be activated if, before the
387	387	license expires, a residential mortgage loan company files a
388	388	request, accompanied by a $25 fee, notifying the commissioner that
389	389	the residential mortgage loan company will sponsor the residential
390	390	mortgage loan originator and will assume responsibility for the
391	391	actions of the residential mortgage loan originator.]
392	392	(b-1) Not later than the 10th day before a residential
393	393	mortgage loan company begins doing business under an assumed name,
394	394	the residential mortgage loan company shall file with the
395	395	commissioner a copy of an assumed name certificate for each assumed
396	396	name under which the residential mortgage loan company intends to
397	397	conduct business and pay a $25 registration fee for each assumed
398	398	name. [A residential mortgage loan originator may not conduct
399	399	business under any assumed name that is not the registered assumed
400	400	name of the sponsoring residential mortgage loan company.]
401	401	SECTION 31. Subsection (a), Section 156.213, Finance Code,
402	402	is amended to read as follows:
403	403	(a) Each licensed residential mortgage loan company [or
404	404	licensed residential mortgage loan originator, as required by the
405	405	commissioner,] shall file a mortgage call report with the
406	406	commissioner or the commissioner's authorized designee on a form
407	407	prescribed by the commissioner or authorized designee. The report:
408	408	(1) is a statement of condition of the residential
409	409	mortgage loan company and the company's operations[, or a statement
410	410	of condition of the residential mortgage loan originators sponsored
411	411	by the company, as applicable], including financial statements and
412	412	production activity volumes;
413	413	(2) must include any other information required by the
414	414	commissioner; and
415	415	(3) must be filed as frequently as required by the
416	416	commissioner.
417	417	SECTION 32. Section 156.214, Finance Code, is redesignated
418	418	as Section 156.2012, Finance Code, and amended to read as follows:
419	419	Sec. 156.2012 [156.214]. REGISTERED FINANCIAL SERVICES
420	420	COMPANY. (a) A [registered] financial services company may
421	421	perform the services of a [another] residential mortgage loan
422	422	company [as] if the company is registered [were licensed as a
423	423	residential mortgage loan company] under this chapter[, through
424	424	individuals who are the exclusive agents of the registered
425	425	financial services company].
426	426	(b) To be eligible to register as a registered financial
427	427	services company, a person must:
428	428	(1) be a depository institution exempt from this
429	429	chapter under Section 156.202(a-1)(4)(A) [156.202(a-1)(8)(A)] and
430	430	chartered and regulated by [the Office of Thrift Supervision or]
431	431	the Office of the Comptroller of the Currency, or be a subsidiary of
432	432	the institution;
433	433	(2) [provide the commissioner with satisfactory
434	434	evidence of an undertaking of accountability in a form acceptable
435	435	to the commissioner, supported by a surety bond equal to $1 million
436	436	to cover the person's responsibility for residential mortgage loan
437	437	company activities of each exclusive agent;
438	438	[(3)] provide a business plan satisfactory to the
439	439	commissioner that sets forth the person's plan to:
440	440	(A) provide education to its sponsored
441	441	residential mortgage loan originators;
442	442	(B) [exclusive agents,] handle consumer
443	443	complaints relating to its sponsored residential mortgage loan
444	444	originators; and
445	445	(C) [exclusive agents, and] supervise the
446	446	residential mortgage loan origination activities of its sponsored
447	447	residential mortgage loan originators [exclusive agents];
448	448	(3) [(4)] pay a [an annual] registration fee in an
449	449	amount not to exceed $500 [determined as follows:
450	450	[(A) if the registered financial services
451	451	company has 2,000 or fewer exclusive agents acting in this state, an
452	452	amount equal to the lesser of:
453	453	[(i) one-half of the license fee for a
454	454	residential mortgage loan originator under Section 156.203(c)(1),
455	455	multiplied by the number of exclusive agents under contract to act
456	456	for the person in this state; or
457	457	[(ii) $200,000;
458	458	[(B) if the registered financial services
459	459	company has at least 2,001 but not more than 2,500 exclusive agents
460	460	acting in this state, $225,000;
461	461	[(C) if the registered financial services
462	462	company has at least 2,501 but not more than 3,000 exclusive agents
463	463	acting in this state, $250,000;
464	464	[(D) if the registered financial services
465	465	company has at least 3,001 but not more than 5,000 exclusive agents
466	466	acting in this state, $300,000; or
467	467	[(E) if the registered financial services
468	468	company has at least 5,001 exclusive agents acting in this state,
469	469	$350,000];
470	470	(4) [and
471	471	[(5)] designate an officer of the person to be
472	472	responsible for the activities of its sponsored residential
473	473	mortgage loan originators;
474	474	(5) submit a completed application through the
475	475	Nationwide Mortgage Licensing System and Registry together with the
476	476	applicable fee required by Subdivision (3) or Subsection (c);
477	477	(6) obtain preapproval from the commissioner that the
478	478	person meets the eligibility requirements for registration as a
479	479	financial services company; and
480	480	(7) not be in violation of this chapter, a rule adopted
481	481	under this chapter, or any order previously issued by the
482	482	commissioner to the applicant [the exclusive agents].
483	483	(c) If the commissioner determines that a person has met the
484	484	requirements of Subsection (b) [and Section 156.2045(a)], the
485	485	commissioner shall issue a registration to the person. The
486	486	registration is valid for one year, expires on December 31 of each
487	487	year, and must be renewed annually by meeting the requirements
488	488	under Subsection (b) and paying a renewal fee in an amount not to
489	489	exceed $500. A person must renew an expired registration in the
490	490	manner determined by the commissioner.
491	491	(d) A registered financial services company is subject to
492	492	Subchapters D and E as if the company were licensed as a residential
493	493	mortgage loan company.
494	494	SECTION 33. Subsections (a), (b), (c), and (h), Section
495	495	156.301, Finance Code, are amended to read as follows:
496	496	(a) The commissioner may conduct inspections of a person
497	497	licensed under this chapter or a residential mortgage loan
498	498	originator who is licensed under Chapter 157 and sponsored by and
499	499	conducting business for a licensed or registered residential
500	500	mortgage loan company under this chapter as the commissioner
501	501	determines necessary to determine whether the person or the
502	502	residential mortgage loan originator is complying with this chapter
503	503	and applicable rules. The inspections may include inspection of
504	504	the books, records, documents, operations, and facilities of the
505	505	person or the residential mortgage loan originator and access to
506	506	any documents required under rules adopted under this chapter. The
507	507	commissioner may share evidence of criminal activity gathered
508	508	during an inspection or investigation with any state or federal law
509	509	enforcement agency.
510	510	(b) On the signed written complaint of a person, the
511	511	commissioner shall investigate the actions and records of a person
512	512	licensed under this chapter or a residential mortgage loan
513	513	originator who is licensed under Chapter 157 and sponsored by and
514	514	conducting business for a licensed or registered residential
515	515	mortgage loan company under this chapter if the complaint, or the
516	516	complaint and documentary or other evidence presented in connection
517	517	with the complaint, provides reasonable cause. The commissioner,
518	518	before commencing an investigation, shall notify the [a]
519	519	residential mortgage loan company or the residential mortgage loan
520	520	originator in writing of the complaint and that the commissioner
521	521	intends to investigate the matter.
522	522	(c) For reasonable cause, the commissioner at any time may
523	523	investigate a person licensed under this chapter or a residential
524	524	mortgage loan originator who is licensed under Chapter 157 and
525	525	sponsored by and conducting business for a licensed or registered
526	526	residential mortgage loan company under this chapter to determine
527	527	whether the person or the residential mortgage loan originator is
528	528	complying with this chapter and applicable rules.
529	529	(h) The commissioner may require reimbursement of expenses
530	530	[in an amount not to exceed $325] for each examiner [a day] for
531	531	on-site examination or investigation of a license holder
532	532	[residential mortgage loan company] if records are located out of
533	533	state or if the review is considered necessary beyond the routine
534	534	examination process. The finance commission by rule shall set the
535	535	maximum amount for the reimbursement of expenses authorized under
536	536	this subsection.
537	537	SECTION 34. Section 156.303, Finance Code, is amended by
538	538	amending Subsections (a), (a-1), (g), and (i) and adding Subsection
539	539	(k) to read as follows:
540	540	(a) The commissioner may order disciplinary action against
541	541	a licensed or registered residential mortgage loan company [or a
542	542	licensed residential mortgage loan originator] when the
543	543	commissioner, after notice and opportunity for hearing, has
544	544	determined that the company [person]:
545	545	(1) obtained a license or registration, including a
546	546	renewal of a license or registration, under this chapter through a
547	547	false or fraudulent representation or made a material
548	548	misrepresentation in an application for a license or registration
549	549	or for the renewal of a license or registration under this chapter;
550	550	(2) published or caused to be published an
551	551	advertisement related to the business of a residential mortgage
552	552	loan company [or residential mortgage loan originator] that:
553	553	(A) is misleading;
554	554	(B) is likely to deceive the public;
555	555	(C) in any manner tends to create a misleading
556	556	impression;
557	557	(D) fails to identify as a residential mortgage
558	558	loan company [or residential mortgage loan originator] the person
559	559	causing the advertisement to be published; or
560	560	(E) violates federal or state law;
561	561	(3) while performing an act for which a license or
562	562	registration under this chapter is required, engaged in conduct
563	563	that constitutes improper, fraudulent, or dishonest dealings;
564	564	(4) entered a plea of guilty or nolo contendere to, or
565	565	is convicted of, a criminal offense that is a felony or that
566	566	involves fraud or moral turpitude in a court of this or another
567	567	state or in a federal court;
568	568	(5) failed to use a fee collected in advance of closing
569	569	of a residential mortgage loan for a purpose for which the fee was
570	570	paid;
571	571	(6) charged or received, directly or indirectly, a fee
572	572	for assisting a mortgage applicant in obtaining a residential
573	573	mortgage loan before all of the services that the person agreed to
574	574	perform for the mortgage applicant are completed, and the proceeds
575	575	of the residential mortgage loan have been disbursed to or on behalf
576	576	of the mortgage applicant[, except as provided by Section 156.304];
577	577	(7) failed within a reasonable time to honor a credit
578	578	card charge back or a check issued to the commissioner after the
579	579	commissioner has mailed a request for payment, including payment of
580	580	[of the check and] any applicable fees, [by certified mail] to the
581	581	person's last known business address as reflected by the
582	582	commissioner's records;
583	583	(8) paid compensation to a person who is not licensed,
584	584	registered, or exempt under this chapter or Chapter 157 for acts for
585	585	which a license or registration under this chapter or Chapter 157 is
586	586	required;
587	587	(9) induced or attempted to induce a party to a
588	588	contract to breach the contract so the person may make a residential
589	589	mortgage loan;
590	590	(10) published or circulated an unjustified or
591	591	unwarranted threat of legal proceedings in matters related to the
592	592	person's actions or services as a residential mortgage loan company
593	593	[or residential mortgage loan originator, as applicable];
594	594	(11) established an association, by employment or
595	595	otherwise, with a person not licensed, registered, or exempt under
596	596	this chapter or Chapter 157 who was expected or required to act as a
597	597	residential mortgage loan company or residential mortgage loan
598	598	originator;
599	599	(12) aided, abetted, or conspired with a person to
600	600	circumvent the requirements of this chapter or Subchapter D,
601	601	Chapter 157;
602	602	(13) acted in the dual capacity of a residential
603	603	mortgage loan company [or residential mortgage loan originator] and
604	604	real estate broker, salesperson, or attorney in a transaction
605	605	without the knowledge and written consent of the mortgage applicant
606	606	or in violation of applicable requirements under federal law;
607	607	(14) discriminated against a prospective borrower on
608	608	the basis of race, color, religion, sex, national origin, ancestry,
609	609	familial status, or a disability;
610	610	(15) failed or refused on demand to:
611	611	(A) produce a document, book, or record
612	612	concerning a residential mortgage loan transaction conducted by a
613	613	[the] residential mortgage loan originator for inspection by the
614	614	commissioner or the commissioner's authorized personnel or
615	615	representative;
616	616	(B) give the commissioner or the commissioner's
617	617	authorized personnel or representative free access to the books or
618	618	records relating to the person's business kept by an officer,
619	619	agent, or employee of the person or any business entity through
620	620	which the person conducts residential mortgage loan origination
621	621	activities, including a subsidiary or holding company affiliate; or
622	622	(C) provide information requested by the
623	623	commissioner as a result of a formal or informal complaint made to
624	624	the commissioner;
625	625	(16) failed without just cause to surrender, on
626	626	demand, a copy of a document or other instrument coming into the
627	627	person's possession that was provided to the person by another
628	628	person making the demand or that the person making the demand is
629	629	under law entitled to receive;
630	630	(17) disregarded or violated this chapter, a rule
631	631	adopted by the finance commission under this chapter, or an order
632	632	issued by the commissioner under this chapter; or
633	633	(18) provided false information to the commissioner
634	634	during the course of an investigation or inspection.
635	635	(a-1) The commissioner may also order disciplinary action
636	636	after notice and opportunity for hearing against a licensed or
637	637	registered residential mortgage loan company [or a licensed
638	638	residential mortgage loan originator] if the commissioner becomes
639	639	aware during the term of the license of any fact that would have
640	640	been grounds for denial of an original license if the fact had been
641	641	known by the commissioner on the date the license was issued.
642	642	(g) If a person fails to pay an administrative penalty that
643	643	has become final or fails to comply with an order of the
644	644	commissioner that has become final, in addition to any other remedy
645	645	provided under law the commissioner, on not less than 10 days'
646	646	notice to the person, may without a prior hearing suspend the
647	647	person's residential mortgage loan company license or registration
648	648	[or residential mortgage loan originator license]. The suspension
649	649	shall continue until the person has complied with the order or paid
650	650	the administrative penalty. During the period of suspension, the
651	651	person may not originate a residential mortgage loan and all
652	652	compensation received by the person during the period of suspension
653	653	is subject to forfeiture as provided by Section 156.406(b).
654	654	(i) An order revoking the license or registration of a
655	655	residential mortgage loan company [or the license of a residential
656	656	mortgage loan originator] may provide that the person is
657	657	prohibited, without obtaining prior written consent of the
658	658	commissioner, from:
659	659	(1) engaging in the business of originating or making
660	660	residential mortgage loans; or
661	661	(2) [being an employee, officer, director, manager,
662	662	shareholder, member, agent, contractor, or processor of a
663	663	residential mortgage loan company or residential mortgage loan
664	664	originator; or
665	665	[(3)] otherwise affiliating with a person for the
666	666	purpose of engaging in the business of originating or making
667	667	residential mortgage loans.
668	668	(k) The commissioner may, at the commissioner's discretion,
669	669	rescind or vacate any previously issued order.
670	670	SECTION 35. Subsection (a), Section 156.304, Finance Code,
671	671	is amended to read as follows:
672	672	(a) Before the completion of all services to be performed, a
673	673	residential mortgage loan originator sponsored by and conducting
674	674	business for a licensed or registered residential mortgage loan
675	675	company under this chapter may charge and receive, unless
676	676	prohibited by law, the following fees for services in assisting a
677	677	mortgage applicant to obtain a residential mortgage loan:
678	678	(1) a fee to obtain a credit report;
679	679	(2) a fee for the appraisal of the real estate;
680	680	(3) a fee for processing a residential mortgage loan
681	681	application;
682	682	(4) a fee for taking a residential mortgage loan
683	683	application;
684	684	(5) a fee for automated underwriting;
685	685	(6) a fee for a courier service;
686	686	(7) a fee to issue a loan commitment; or
687	687	(8) subject to Subsection (b), a fee for locking in an
688	688	interest rate.
689	689	SECTION 36. Section 156.305, Finance Code, is amended to
690	690	read as follows:
691	691	Sec. 156.305. RESTITUTION. The commissioner may order a
692	692	person to make restitution for any amount received by that person in
693	693	violation of this chapter. A residential mortgage loan company may
694	694	be required to make restitution for any amount received by a
695	695	sponsored residential mortgage loan originator in violation of
696	696	Chapter 157 [this chapter].
697	697	SECTION 37. Subsection (d), Section 156.401, Finance Code,
698	698	is amended to read as follows:
699	699	(d) A person [An individual] aggrieved by a ruling, order,
700	700	or decision of the commissioner has the right to appeal to a
701	701	district court in the county in which the hearing was held. An
702	702	appeal under this subsection is governed by Chapter 2001,
703	703	Government Code.
704	704	SECTION 38. Subsection (a), Section 156.406, Finance Code,
705	705	is amended to read as follows:
706	706	(a) A person, unless otherwise exempt, commits an offense if
707	707	the person conducts regulated activities under this chapter without
708	708	first obtaining a license or registration as required by Section
709	709	156.201, 156.2012, or 157.012, as applicable. [A person who is not
710	710	exempt under this chapter and who acts as a residential mortgage
711	711	loan originator without first obtaining a license required under
712	712	this chapter commits an offense.] An offense under this subsection
713	713	is a Class B misdemeanor. A second or subsequent conviction for an
714	714	offense under this subsection shall be punished as a Class A
715	715	misdemeanor.
716	716	SECTION 39. The heading to Subchapter F, Chapter 156,
717	717	Finance Code, is amended to read as follows:
718	718	SUBCHAPTER F. [MORTGAGE BROKER] RECOVERY FUND
719	719	SECTION 40. Subsection (b), Section 156.501, Finance Code,
720	720	is amended to read as follows:
721	721	(b) Subject to this subsection, the recovery fund shall be
722	722	used to reimburse residential mortgage loan applicants for actual
723	723	damages incurred because of acts committed by a residential
724	724	mortgage loan originator who was licensed [under this chapter or]
725	725	under Chapter 157 when the act was committed. The use of the fund
726	726	is limited to reimbursement for out-of-pocket losses caused by an
727	727	act by[:
728	728	[(1) a residential mortgage loan originator licensed
729	729	under this chapter that constitutes a violation of Section
730	730	156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13), or
731	731	(16) or 156.304; or
732	732	[(2)] a residential mortgage loan originator licensed
733	733	under Chapter 157 that constitutes a violation of Section
734	734	157.024(a)(2), (3), (5), (7), (8), (9), (10), (13), [or] (16),
735	735	(17), or (18) or 156.304(b).
736	736	SECTION 41. Subsection (a), Section 156.502, Finance Code,
737	737	is amended to read as follows:
738	738	(a) On an application for an original license or for renewal
739	739	of a license issued under Chapter 157 [this chapter], the
740	740	applicant, in addition to paying the original application fee or
741	741	renewal fee, shall pay a fee in an amount determined by the
742	742	commissioner, not to exceed $20. The fee shall be deposited in the
743	743	recovery fund.
744	744	SECTION 42. Subsection (a), Section 156.503, Finance Code,
745	745	is amended to read as follows:
746	746	(a) An application for the recovery of actual damages from
747	747	the recovery fund under Section 156.504 may not be filed after the
748	748	fourth [second] anniversary of the date of the alleged act or
749	749	omission causing the actual damages or the date the act or omission
750	750	should reasonably have been discovered.
751	751	SECTION 43. Subsection (b), Section 156.504, Finance Code,
752	752	is amended to read as follows:
753	753	(b) The residential mortgage loan applicant is required to
754	754	show:
755	755	(1) that the applicant's claim is based on facts
756	756	allowing recovery under Section 156.501; and
757	757	(2) that the applicant:
758	758	(A) is not a spouse of the licensed residential
759	759	mortgage loan originator;
760	760	(B) is not a child, parent, grandchild,
761	761	grandparent, or sibling, including relationships by adoption, of
762	762	the licensed residential mortgage loan originator;
763	763	(C) is not a person sharing living quarters with
764	764	the licensed residential mortgage loan originator or a current or
765	765	former employer, employee, or associate of the licensed residential
766	766	mortgage loan originator;
767	767	(D) is not a person who has aided, abetted, or
768	768	participated other than as a victim with the licensed residential
769	769	mortgage loan originator in any activity that is illegal under
770	770	[Section 156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12),
771	771	(13), or (16), Section 156.304, or] Section 157.024(a)(2), (3),
772	772	(5), (7), (8), (9), (10), (13), [or] (16), (17), or (18) or
773	773	156.304(b), or is not the personal representative of a licensed
774	774	residential mortgage loan originator; and
775	775	(E) is not licensed as a residential mortgage
776	776	loan originator under Chapter 157 [this chapter] who is seeking to
777	777	recover any compensation in the transaction or transactions for
778	778	which the application for payment is made.
779	779	SECTION 44. Subsection (b), Section 156.505, Finance Code,
780	780	is amended to read as follows:
781	781	(b) A payment from the recovery fund may be made as provided
782	782	by Section 156.504 and this section. A payment for claims:
783	783	(1) arising out of the same transaction, including
784	784	interest, is limited in the aggregate to $25,000, regardless of the
785	785	number of claimants; and
786	786	(2) against a single person licensed as a residential
787	787	mortgage loan originator under [this chapter or] Chapter 157
788	788	arising out of separate transactions, including interest, is
789	789	limited in the aggregate to $50,000 until the fund has been
790	790	reimbursed for all amounts paid.
791	791	SECTION 45. Subsections (a), (c), and (d), Section 156.506,
792	792	Finance Code, are amended to read as follows:
793	793	(a) The commissioner may revoke or suspend a license issued
794	794	under Chapter 157 [this chapter] on proof that the commissioner has
795	795	made a payment from the recovery fund of any amount toward
796	796	satisfaction of a claim against a residential mortgage loan
797	797	originator under Chapter 157 [this chapter].
798	798	(c) A person on whose behalf payment was made from the
799	799	recovery fund is not eligible to receive a new license or have a
800	800	suspension lifted under this chapter or Chapter 157 until the
801	801	person has repaid in full, plus interest at the current legal rate,
802	802	the amount paid from the fund on the person's behalf and any costs
803	803	associated with investigating and processing the claim against the
804	804	fund or with collection of reimbursement for payments from the
805	805	fund.
806	806	(d) This section does not limit the authority of the
807	807	commissioner to take disciplinary action against a residential
808	808	mortgage loan originator for a violation of Chapter 157 [this
809	809	chapter] or the rules adopted by the finance commission under that
810	810	[this] chapter. The repayment in full to the recovery fund of all
811	811	obligations of a residential mortgage loan originator does not
812	812	nullify or modify the effect of any other disciplinary proceeding
813	813	brought under Chapter 157 [this chapter].
814	814	SECTION 46. The heading to Chapter 157, Finance Code, is
815	815	amended to read as follows:
816	816	CHAPTER 157. [REGISTRATION OF] MORTGAGE BANKERS AND RESIDENTIAL
817	817	MORTGAGE LOAN ORIGINATORS
818	818	SECTION 47. Sections 157.001 and 157.002, Finance Code, are
819	819	designated as Subchapter A, Chapter 157, Finance Code, and a
820	820	heading is added to that subchapter to read as follows:
821	821	SUBCHAPTER A. GENERAL PROVISIONS
822	822	SECTION 48. Section 157.002, Finance Code, is amended by
823	823	adding Subdivisions (3-a) and (5-a) to read as follows:
824	824	(3-a) "Inspection" includes examination.
825	825	(5-a) "Residential mortgage loan company" has the
826	826	meaning assigned by Section 156.002.
827	827	SECTION 49. Chapter 157, Finance Code, is amended by adding
828	828	Subchapter B to read as follows:
829	829	SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
830	830	Sec. 157.0024. MORTGAGE INDUSTRY ADVISORY COMMITTEE. The
831	831	mortgage industry advisory committee shall advise and assist the
832	832	commissioner with respect to this chapter as provided by Section
833	833	156.104.
834	834	SECTION 50. Sections 157.003, 157.004, 157.005, 157.006,
835	835	157.0061, 157.0062, 157.009, and 157.010, Finance Code, are
836	836	designated as Subchapter C, Chapter 157, Finance Code, and a
837	837	heading is added to that subchapter to read as follows:
838	838	SUBCHAPTER C. REGISTRATION OF MORTGAGE BANKERS
839	839	SECTION 51. Subsection (b), Section 157.003, Finance Code,
840	840	is amended to read as follows:
841	841	(b) To register under this chapter, a mortgage banker shall:
842	842	(1) enroll with the Nationwide Mortgage Licensing
843	843	System and Registry;
844	844	(2) be in good standing with the secretary of state;
845	845	(3) have a valid federal employer identification
846	846	number;
847	847	(4) meet the qualification requirements for a mortgage
848	848	banker; [and]
849	849	(5) not be in violation of this chapter, a rule adopted
850	850	under this chapter, or any order previously issued by the
851	851	commissioner to the applicant; and
852	852	(6) provide to the commissioner a list of any offices
853	853	that are separate and distinct from the primary office identified
854	854	on the mortgage banker registration and that conduct residential
855	855	mortgage loan business relating to this state, regardless of
856	856	whether the offices are located in this state.
857	857	SECTION 52. Section 157.004, Finance Code, is amended to
858	858	read as follows:
859	859	Sec. 157.004. EXEMPTIONS. This chapter does not apply to:
860	860	(1) a federally insured bank, savings bank, savings
861	861	and loan association, Farm Credit System Institution, or credit
862	862	union;
863	863	(2) a subsidiary of a federally insured bank, savings
864	864	bank, savings and loan association, Farm Credit System Institution,
865	865	or credit union;
866	866	(3) a residential mortgage loan company licensed
867	867	[person licensed as a mortgage broker] under Chapter 156;
868	868	(4) an authorized lender licensed under Chapter 342;
869	869	or
870	870	(5) the state or a governmental agency, political
871	871	subdivision, or other instrumentality of the state, or an employee
872	872	of the state or a governmental agency, political subdivision, or
873	873	instrumentality of the state who is acting within the scope of the
874	874	person's employment.
875	875	SECTION 53. Section 157.005, Finance Code, is amended to
876	876	read as follows:
877	877	Sec. 157.005. UPDATE OF REGISTRATION. A mortgage banker
878	878	shall update information contained in the registration not later
879	879	than the 10th [30th] day after the date the information changes.
880	880	SECTION 54. Sections 157.007 and 157.008, Finance Code, are
881	881	transferred to Subchapter B, Chapter 157, Finance Code, as added by
882	882	this Act, and redesignated as Sections 157.0021 and 157.0022,
883	883	Finance Code, to read as follows:
884	884	Sec. 157.0021 [157.007]. DISCLOSURE STATEMENT. (a) A
885	885	mortgage banker that is a residential mortgage loan originator
886	886	shall include a notice to a residential mortgage loan applicant
887	887	with an application for a residential mortgage loan. The finance
888	888	commission by rule shall adopt a standard disclosure form to be used
889	889	by the mortgage banker. The form must:
890	890	(1) include the name, address, and toll-free telephone
891	891	number for the Department of Savings and Mortgage Lending;
892	892	(2) contain information on how to file a complaint or
893	893	recovery fund claim; and
894	894	(3) prescribe a method for proof of delivery to the
895	895	consumer.
896	896	(b) A mortgage banker that indicates in its registration
897	897	that it acts as a residential mortgage loan servicer shall provide
898	898	to the borrower of each residential mortgage loan it services the
899	899	following notice not later than the 30th day after the date the
900	900	mortgage banker commences servicing the loan:
901	901	"COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD
902	902	BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
903	903	______________________________ (street address of the Department
904	904	of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
905	905	AVAILABLE AT _______________ (telephone number of the Department of
906	906	Savings and Mortgage Lending's toll-free consumer hotline)."
907	907	Sec. 157.0022 [157.008]. COMPLAINTS. (a) If the
908	908	Department of Savings and Mortgage Lending receives a signed
909	909	written complaint from a person concerning a mortgage banker, the
910	910	commissioner shall notify the representative designated by the
911	911	mortgage banker under Section 157.003(b) in writing of the
912	912	complaint and provide a copy of the complaint to the
913	913	representative.
914	914	(b) The commissioner may request documentary and other
915	915	evidence considered by the commissioner as necessary to effectively
916	916	evaluate the complaint, including correspondence, loan documents,
917	917	and disclosures. A mortgage banker shall promptly provide any
918	918	evidence requested by the commissioner.
919	919	(c) The commissioner may require the mortgage banker to
920	920	resolve the complaint or to provide the commissioner with a
921	921	response to the complaint. The commissioner may direct the
922	922	mortgage banker in writing to take specific action to resolve the
923	923	complaint.
924	924	SECTION 55. Section 157.009, Finance Code, is amended by
925	925	adding Subsection (d-1) and amending Subsection (e) to read as
926	926	follows:
927	927	(d-1) The commissioner, after review of the circumstances,
928	928	may revoke the registration of a mortgage banker if the mortgage
929	929	banker has had a license, registration, or other certification
930	930	revoked by a state or federal regulatory authority.
931	931	(e) If the commissioner proposes to revoke a registration
932	932	under Subsection (c), [or] (d), or (d-1), the mortgage banker is
933	933	entitled to a hearing before the commissioner or a hearings
934	934	officer, who shall propose a decision to the commissioner. The
935	935	commissioner or hearings officer shall prescribe the time and place
936	936	of the hearing. The hearing is governed by Chapter 2001, Government
937	937	Code.
938	938	SECTION 56. Section 157.011, Finance Code, is transferred
939	939	to Subchapter B, Chapter 157, Finance Code, as added by this Act,
940	940	and redesignated as Section 157.0023, Finance Code, to read as
941	941	follows:
942	942	Sec. 157.0023 [157.011]. RULEMAKING AUTHORITY. (a) The
943	943	Finance Commission of Texas may adopt rules necessary to implement
944	944	or fulfill the purpose of this chapter.
945	945	(b) The Finance Commission of Texas may by rule adopt
946	946	standard forms for, and require the use of the forms by, a mortgage
947	947	banker who represents that an applicant for a loan is preapproved or
948	948	has prequalified for the loan.
949	949	(c) The finance commission may adopt rules under this
950	950	chapter as required to carry out the intentions of the federal
951	951	Secure and Fair Enforcement for Mortgage Licensing Act of 2008
952	952	(Pub. L. No. 110-289).
953	953	SECTION 57. Sections 157.012, 157.013, 157.014, 157.015,
954	954	157.016, 157.017, 157.019, 157.020, and 157.0201, Finance Code, are
955	955	designated as Subchapter D, Chapter 157, Finance Code, and a
956	956	heading is added to that subchapter to read as follows:
957	957	SUBCHAPTER D. LICENSING OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS;
958	958	DISCLOSURES AND REQUIREMENTS
959	959	SECTION 58. The heading to Section 157.012, Finance Code,
960	960	is amended to read as follows:
961	961	Sec. 157.012. LICENSE REQUIRED FOR RESIDENTIAL MORTGAGE
962	962	LOAN ORIGINATORS [CERTAIN EMPLOYEES OF MORTGAGE BANKERS].
963	963	SECTION 59. Section 157.012, Finance Code, is amended by
964	964	amending Subsections (a) and (c) and adding Subsection (e) to read
965	965	as follows:
966	966	(a) An individual [An employee of a mortgage banker] may not
967	967	act or attempt to act in the capacity of a residential mortgage loan
968	968	originator unless the individual is exempt under Section 157.0121
969	969	or 180.003(b) or [employee]:
970	970	(1) is licensed under this chapter, sponsored by an
971	971	appropriate entity [a registered mortgage banker], and enrolled
972	972	with the Nationwide Mortgage Licensing System and Registry as
973	973	required by Section 180.052; and
974	974	(2) complies with other applicable requirements of
975	975	Chapter 180 and rules adopted by the finance commission under that
976	976	chapter.
977	977	(c) To be eligible to be licensed as a residential mortgage
978	978	loan originator, the individual [an employee of a mortgage banker],
979	979	in addition to meeting the requirements of Subsection (a), must:
980	980	(1) satisfy the commissioner as to the individual's
981	981	[employee's] good moral character, including the individual's
982	982	[employee's] honesty, trustworthiness, and integrity;
983	983	(2) not be in violation of this chapter, Chapter 180,
984	984	or any rules adopted under this chapter or Chapter 180;
985	985	(3) provide the commissioner with satisfactory
986	986	evidence that the individual [employee] meets the qualifications
987	987	provided by Chapter 180; and
988	988	(4) be a citizen of the United States or a lawfully
989	989	admitted alien.
990	990	(e) In this section, "appropriate entity" means an entity:
991	991	(1) that is licensed or registered under this chapter
992	992	or Chapter 156; and
993	993	(2) for which the individual is acting as a
994	994	residential mortgage loan originator.
995	995	SECTION 60. Subchapter D, Chapter 157, Finance Code, as
996	996	added by this Act, is amended by adding Section 157.0121 to read as
997	997	follows:
998	998	Sec. 157.0121. EXEMPTIONS FROM RESIDENTIAL MORTGAGE LOAN
999	999	ORIGINATOR REQUIREMENTS. (a) In this section, "depository
1000	1000	institution," "dwelling," "federal banking agency," and "immediate
1001	1001	family member" have the meanings assigned by Section 180.002.
1002	1002	(b) The following individuals are exempt from this chapter:
1003	1003	(1) a registered mortgage loan originator when acting
1004	1004	for:
1005	1005	(A) a depository institution;
1006	1006	(B) a subsidiary of a depository institution that
1007	1007	is:
1008	1008	(i) owned and controlled by the depository
1009	1009	institution; and
1010	1010	(ii) regulated by a federal banking agency;
1011	1011	or
1012	1012	(C) an institution regulated by the Farm Credit
1013	1013	Administration;
1014	1014	(2) an individual who offers or negotiates the terms
1015	1015	of a residential mortgage loan with or on behalf of an immediate
1016	1016	family member of the individual;
1017	1017	(3) a licensed attorney who negotiates the terms of a
1018	1018	residential mortgage loan on behalf of a client as an ancillary
1019	1019	matter to the attorney's representation of the client, unless the
1020	1020	attorney:
1021	1021	(A) takes a residential mortgage loan
1022	1022	application; and
1023	1023	(B) offers or negotiates the terms of a
1024	1024	residential mortgage loan;
1025	1025	(4) an individual who offers or negotiates terms of a
1026	1026	residential mortgage loan secured by a dwelling that serves as the
1027	1027	individual's residence;
1028	1028	(5) any owner of residential real estate who in any
1029	1029	12-consecutive-month period makes no more than five residential
1030	1030	mortgage loans to purchasers of the property for all or part of the
1031	1031	purchase price of the residential real estate against which the
1032	1032	mortgage is secured; and
1033	1033	(6) an individual who is exempt as provided by Section
1034	1034	180.003(b).
1035	1035	(c) Employees of the following entities, when acting for the
1036	1036	benefit of those entities, are exempt from the licensing and other
1037	1037	requirements of this chapter applicable to residential mortgage
1038	1038	loan originators:
1039	1039	(1) a nonprofit organization providing self-help
1040	1040	housing that originates zero interest residential mortgage loans
1041	1041	for borrowers who have provided part of the labor to construct the
1042	1042	dwelling securing the loan;
1043	1043	(2) any owner of residential real estate who in any
1044	1044	12-consecutive-month period makes no more than five residential
1045	1045	mortgage loans to purchasers of the property for all or part of the
1046	1046	purchase price of the residential real estate against which the
1047	1047	mortgage is secured; and
1048	1048	(3) an entity that is:
1049	1049	(A) a depository institution;
1050	1050	(B) a subsidiary of a depository institution that
1051	1051	is:
1052	1052	(i) owned and controlled by the depository
1053	1053	institution; and
1054	1054	(ii) regulated by a federal banking agency;
1055	1055	or
1056	1056	(C) an institution regulated by the Farm Credit
1057	1057	Administration.
1058	1058	(d) A person is not required to obtain a license under this
1059	1059	chapter to originate a loan subject to Chapter 342 or a loan
1060	1060	governed by Section 50(a)(6), Article XVI, Texas Constitution, if
1061	1061	the person:
1062	1062	(1) is enrolled in the Nationwide Mortgage Licensing
1063	1063	System and Registry;
1064	1064	(2) is licensed under Chapter 342; and
1065	1065	(3) makes consumer loans subject to:
1066	1066	(A) Subchapter G, Chapter 342; and
1067	1067	(B) Subchapter E or F, Chapter 342.
1068	1068	(e) The finance commission may grant an exemption from the
1069	1069	residential mortgage loan originator licensing requirements of
1070	1070	this chapter to a municipality, county, community development
1071	1071	corporation, or public or private grant administrator to the extent
1072	1072	the entity is administering the Texas HOME Investment Partnerships
1073	1073	program if the commission determines that granting the exemption is
1074	1074	not inconsistent with the intentions of the federal Secure and Fair
1075	1075	Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
1076	1076	110-289).
1077	1077	SECTION 61. Section 157.013, Finance Code, is amended by
1078	1078	amending Subsection (b) and adding Subsection (d) to read as
1079	1079	follows:
1080	1080	(b) An application for a residential mortgage loan
1081	1081	originator license must be accompanied by:
1082	1082	(1) an application fee in an amount determined by the
1083	1083	commissioner, not to exceed $500;[,] and
1084	1084	(2) [by] a recovery fund fee in an amount determined by
1085	1085	the commissioner, not to exceed $20.
1086	1086	(d) In addition to the disciplinary action by the
1087	1087	commissioner authorized under Section 157.024(a)(6), the
1088	1088	commissioner may collect a fee in an amount not to exceed $50 for
1089	1089	any returned check or credit card charge back.
1090	1090	SECTION 62. Subchapter D, Chapter 157, Finance Code, as
1091	1091	added by this Act, is amended by adding Sections 157.0131 and
1092	1092	157.0132 to read as follows:
1093	1093	Sec. 157.0131. CONVICTION OF OFFENSE. A person is
1094	1094	considered to have been convicted of a criminal offense if:
1095	1095	(1) a sentence is imposed on the person;
1096	1096	(2) the person received probation or community
1097	1097	supervision, including deferred adjudication or community service;
1098	1098	or
1099	1099	(3) the court deferred final disposition of the
1100	1100	person's case.
1101	1101	Sec. 157.0132. CRIMINAL AND OTHER BACKGROUND CHECKS.
1102	1102	(a) On receipt of an application for a residential mortgage loan
1103	1103	originator license, the commissioner shall, at a minimum, conduct a
1104	1104	criminal background and credit history check of the applicant.
1105	1105	(b) The commissioner shall conduct criminal background and
1106	1106	credit history checks in accordance with Section 180.054, and, in
1107	1107	connection with each application for a residential mortgage loan
1108	1108	originator license or other individual license, the commissioner
1109	1109	may conduct a criminal background check through the Department of
1110	1110	Public Safety.
1111	1111	(c) The commissioner shall keep confidential any background
1112	1112	information obtained under this section and may not release or
1113	1113	disclose the information unless:
1114	1114	(1) the information is a public record at the time the
1115	1115	commissioner obtains the information; or
1116	1116	(2) the commissioner releases the information:
1117	1117	(A) under order from a court; or
1118	1118	(B) to a governmental agency.
1119	1119	(d) Notwithstanding Subsection (c), criminal history record
1120	1120	information obtained from the Federal Bureau of Investigation may
1121	1121	be released or disclosed only to a governmental entity or as
1122	1122	authorized by federal statute, federal rule, or federal executive
1123	1123	order.
1124	1124	SECTION 63. Subchapter D, Chapter 157, Finance Code, as
1125	1125	added by this Act, is amended by adding Section 157.0141 to read as
1126	1126	follows:
1127	1127	Sec. 157.0141. CONDITIONAL LICENSE. The commissioner may
1128	1128	issue a conditional license. The finance commission by rule shall
1129	1129	adopt reasonable terms and conditions for a conditional license.
1130	1130	SECTION 64. Section 157.015, Finance Code, is amended by
1131	1131	amending Subsections (a), (c), (d), and (g) and adding Subsections
1132	1132	(d-1) and (h) to read as follows:
1133	1133	(a) A residential mortgage loan originator license issued
1134	1134	under this chapter is valid through December 31 of the year of
1135	1135	issuance and may be renewed on or before its expiration date if the
1136	1136	residential mortgage loan originator:
1137	1137	(1) pays to the commissioner a renewal fee in an amount
1138	1138	determined by the commissioner not to exceed $500 and a recovery
1139	1139	fund fee as provided by Section 156.502;
1140	1140	(2) continues to meet the minimum requirements for
1141	1141	license issuance; and
1142	1142	(3) provides the commissioner with satisfactory
1143	1143	evidence that the residential mortgage loan originator has
1144	1144	attended, during the term of the current license, continuing
1145	1145	education courses in accordance with the applicable requirements of
1146	1146	Chapter 180 [A residential mortgage loan originator license issued
1147	1147	under this chapter is valid for one year and may be renewed on or
1148	1148	before its expiration date].
1149	1149	(c) An application for renewal [of a residential mortgage
1150	1150	loan originator license] shall be in the form prescribed by the
1151	1151	commissioner [meet the requirements of Section 157.013].
1152	1152	(d) On receipt of a request for a renewal of a license issued
1153	1153	under this subchapter, the commissioner may conduct a criminal
1154	1154	background check under Section 157.0132 [An application for renewal
1155	1155	of a residential mortgage loan originator license must meet all of
1156	1156	the standards and qualifications for license renewal under Chapter
1157	1157	180].
1158	1158	(d-1) A renewal fee is not refundable and may not be
1159	1159	credited or applied to any other fee or indebtedness owed by the
1160	1160	person paying the fee.
1161	1161	(g) The commissioner may deny the renewal application for a
1162	1162	residential mortgage loan originator license if:
1163	1163	(1) the person seeking the renewal of the residential
1164	1164	mortgage loan originator license is in violation of this chapter,
1165	1165	Chapter 156, or Chapter 180, an applicable rule adopted under this
1166	1166	chapter, Chapter 156, or Chapter 180, or any order previously
1167	1167	issued to the person by the commissioner;
1168	1168	(2) the person seeking renewal of the residential
1169	1169	mortgage loan originator license is in default in the payment of any
1170	1170	administrative penalty, fee, charge, or other indebtedness owed
1171	1171	under this title;
1172	1172	(3) the person seeking the renewal of the residential
1173	1173	mortgage loan originator license is in default on a student loan
1174	1174	administered by the Texas Guaranteed Student Loan Corporation,
1175	1175	under Section 57.491, Education Code; or
1176	1176	(4) during the current term of the license, the
1177	1177	commissioner becomes aware of any fact that would have been grounds
1178	1178	for denial of an original license if the fact had been known by the
1179	1179	commissioner on the date the license was granted.
1180	1180	(h) In addition to the disciplinary action by the
1181	1181	commissioner authorized under Section 157.024(a)(6), the
1182	1182	commissioner may collect a fee in an amount not to exceed $50 for
1183	1183	any returned check or credit card charge back.
1184	1184	SECTION 65. Subsection (a), Section 157.016, Finance Code,
1185	1185	is amended to read as follows:
1186	1186	(a) A person whose residential mortgage loan originator
1187	1187	license has expired may not engage in activities that require a
1188	1188	license until the license has been reinstated or a new license has
1189	1189	been issued [renewed].
1190	1190	SECTION 66. Subsection (g), Section 157.017, Finance Code,
1191	1191	is amended to read as follows:
1192	1192	(g) A person whose application for or request to renew a
1193	1193	license has been denied is not eligible to be licensed for a period
1194	1194	of two years after the date the denial becomes final, or a shorter
1195	1195	period as determined by the commissioner after evaluating the
1196	1196	specific circumstances of the denial [person's subsequent
1197	1197	application]. The finance commission may adopt rules to provide
1198	1198	conditions for which the commissioner may shorten the period of
1199	1199	ineligibility [time for eligibility for a new license].
1200	1200	SECTION 67. The heading to Section 157.019, Finance Code,
1201	1201	is amended to read as follows:
1202	1202	Sec. 157.019. MODIFICATION OF LICENSE; CHANGE OF
1203	1203	SPONSORSHIP.
1204	1204	SECTION 68. Section 157.019, Finance Code, is amended by
1205	1205	amending Subsections (a) and (c) and adding Subsections (d) and (e)
1206	1206	to read as follows:
1207	1207	(a) Before the 10th day preceding the effective date of an
1208	1208	address change, [a mortgage banker employee who is] a residential
1209	1209	mortgage loan originator shall notify the commissioner or
1210	1210	authorized designee in writing of the new address.
1211	1211	(c) When the sponsorship of a residential mortgage loan
1212	1212	originator is terminated, the residential mortgage loan originator
1213	1213	or the former sponsoring entity licensed or registered under this
1214	1214	chapter or Chapter 156 shall immediately notify the
1215	1215	commissioner. The residential mortgage loan originator's license
1216	1216	then becomes inactive. The residential mortgage loan originator
1217	1217	license may be activated if, before the license expires, an entity
1218	1218	licensed or registered under this chapter or Chapter 156 files a
1219	1219	request, accompanied by a $25 fee, notifying the commissioner that
1220	1220	the entity will sponsor the residential mortgage loan originator
1221	1221	and will assume responsibility for the actions of the residential
1222	1222	mortgage loan originator [A mortgage banker employee who is a
1223	1223	residential mortgage loan originator shall notify the commissioner
1224	1224	or authorized designee in writing of a change of sponsorship. The
1225	1225	notice must be accompanied by a fee of $25].
1226	1226	(d) A residential mortgage loan originator may not conduct
1227	1227	business under any assumed name that is not the registered assumed
1228	1228	name of the entity licensed or registered under this chapter or
1229	1229	Chapter 156 that is sponsoring the originator.
1230	1230	(e) A fee under this section is not refundable and may not be
1231	1231	credited or applied to any other fee or indebtedness owed by the
1232	1232	person paying the fee.
1233	1233	SECTION 69. Section 157.020, Finance Code, is amended by
1234	1234	adding Subsection (a-1) to read as follows:
1235	1235	(a-1) A licensed residential mortgage loan originator, as
1236	1236	required by the commissioner, shall file a mortgage call report
1237	1237	with the commissioner or the commissioner's authorized designee on
1238	1238	a form prescribed by the commissioner or authorized designee. The
1239	1239	report:
1240	1240	(1) is a statement of condition of the residential
1241	1241	mortgage loan originator;
1242	1242	(2) must include any information required by the
1243	1243	commissioner; and
1244	1244	(3) must be filed as frequently as required by the
1245	1245	commissioner.
1246	1246	SECTION 70. Subchapter D, Chapter 157, Finance Code, as
1247	1247	added by this Act, is amended by adding Sections 157.02012,
1248	1248	157.02013, 157.02014, 157.02015, and 157.02016 to read as follows:
1249	1249	Sec. 157.02012. STANDARD FORMS. (a) The finance
1250	1250	commission by rule shall adopt one or more standard forms for use by
1251	1251	a residential mortgage loan originator, sponsored by and conducting
1252	1252	business for a registered mortgage banker under this chapter, in
1253	1253	representing that an applicant for a residential mortgage loan is
1254	1254	preapproved or has prequalified for the loan.
1255	1255	(b) The finance commission shall adopt rules requiring a
1256	1256	residential mortgage loan originator licensed under this chapter to
1257	1257	use the forms adopted by the finance commission under Subsection
1258	1258	(a).
1259	1259	Sec. 157.02013. SECONDARY MARKET TRANSACTIONS. This
1260	1260	chapter does not prohibit a residential mortgage loan originator
1261	1261	sponsored by and conducting business for a registered mortgage
1262	1262	banker under this chapter from receiving compensation from a party
1263	1263	other than the mortgage applicant for the sale, transfer,
1264	1264	assignment, or release of rights on the closing of a mortgage
1265	1265	transaction.
1266	1266	Sec. 157.02014. AFFILIATED BUSINESS ARRANGEMENTS. Unless
1267	1267	prohibited by federal or state law, this chapter may not be
1268	1268	construed to prevent affiliated or controlled business
1269	1269	arrangements or loan origination services by or between residential
1270	1270	mortgage loan originators sponsored by and conducting business for
1271	1271	a registered mortgage banker under this chapter and other
1272	1272	professionals if the residential mortgage loan originator complies
1273	1273	with all applicable federal and state laws permitting those
1274	1274	arrangements or services.
1275	1275	Sec. 157.02015. RULEMAKING AUTHORITY WITH RESPECT TO
1276	1276	RESIDENTIAL MORTGAGE LOAN ORIGINATORS. (a) The finance
1277	1277	commission may adopt rules to prohibit false, misleading, or
1278	1278	deceptive practices by residential mortgage loan originators but
1279	1279	may not adopt any other rules restricting competitive bidding or
1280	1280	advertising by residential mortgage loan originators. When
1281	1281	adopting rules under this subsection, the finance commission may
1282	1282	not restrict:
1283	1283	(1) the use of any medium for an advertisement;
1284	1284	(2) the personal appearance of or voice of a person in
1285	1285	an advertisement;
1286	1286	(3) the size or duration of an advertisement; or
1287	1287	(4) a residential mortgage loan originator's
1288	1288	advertisement under a trade name.
1289	1289	(b) The finance commission may adopt rules regarding books
1290	1290	and records that a residential mortgage loan originator licensed
1291	1291	under this chapter is required to keep, including the location at
1292	1292	which the books and records must be kept.
1293	1293	(c) The finance commission shall consult with the
1294	1294	commissioner when proposing and adopting rules under this section.
1295	1295	Sec. 157.02016. ADMINISTRATION OF SUBCHAPTER. The
1296	1296	commissioner shall administer and enforce this subchapter.
1297	1297	SECTION 71. Sections 157.021, 157.0211, 157.022, 157.023,
1298	1298	157.024, 157.0241, 157.025, 157.026, 157.027, 157.028, 157.029,
1299	1299	157.030, and 157.031, Finance Code, are designated as Subchapter E,
1300	1300	Chapter 157, Finance Code, and a heading is added to that subchapter
1301	1301	to read as follows:
1302	1302	SUBCHAPTER E. ENFORCEMENT
1303	1303	SECTION 72. Section 157.021, Finance Code, is amended by
1304	1304	amending Subsection (a) and adding Subsection (h) to read as
1305	1305	follows:
1306	1306	(a) The commissioner may conduct an inspection of a person
1307	1307	licensed as a residential mortgage loan originator as the
1308	1308	commissioner determines necessary to determine whether the person
1309	1309	is complying with this chapter, Chapter 180, and applicable rules.
1310	1310	An inspection under this subsection may include inspection of the
1311	1311	books, records, documents, operations, and facilities of the
1312	1312	person. The commissioner may request the assistance and
1313	1313	cooperation of the sponsoring mortgage banker in providing needed
1314	1314	documents and records. The commissioner may not make a request of
1315	1315	the sponsoring mortgage banker for documents and records unrelated
1316	1316	to the person being investigated or inspected. The commissioner
1317	1317	may share evidence of criminal activity gathered during an
1318	1318	inspection or investigation with any state or federal law
1319	1319	enforcement agency.
1320	1320	(h) The commissioner may require reimbursement of expenses
1321	1321	for each examiner for an on-site examination or inspection of a
1322	1322	licensed residential mortgage loan originator if records are
1323	1323	located out of state and are not made available for examination or
1324	1324	inspection by the examiner in this state. The finance commission by
1325	1325	rule shall set the maximum amount for the reimbursement of expenses
1326	1326	authorized under this subsection.
1327	1327	SECTION 73. Section 157.0211, Finance Code, is amended to
1328	1328	read as follows:
1329	1329	Sec. 157.0211. MULTI-STATE EXAMINATION AUTHORITY OF
1330	1330	RESIDENTIAL MORTGAGE LOAN SERVICER. To ensure that mortgage
1331	1331	bankers that act as residential mortgage loan servicers operate in
1332	1332	this state in compliance with this chapter and with other law in
1333	1333	accordance with this chapter, the commissioner or the
1334	1334	commissioner's designee may participate in multi-state mortgage
1335	1335	examinations as scheduled by the Conference of State Bank
1336	1336	Supervisors Multi-State Mortgage Committee or by the Consumer
1337	1337	Financial Protection Bureau in accordance with the [Conference of
1338	1338	State Bank Supervisors] protocol for such examinations.
1339	1339	SECTION 74. Subsection (a), Section 157.023, Finance Code,
1340	1340	is amended to read as follows:
1341	1341	(a) The commissioner, after notice and opportunity for a
1342	1342	hearing, may impose an administrative penalty on an individual who
1343	1343	is licensed or required to be licensed under this chapter as a
1344	1344	residential mortgage loan originator and who violates this chapter,
1345	1345	Chapter 156, or a rule or order adopted under this chapter or
1346	1346	Chapter 156.
1347	1347	SECTION 75. Subsections (a), (h), and (j), Section 157.024,
1348	1348	Finance Code, are amended to read as follows:
1349	1349	(a) The commissioner may order disciplinary action against
1350	1350	a licensed residential mortgage loan originator when the
1351	1351	commissioner, after notice and opportunity for a hearing, has
1352	1352	determined that the person:
1353	1353	(1) obtained a license, including a renewal of a
1354	1354	license, under this chapter through a false or fraudulent
1355	1355	representation or made a material misrepresentation in an
1356	1356	application for a license or for the renewal of a license under this
1357	1357	chapter;
1358	1358	(2) published or caused to be published an
1359	1359	advertisement related to the business of a residential mortgage
1360	1360	loan originator that:
1361	1361	(A) was misleading;
1362	1362	(B) was likely to deceive the public;
1363	1363	(C) in any manner tended to create a misleading
1364	1364	impression;
1365	1365	(D) failed to identify as a licensed residential
1366	1366	mortgage loan originator the person causing the advertisement to be
1367	1367	published; or
1368	1368	(E) violated federal or state law;
1369	1369	(3) while performing an act for which a license under
1370	1370	this chapter or Chapter 156 is required, engaged in conduct that
1371	1371	constitutes improper, fraudulent, or dishonest dealings;
1372	1372	(4) entered a plea of nolo contendere to or was
1373	1373	convicted of a criminal offense that is a felony or that involves
1374	1374	fraud or moral turpitude in a court of this or another state or in a
1375	1375	federal court;
1376	1376	(5) failed to use a fee collected in advance of closing
1377	1377	a residential mortgage loan for a purpose for which the fee was
1378	1378	paid;
1379	1379	(6) failed within a reasonable time to honor a credit
1380	1380	card charge back or a check issued to the commissioner after the
1381	1381	commissioner mailed a request for payment, including any applicable
1382	1382	fees, by mail to the person's last known home [business] address as
1383	1383	reflected in the commissioner's records;
1384	1384	(7) induced or attempted to induce a party to a
1385	1385	contract to breach the contract so the person could make a
1386	1386	residential mortgage loan;
1387	1387	(8) published or circulated an unjustified or
1388	1388	unwarranted threat of legal proceedings in matters related to the
1389	1389	person's actions or services as a licensed residential mortgage
1390	1390	loan originator;
1391	1391	(9) aided, abetted, or conspired with a person to
1392	1392	circumvent the requirements of this chapter or Chapter 156;
1393	1393	(10) acted in the dual capacity of a licensed
1394	1394	residential mortgage loan originator and real estate broker,
1395	1395	salesperson, or attorney in a transaction without the knowledge and
1396	1396	written consent of the mortgage applicant or in violation of
1397	1397	applicable requirements under federal law;
1398	1398	(11) discriminated against a prospective borrower on
1399	1399	the basis of race, color, religion, sex, national origin, ancestry,
1400	1400	familial status, or disability;
1401	1401	(12) failed or refused on demand to:
1402	1402	(A) produce a document, book, or record
1403	1403	concerning a residential mortgage loan transaction conducted by the
1404	1404	licensed residential mortgage loan originator for inspection by the
1405	1405	commissioner or the commissioner's authorized personnel or
1406	1406	representative;
1407	1407	(B) give the commissioner or the commissioner's
1408	1408	authorized personnel or representative free access to the books or
1409	1409	records relating to the residential mortgage loan originator's
1410	1410	business kept by any other person or any business entity through
1411	1411	which the residential mortgage loan originator conducts
1412	1412	residential mortgage loan origination activities; or
1413	1413	(C) provide information requested by the
1414	1414	commissioner as a result of a formal or informal complaint made to
1415	1415	the commissioner;
1416	1416	(13) failed without just cause to surrender, on
1417	1417	demand, a copy of a document or other instrument coming into the
1418	1418	residential mortgage loan originator's possession that was
1419	1419	provided to the residential mortgage loan originator by another
1420	1420	person making the demand or that the person making the demand is
1421	1421	under law entitled to receive;
1422	1422	(14) disregarded or violated this chapter, Chapter
1423	1423	156, a rule adopted under this chapter or Chapter 156, or an order
1424	1424	issued by the commissioner under this chapter or Chapter 156;
1425	1425	(15) provided false information to the commissioner
1426	1426	during the course of an investigation or inspection;
1427	1427	(16) paid compensation to a person who is not licensed
1428	1428	or exempt under this chapter for acts for which a license under this
1429	1429	chapter or Chapter 156 is required; [or]
1430	1430	(17) established an association, by employment or
1431	1431	otherwise, with a person not licensed, registered, or exempt under
1432	1432	this chapter or Chapter 156 who was expected or required to act as a
1433	1433	residential mortgage loan originator or residential mortgage loan
1434	1434	company; or
1435	1435	(18) charged or received, directly or indirectly, a
1436	1436	fee for assisting a mortgage applicant in obtaining a residential
1437	1437	mortgage loan under Chapter 156 before all of the services that the
1438	1438	person agreed to perform for the mortgage applicant are completed,
1439	1439	and the proceeds of the residential mortgage loan have been
1440	1440	disbursed to or on behalf of the mortgage applicant, except as
1441	1441	provided by Section 156.304.
1442	1442	(h) If a residential mortgage loan originator fails to pay
1443	1443	an administrative penalty that has become final or fails to comply
1444	1444	with an order of the commissioner that has become final, in addition
1445	1445	to any other remedy provided under law, the commissioner, on not
1446	1446	less than 10 days' notice to the residential mortgage loan
1447	1447	originator, may without a prior hearing suspend the residential
1448	1448	mortgage loan originator's license. The suspension continues until
1449	1449	the residential mortgage loan originator has complied with the
1450	1450	administrative order or paid the administrative penalty. During
1451	1451	the period of suspension, the residential mortgage loan originator
1452	1452	may not originate a residential mortgage loan and all compensation
1453	1453	received by the residential mortgage loan originator during the
1454	1454	period of suspension is subject to forfeiture as provided by
1455	1455	Section 157.031(a-1)[, as defined by Section 180.002].
1456	1456	(j) An order revoking the license of a residential mortgage
1457	1457	loan originator may provide that the person is prohibited, without
1458	1458	previously obtaining written consent of the commissioner, from:
1459	1459	(1) engaging in the business of originating or making
1460	1460	residential mortgage loans[, as defined by Section 180.002];
1461	1461	(2) otherwise affiliating with a person for the
1462	1462	purpose of engaging in the business of originating or making
1463	1463	residential mortgage loans[, as defined by Section 180.002]; and
1464	1464	(3) being an employee, officer, director, manager,
1465	1465	shareholder, member, agent, contractor, or processor of a mortgage
1466	1466	banker, residential mortgage loan company, or residential mortgage
1467	1467	loan originator for a residential mortgage loan company.
1468	1468	SECTION 76. Subsection (e), Section 157.0241, Finance Code,
1469	1469	is amended to read as follows:
1470	1470	(e) This section does not limit the authority of the
1471	1471	commissioner to take disciplinary action against a residential
1472	1472	mortgage loan originator for a violation of this chapter, Chapter
1473	1473	156, or the rules adopted by the finance commission under this
1474	1474	chapter or Chapter 156. The repayment in full to the recovery fund
1475	1475	of all obligations of a residential mortgage loan originator does
1476	1476	not nullify or modify the effect of any other disciplinary
1477	1477	proceeding brought under this chapter or Chapter 156.
1478	1478	SECTION 77. Section 157.025, Finance Code, is amended to
1479	1479	read as follows:
1480	1480	Sec. 157.025. RESTITUTION. The commissioner may order a
1481	1481	residential mortgage loan originator to make restitution for any
1482	1482	amount received by that person in violation of this chapter or
1483	1483	Chapter 156.
1484	1484	SECTION 78. Section 157.026, Finance Code, is amended by
1485	1485	amending Subsection (b) and adding Subsection (e) to read as
1486	1486	follows:
1487	1487	(b) If the commissioner proposes to suspend or revoke a
1488	1488	license of a residential mortgage loan originator or if the
1489	1489	commissioner refuses to issue or renew [a license to an applicant
1490	1490	for] a residential mortgage loan originator license [or person
1491	1491	requesting a renewal of a residential mortgage loan originator
1492	1492	license] under this chapter, the applicant or license holder is
1493	1493	entitled to a hearing before the commissioner or an administrative
1494	1494	law judge who shall make a proposal for decision to the
1495	1495	commissioner. The commissioner or administrative law judge shall
1496	1496	prescribe the time and place of the hearing. The hearing is
1497	1497	governed by Chapter 2001, Government Code.
1498	1498	(e) The commissioner may, in the commissioner's discretion,
1499	1499	rescind or vacate any previously issued revocation order.
1500	1500	SECTION 79. Subsection (a), Section 157.027, Finance Code,
1501	1501	is amended to read as follows:
1502	1502	(a) A residential mortgage loan applicant injured by a
1503	1503	violation of this chapter or Chapter 156 by a residential mortgage
1504	1504	loan originator may bring an action for recovery of actual monetary
1505	1505	damages and reasonable attorney's fees and court costs.
1506	1506	SECTION 80. Subsection (b), Section 157.030, Finance Code,
1507	1507	is amended to read as follows:
1508	1508	(b) This section does not limit or preclude the liability of
1509	1509	a residential mortgage loan originator for:
1510	1510	(1) failing to comply with this chapter, Chapter 156,
1511	1511	or a rule adopted under this chapter or Chapter 156;
1512	1512	(2) failing to comply with a provision of or duty
1513	1513	arising under an agreement with a residential mortgage loan
1514	1514	applicant under this chapter or Chapter 156; or
1515	1515	(3) violating any other state or federal law.
1516	1516	SECTION 81. Section 157.031, Finance Code, is amended by
1517	1517	amending Subsection (a) and adding Subsection (a-1) to read as
1518	1518	follows:
1519	1519	(a) An individual who is not exempt under this chapter or
1520	1520	other applicable law and who acts as a residential mortgage loan
1521	1521	originator without first obtaining a license required under this
1522	1522	chapter commits an offense [A person commits an offense if the
1523	1523	person is an employee of a mortgage banker, is not exempt under this
1524	1524	chapter, and acts as a residential mortgage loan originator without
1525	1525	first obtaining a license required under this chapter]. An offense
1526	1526	under this subsection is a Class B misdemeanor. A second or
1527	1527	subsequent conviction for an offense under this subsection is a
1528	1528	Class A misdemeanor.
1529	1529	(a-1) An individual who received money, or the equivalent of
1530	1530	money, as a fee or profit because of or in consequence of the
1531	1531	individual acting as a residential mortgage loan originator without
1532	1532	an active license or being exempt under this chapter is liable for
1533	1533	damages in an amount that is not less than the amount of the fee or
1534	1534	profit received and not to exceed three times the amount of the fee
1535	1535	or profit received, as may be determined by the court. An aggrieved
1536	1536	person may recover damages under this subsection in a court.
1537	1537	SECTION 82. Subchapter E, Chapter 157, Finance Code, as
1538	1538	added by this Act, is amended by adding Section 157.032 to read as
1539	1539	follows:
1540	1540	Sec. 157.032. POWERS OF COMMISSIONER. (a) In addition to
1541	1541	any other action, proceeding, or remedy authorized by law, the
1542	1542	commissioner may institute an action in the commissioner's name to
1543	1543	enjoin a violation of Subchapter D or a rule adopted under
1544	1544	Subchapter D. To sustain an action filed under this subsection, it
1545	1545	is not necessary to allege or prove that an adequate remedy at law
1546	1546	does not exist or that substantial or irreparable damage would
1547	1547	result from a continued violation of Subchapter D.
1548	1548	(b) The commissioner is not required to provide an appeal
1549	1549	bond in any action or proceeding to enforce Subchapter D.
1550	1550	(c) The commissioner may authorize specific employees to
1551	1551	conduct hearings and make recommendations for final decisions in
1552	1552	contested cases.
1553	1553	SECTION 83. Section 158.104, Finance Code, is amended to
1554	1554	read as follows:
1555	1555	Sec. 158.104. MULTI-STATE EXAMINATION AUTHORITY. To ensure
1556	1556	that residential mortgage loan servicers to whom this chapter
1557	1557	applies operate in this state in compliance with this chapter and
1558	1558	with other law in accordance with this chapter, the commissioner or
1559	1559	the commissioner's designee may participate in multi-state
1560	1560	mortgage examinations as scheduled by the Conference of State Bank
1561	1561	Supervisors Multi-State Mortgage Committee or by the Consumer
1562	1562	Financial Protection Bureau in accordance with the [Conference of
1563	1563	State Bank Supervisors] protocol for such examinations.
1564	1564	SECTION 84. Subdivisions (17) and (21), Section 180.002,
1565	1565	Finance Code, are amended to read as follows:
1566	1566	(17) "Regulatory official" means:
1567	1567	(A) with respect to Subtitles A, F, and G of this
1568	1568	title, the banking commissioner of Texas;
1569	1569	(B) with respect to Chapters 156 and 157 [except
1570	1570	as provided by Paragraph (D)], the savings and mortgage lending
1571	1571	commissioner; and
1572	1572	(C) with respect to Chapters 342, 347, 348, and
1573	1573	351, the consumer credit commissioner[; and
1574	1574	[(D) with respect to credit unions, to the
1575	1575	examination, investigation, or inspection of employees of credit
1576	1576	union subsidiary organizations licensed under Chapter 156, and to
1577	1577	the enforcement of compliance with this chapter and Chapter 156 by
1578	1578	those employees, the credit union commissioner].
1579	1579	(21) "Rulemaking authority" means[:
1580	1580	[(A)] the finance commission[, except as
1581	1581	provided by Paragraph (B); or
1582	1582	[(B) with respect to credit unions and the
1583	1583	rulemaking authority granted by Section 15.4024, the Credit Union
1584	1584	Commission].
1585	1585	SECTION 85. Subsection (a), Section 180.056, Finance Code,
1586	1586	is amended to read as follows:
1587	1587	(a) An applicant for a residential mortgage loan originator
1588	1588	license must complete education courses that include[, at a
1589	1589	minimum,] at least the minimum number of hours and type of courses
1590	1590	required by the S.A.F.E. Mortgage Licensing Act and the minimum
1591	1591	number of hours of training related to lending standards for the
1592	1592	nontraditional mortgage product marketplace required by that Act
1593	1593	and any additional requirements established by the regulatory
1594	1594	official and adopted by rule of the rulemaking authority.
1595	1595	SECTION 86. Subsection (a), Section 180.251, Finance Code,
1596	1596	is amended to read as follows:
1597	1597	(a) The [Except as provided by Subsection (b), the] savings
1598	1598	and mortgage lending commissioner shall administer and enforce this
1599	1599	chapter with respect to individuals licensed under Chapter [156 or]
1600	1600	157.
1601	1601	SECTION 87. The following provisions of the Finance Code
1602	1602	are repealed:
1603	1603	(1) Section 15.4024;
1604	1604	(2) Sections 156.2015, 156.205, and 156.405;
1605	1605	(3) Subsections (a-1) and (a-2), Section 156.101;
1606	1606	(4) Subsections (b), (b-1), and (b-2), Section
1607	1607	156.201;
1608	1608	(5) Subsection (b), Section 156.102, Subsection (c),
1609	1609	Section 156.202, Subsection (c), Section 156.203, Subsection (b),
1610	1610	Section 156.2041, Subsection (b), Section 156.2042, Subsection
1611	1611	(b), Section 156.2043, Subsection (c), Section 156.2044, Section
1612	1612	156.2045, Subsection (a), Section 156.206, Subsections (b), (c),
1613	1613	and (d), Section 156.207, and Subsection (c), Section 156.2081;
1614	1614	(6) Subsections (b-1), (b-2), and (j), Section
1615	1615	156.208;
1616	1616	(7) Subsection (f), Section 157.003, Finance Code, as
1617	1617	added by Chapter 655 (Senate Bill No. 1124), Acts of the 82nd
1618	1618	Legislature, Regular Session, 2011;
1619	1619	(8) Subsection (d), Section 157.012, and Subsection
1620	1620	(b), Section 157.015; and
1621	1621	(9) Subsection (b), Section 180.251.
1622	1622	SECTION 88. The changes in law made by this Act do not
1623	1623	affect any pending proceeding or action brought under Subchapter D,
1624	1624	Chapter 156, Finance Code, as that subchapter existed immediately
1625	1625	before amendment by this Act, and the former law is continued in
1626	1626	effect for that purpose.
1627	1627	SECTION 89. The changes in law made by this Act apply only
1628	1628	to a license or registration issued or renewed on or after the
1629	1629	effective date of this Act. A license or registration issued or
1630	1630	renewed before the effective date of this Act is governed by the law
1631	1631	in effect on the date the license or registration was issued or
1632	1632	renewed, and the former law is continued in effect for that purpose.
1633	1633	SECTION 90. This Act takes effect September 1, 2013.