Texas 2017 - 85th Regular

Texas Senate Bill SB1916 Compare Versions

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1	1	85R5936 TSR-F
2	2	By: Buckingham S.B. No. 1916
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to savings and loan associations, savings banks,
8	8	residential mortgage loan originators and servicers, and other
9	9	persons or entities under the regulatory jurisdiction of the
10	10	Department of Savings and Mortgage Lending and the savings and
11	11	mortgage lending commissioner; creating an offense.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Sections 62.001(a), (b), and (d), Finance Code,
14	14	are amended to read as follows:
15	15	(a) Five or more residents of this state may apply to form
16	16	and incorporate an association by submitting to the commissioner an
17	17	application and the filing fee.
18	18	(b) An application must contain:
19	19	(1) two copies of the association's certificate of
20	20	formation [articles of incorporation] identifying:
21	21	(A) the name of the association;
22	22	(B) the location of the principal office; and
23	23	(C) the names and addresses of the initial
24	24	directors;
25	25	(2) two copies of the association's bylaws;
26	26	(3) data sufficiently detailed and comprehensive to
27	27	enable the commissioner to make a determination under Section
28	28	62.007, including statements, exhibits, and maps;
29	29	(4) other information relating to the association and
30	30	its operation that the finance commission by rule requires; and
31	31	(5) financial information about each applicant,
32	32	incorporator, director, or shareholder that the finance commission
33	33	by rule requires.
34	34	(d) The certificate of formation [articles of
35	35	incorporation] and statements of fact shall be signed and sworn to.
36	36	SECTION 2. Section 62.002(a), Finance Code, is amended to
37	37	read as follows:
38	38	(a) A capital stock association's certificate of formation
39	39	[articles of incorporation] must include a statement of:
40	40	(1) the aggregate number of shares of common stock
41	41	that the association may issue;
42	42	(2) the par value of each share or that the shares are
43	43	without par value;
44	44	(3) whether the association may issue preferred stock;
45	45	(4) the amount of stock that has been subscribed and
46	46	will be paid for before the association begins business;
47	47	(5) the name and address of each subscriber and the
48	48	amount subscribed by each; and
49	49	(6) the amount of paid-in surplus with which the
50	50	association will begin business.
51	51	SECTION 3. Section 62.003, Finance Code, is amended to read
52	52	as follows:
53	53	Sec. 62.003. ADDITIONAL INCORPORATION REQUIREMENTS FOR
54	54	MUTUAL ASSOCIATION. (a) A mutual association's certificate of
55	55	formation [articles of incorporation] must include a statement of
56	56	the amount of savings liability of the association and the amount of
57	57	the expense fund with which the association will begin business.
58	58	(b) Before approving the certificate of formation
59	59	[articles of incorporation] of a mutual association, the
60	60	commissioner may require the association to have subscriptions for
61	61	an aggregate amount of savings accounts and an expense fund in an
62	62	aggregate amount that the commissioner, under rules of the finance
63	63	commission, finds is necessary for the successful operation of the
64	64	association.
65	65	SECTION 4. Sections 62.007(a) and (b), Finance Code, are
66	66	amended to read as follows:
67	67	(a) The commissioner may approve an application to
68	68	incorporate only if the commissioner finds that:
69	69	(1) the prerequisites to incorporation required by
70	70	this chapter are satisfied;
71	71	(2) the character, responsibility, and general
72	72	fitness of each person named in the certificate of formation
73	73	[articles of incorporation] command confidence and warrant belief
74	74	that:
75	75	(A) the business of the association will be
76	76	honestly and efficiently conducted in accordance with the intent
77	77	and purpose of this subtitle; and
78	78	(B) the association will have qualified
79	79	full-time management;
80	80	(3) there is a public need for the association;
81	81	(4) the volume of business in the community in which
82	82	the association will conduct its business indicates a profitable
83	83	operation is probable; and
84	84	(5) the operation of the association will not unduly
85	85	harm an existing association.
86	86	(b) On finding that the requirements of Subsection (a) are
87	87	fulfilled, the commissioner shall:
88	88	(1) enter an order approving the application and
89	89	stating the findings required by Subsection (a);
90	90	(2) issue under official seal a certificate of
91	91	incorporation;
92	92	(3) deliver a copy of the approved certificate of
93	93	formation [articles of incorporation] and bylaws to the
94	94	incorporators; and
95	95	(4) permanently retain a copy of the certificate of
96	96	formation [articles] and bylaws.
97	97	SECTION 5. The heading to Section 62.010, Finance Code, is
98	98	amended to read as follows:
99	99	Sec. 62.010. AMENDMENT OF CERTIFICATE OF FORMATION
100	100	[ARTICLES OF INCORPORATION] OR BYLAWS.
101	101	SECTION 6. Section 62.010(a), Finance Code, is amended to
102	102	read as follows:
103	103	(a) An association may amend its certificate of formation
104	104	[articles of incorporation] or bylaws by a resolution adopted by a
105	105	majority vote of those entitled to vote attending an annual meeting
106	106	or a special meeting called for that purpose.
107	107	SECTION 7. Section 62.011(a), Finance Code, is amended to
108	108	read as follows:
109	109	(a) Only with the prior approval of the commissioner may an
110	110	association:
111	111	(1) establish an office other than the principal
112	112	office stated in the association's certificate of formation
113	113	[articles of incorporation];
114	114	(2) move an office from its immediate vicinity; or
115	115	(3) change the association's name.
116	116	SECTION 8. Section 62.051, Finance Code, is amended to read
117	117	as follows:
118	118	Sec. 62.051. PURPOSE OF INCORPORATION. A person may apply
119	119	to form and incorporate an association for the purpose of:
120	120	(1) purchasing the assets, assuming the liabilities,
121	121	excluding liability to stockholders, and continuing the business of
122	122	an association the commissioner considers to be in an unsafe
123	123	condition; or
124	124	(2) acquiring an existing association by merger.
125	125	SECTION 9. Sections 62.053(a) and (e), Finance Code, are
126	126	amended to read as follows:
127	127	(a) The commissioner shall approve an application under
128	128	this subchapter if the commissioner finds that:
129	129	(1) the business of the association that is to be
130	130	reorganized or merged can be effectively continued under the
131	131	certificate of formation [articles of incorporation]; and
132	132	(2) the reorganization or merger is in the best
133	133	interest of the general public and the savers, depositors,
134	134	creditors, and shareholders of the association that is to be
135	135	reorganized or merged.
136	136	(e) In a merger, a shareholder of a capital stock
137	137	association has the same dissenter's rights as a shareholder of a
138	138	domestic business corporation under the Business Organizations
139	139	Code [Texas Business Corporation Act].
140	140	SECTION 10. Section 62.156(c), Finance Code, is amended to
141	141	read as follows:
142	142	(c) An association may retire or redeem preferred stock in
143	143	the manner provided by:
144	144	(1) the certificate of formation [articles of
145	145	incorporation]; or
146	146	(2) a resolution of the board establishing the rights
147	147	and preferences relating to the stock.
148	148	SECTION 11. Sections 62.157(a) and (c), Finance Code, are
149	149	amended to read as follows:
150	150	(a) The certificate of formation [articles of
151	151	incorporation] may:
152	152	(1) authorize that shares of preferred stock be
153	153	divided into and issued in series; and
154	154	(2) determine the rights and preferences of each
155	155	series or part of a series.
156	156	(c) The certificate of formation [articles of
157	157	incorporation] may authorize the board by resolution to divide
158	158	classes of preferred stock into series and to determine the rights
159	159	and preferences of the shares of each series. A copy of the
160	160	resolution must be submitted to the commissioner before the shares
161	161	may be issued. The commissioner shall file the resolution in the
162	162	commissioner's office if the resolution conforms to this subtitle.
163	163	After the resolution is filed, it is considered an amendment of the
164	164	association's certificate of formation [articles of
165	165	incorporation].
166	166	SECTION 12. Section 62.252(b), Finance Code, is amended to
167	167	read as follows:
168	168	(b) The directors shall execute [two copies of] the
169	169	application required by Section 62.251.
170	170	SECTION 13. Section 62.351(c), Finance Code, is amended to
171	171	read as follows:
172	172	(c) A shareholder of a capital stock association has the
173	173	same dissenter's rights as a shareholder of a domestic corporation
174	174	under the Business Organizations Code [Texas Business Corporation
175	175	Act].
176	176	SECTION 14. Section 62.405(c), Finance Code, is amended to
177	177	read as follows:
178	178	(c) A surviving association that is a domestic association
179	179	shall operate under:
180	180	(1) the certificate of formation [articles] and bylaws
181	181	of the merging or consolidating domestic association; and
182	182	(2) the laws applicable to a domestic association.
183	183	SECTION 15. Section 62.454(b), Finance Code, is amended to
184	184	read as follows:
185	185	(b) After the merger takes effect:
186	186	(1) a corporation that was merged ceases to exist;
187	187	(2) the association assumes the rights and obligations
188	188	of the corporation and owns the property of the association; and
189	189	(3) the association's certificate of formation is
190	190	[articles of incorporation are] considered amended to the extent
191	191	that a change is stated in the plan of merger.
192	192	SECTION 16. Section 66.002, Finance Code, is amended to
193	193	read as follows:
194	194	Sec. 66.002. ADOPTION OF RULES. The finance commission may
195	195	adopt rules relating to:
196	196	(1) the minimum amounts of capital stock and paid-in
197	197	surplus required for incorporation as a capital stock association;
198	198	(2) the minimum amounts of savings liability and
199	199	expense funds required for incorporation as a mutual association;
200	200	(3) the fees and procedures for processing, hearing,
201	201	and deciding applications filed with the commissioner or the
202	202	Department of Savings and Mortgage Lending under this subtitle;
203	203	(4) the books and records that an association is
204	204	required to keep and the location at which the books and records are
205	205	required to be maintained;
206	206	(5) the accounting principles and practices that an
207	207	association is required to observe;
208	208	(6) the conditions under which records may be copied
209	209	or reproduced for permanent storage before the original records are
210	210	destroyed;
211	211	(7) [the form, contents, and time of publication of
212	212	statements of condition;
213	213	[(8)] the form and contents of annual reports and
214	214	other reports that an association is required to prepare and
215	215	publish or file;
216	216	(8) [(9)] the manner in which assets, liabilities, and
217	217	transactions in general are to be described when entered in the
218	218	books of an association, so that the entry accurately describes the
219	219	subject matter of the entry; and
220	220	(9) [(10)] the conditions under which the
221	221	commissioner may require an asset to be charged off or reserves
222	222	established by transfer from surplus or paid-in capital because of
223	223	the depreciation of or overstated value of the asset.
224	224	SECTION 17. Section 66.101, Finance Code, is amended to
225	225	read as follows:
226	226	Sec. 66.101. INTERVENTION FOR VIOLATIONS AND UNSAFE AND
227	227	UNSOUND PRACTICES. The commissioner may intervene in the affairs
228	228	of an association if the association or a person who participates in
229	229	the affairs of the association or a subsidiary of the association:
230	230	(1) engages in or is about to engage in an unsafe and
231	231	unsound practice in conducting the affairs of the association; or
232	232	(2) violates or is about to violate:
233	233	(A) the certificate of formation [articles of
234	234	incorporation] or bylaws of the association;
235	235	(B) a law or supervisory order applicable to the
236	236	association; or
237	237	(C) a condition that the commissioner or the
238	238	finance commission has imposed on the association by written order
239	239	or agreement.
240	240	SECTION 18. Section 67.001(b), Finance Code, is amended to
241	241	read as follows:
242	242	(b) Subsection (a) does not prohibit activity that is not
243	243	considered to be transacting business in this state under Section
244	244	9.251, Business Organizations Code [Section B, Article 8.01, Texas
245	245	Business Corporation Act].
246	246	SECTION 19. Sections 92.051(a), (b), and (d), Finance Code,
247	247	are amended to read as follows:
248	248	(a) Five or more adult residents of this state may apply to
249	249	form and incorporate a savings bank by submitting to the
250	250	commissioner:
251	251	(1) an application to incorporate a savings bank that
252	252	is:
253	253	(A) in a form specified by the commissioner; and
254	254	(B) signed by each incorporator; and
255	255	(2) the filing fee.
256	256	(b) An application must contain:
257	257	(1) two copies of the savings bank's certificate of
258	258	formation [articles of incorporation] identifying:
259	259	(A) the name of the savings bank;
260	260	(B) the location of the principal office; and
261	261	(C) the names and addresses of the initial
262	262	directors;
263	263	(2) two copies of the savings bank's bylaws;
264	264	(3) data sufficiently detailed and comprehensive to
265	265	enable the commissioner to make findings under Section 92.058,
266	266	including statements, exhibits, and maps;
267	267	(4) other information relating to the savings bank and
268	268	its operation that the finance commission by rule requires; and
269	269	(5) financial information about each applicant,
270	270	incorporator, director, officer, or shareholder that the finance
271	271	commission by rule requires.
272	272	(d) The certificate of formation [articles of
273	273	incorporation] and statements of fact must be signed and sworn to.
274	274	SECTION 20. Section 92.052(a), Finance Code, is amended to
275	275	read as follows:
276	276	(a) A capital stock savings bank's certificate of formation
277	277	[articles of incorporation] must include a statement of:
278	278	(1) the aggregate number of shares of common stock
279	279	that the savings bank may issue;
280	280	(2) the par value of each share or that the shares are
281	281	without par value;
282	282	(3) whether the savings bank may issue preferred
283	283	stock;
284	284	(4) the amount of stock that has been subscribed and
285	285	will be paid for before the savings bank begins business;
286	286	(5) the name and address of each subscriber and the
287	287	amount subscribed by each; and
288	288	(6) the amount of paid-in surplus with which the
289	289	savings bank will begin business.
290	290	SECTION 21. Section 92.053, Finance Code, is amended to
291	291	read as follows:
292	292	Sec. 92.053. ADDITIONAL REQUIREMENTS FOR MUTUAL SAVINGS
293	293	BANK. (a) A mutual savings bank's certificate of formation
294	294	[articles of incorporation] must include a statement of the amount
295	295	of deposit liability of the savings bank and the amount of the
296	296	expense fund with which the savings bank will begin business.
297	297	(b) Before approving the certificate of formation [articles
298	298	of incorporation] of a mutual savings bank, the commissioner shall
299	299	require the savings bank to have subscriptions for an aggregate
300	300	amount of deposit accounts and an expense fund in an aggregate
301	301	amount the finance commission by rule establishes as necessary for
302	302	the successful operation of a mutual savings bank.
303	303	SECTION 22. Sections 92.058(b) and (c), Finance Code, are
304	304	amended to read as follows:
305	305	(b) The commissioner may approve an application to
306	306	incorporate only if:
307	307	(1) the prerequisites to incorporation required by
308	308	this chapter are satisfied;
309	309	(2) the character, responsibility, and general
310	310	fitness of each person named in the certificate of formation
311	311	[articles of incorporation] command confidence and warrant belief
312	312	that:
313	313	(A) the business of the savings bank will be
314	314	honestly and efficiently conducted in accordance with the intent
315	315	and purpose of this subtitle; and
316	316	(B) the savings bank will have qualified
317	317	full-time management;
318	318	(3) there is a public need for the savings bank;
319	319	(4) the volume of business in the community in which
320	320	the savings bank will conduct its business indicates a profitable
321	321	operation is probable; and
322	322	(5) the operation of the savings bank will not unduly
323	323	harm an existing savings bank or state or federal savings and loan
324	324	association.
325	325	(c) On finding that each requirement of Subsection (b) is
326	326	met, the commissioner shall:
327	327	(1) enter an order approving the application and
328	328	stating the findings required by Subsection (b);
329	329	(2) issue under official seal a certificate of
330	330	incorporation;
331	331	(3) deliver a copy of the approved certificate of
332	332	formation [articles of incorporation] and bylaws to the
333	333	incorporators; and
334	334	(4) permanently retain a copy of the certificate of
335	335	formation [articles of incorporation] and bylaws.
336	336	SECTION 23. The heading to Section 92.062, Finance Code, is
337	337	amended to read as follows:
338	338	Sec. 92.062. AMENDMENT OF CERTIFICATE OF FORMATION
339	339	[ARTICLES OF INCORPORATION] OR BYLAWS.
340	340	SECTION 24. Section 92.062(a), Finance Code, is amended to
341	341	read as follows:
342	342	(a) A savings bank may amend its certificate of formation
343	343	[articles of incorporation] or bylaws by a resolution adopted by a
344	344	majority vote of those entitled to vote attending an annual meeting
345	345	or a special meeting called for that purpose.
346	346	SECTION 25. Section 92.063(a), Finance Code, is amended to
347	347	read as follows:
348	348	(a) Only with the prior approval of the commissioner given
349	349	in accordance with rules of the finance commission may a savings
350	350	bank:
351	351	(1) establish an office other than the principal
352	352	office stated in the savings bank's certificate of formation
353	353	[articles of incorporation];
354	354	(2) move an office from its immediate vicinity; or
355	355	(3) change the savings bank's name.
356	356	SECTION 26. Section 92.101, Finance Code, is amended to
357	357	read as follows:
358	358	Sec. 92.101. PURPOSE OF INCORPORATION. A person may apply
359	359	to form and incorporate a savings bank for the purpose of:
360	360	(1) purchasing the assets, assuming the liabilities
361	361	other than liability to shareholders, and continuing the business
362	362	of a financial institution the commissioner considers to be in an
363	363	unsafe condition;
364	364	(2) acquiring an existing financial institution by
365	365	merger; or
366	366	(3) facilitating a reorganization or merger with or
367	367	into a savings bank under rules adopted by the finance commission.
368	368	SECTION 27. Sections 92.103(a) and (e), Finance Code, are
369	369	amended to read as follows:
370	370	(a) The commissioner shall approve an application under
371	371	this subchapter if the commissioner finds that:
372	372	(1) the business of the financial institution that is
373	373	to be reorganized or merged can be effectively continued under the
374	374	certificate of formation [articles of incorporation]; and
375	375	(2) the reorganization or merger is in the best
376	376	interest of the public and the savers, depositors, creditors, and
377	377	shareholders of the financial institution that is to be reorganized
378	378	or merged.
379	379	(e) In a merger, a shareholder of a capital stock financial
380	380	institution has the same dissenter's rights as a shareholder of a
381	381	domestic business corporation under the Business Organizations
382	382	Code [Texas Business Corporation Act].
383	383	SECTION 28. Section 92.152(b), Finance Code, is amended to
384	384	read as follows:
385	385	(b) The members or shareholders shall elect the board by a
386	386	majority vote at the annual meeting. The directors may be elected
387	387	for staggered terms of longer than one year as provided by the
388	388	savings bank's bylaws or certificate of formation [articles of
389	389	incorporation].
390	390	SECTION 29. Section 92.158(a), Finance Code, is amended to
391	391	read as follows:
392	392	(a) The voting rights of a person entitled to vote at an
393	393	annual or special meeting of a savings bank are the same as those of
394	394	a shareholder of a domestic business corporation under the Business
395	395	Organizations Code [Texas Business Corporation Act].
396	396	SECTION 30. Section 92.209(c), Finance Code, is amended to
397	397	read as follows:
398	398	(c) A savings bank may retire or redeem preferred stock in
399	399	the manner provided by:
400	400	(1) the certificate of formation [articles of
401	401	incorporation]; or
402	402	(2) a resolution of the board of the savings bank
403	403	establishing the rights and preferences relating to the stock.
404	404	SECTION 31. Sections 92.210(a) and (c), Finance Code, are
405	405	amended to read as follows:
406	406	(a) The certificate of formation [articles of
407	407	incorporation] may:
408	408	(1) authorize that shares of preferred stock be
409	409	divided into and issued in series; and
410	410	(2) determine the rights and preferences of each
411	411	series or part of a series.
412	412	(c) The certificate of formation [articles of
413	413	incorporation] may authorize the board by resolution to divide
414	414	classes of preferred stock into series and to determine the rights
415	415	and preferences of the shares of each series. A copy of the
416	416	resolution must be submitted to the commissioner before the shares
417	417	may be issued. The commissioner shall file the resolution in the
418	418	commissioner's office if the resolution conforms to this subtitle.
419	419	After the resolution is filed, it is considered an amendment of the
420	420	savings bank's certificate of formation [articles of
421	421	incorporation].
422	422	SECTION 32. Section 92.302(b), Finance Code, is amended to
423	423	read as follows:
424	424	(b) The directors, or the president and secretary, shall
425	425	execute [two copies of] an application for certificate of
426	426	incorporation as provided by Subchapter B.
427	427	SECTION 33. Section 92.351(c), Finance Code, is amended to
428	428	read as follows:
429	429	(c) A shareholder of a capital stock savings bank has the
430	430	same dissenter's rights as a shareholder of a domestic corporation
431	431	under the Business Organizations Code [Texas Business Corporation
432	432	Act].
433	433	SECTION 34. Section 92.405(c), Finance Code, is amended to
434	434	read as follows:
435	435	(c) A surviving savings bank that is a domestic savings bank
436	436	shall operate under:
437	437	(1) the certificate of formation [articles] and bylaws
438	438	of the merging or consolidating domestic savings bank; and
439	439	(2) the law applicable to a domestic savings bank.
440	440	SECTION 35. Section 92.454(b), Finance Code, is amended to
441	441	read as follows:
442	442	(b) After the merger takes effect:
443	443	(1) a corporation that was merged ceases to exist;
444	444	(2) the savings bank assumes the rights and
445	445	obligations of the corporation and owns the property of the
446	446	corporation; and
447	447	(3) the savings bank's certificate of formation is
448	448	[articles of incorporation are] considered amended to the extent
449	449	that a change is stated in the plan of merger.
450	450	SECTION 36. Section 94.301, Finance Code, is amended to
451	451	read as follows:
452	452	Sec. 94.301. AUTHORIZATION. With the prior approval
453	453	[consent] of the commissioner and subject to rules adopted by the
454	454	finance commission, a savings bank may invest in a subsidiary
455	455	corporation created under general corporation law.
456	456	SECTION 37. Section 96.002(a), Finance Code, is amended to
457	457	read as follows:
458	458	(a) The finance commission may adopt rules necessary to
459	459	supervise and regulate savings banks and to protect public
460	460	investment in savings banks, including rules relating to:
461	461	(1) the minimum amounts of capital required to
462	462	incorporate and operate as a savings bank, which may not be less
463	463	than the amounts required of corresponding national banks;
464	464	(2) the fees and procedures for processing, hearing,
465	465	and deciding applications filed with the commissioner or the
466	466	Department of Savings and Mortgage Lending under this subtitle;
467	467	(3) the books and records that a savings bank is
468	468	required to keep and the location at which the books and records are
469	469	required to be maintained;
470	470	(4) the accounting principles and practices that a
471	471	savings bank is required to observe;
472	472	(5) the conditions under which records may be copied
473	473	or reproduced for permanent storage before the originals are
474	474	destroyed;
475	475	(6) [the form, content, and time of publication of
476	476	statements of condition;
477	477	[(7)] the form and content of any report that a savings
478	478	bank is required to prepare and publish or file under this chapter;
479	479	(7) [(8)] the manner in which assets, liabilities, and
480	480	transactions in general are to be described when entered in the
481	481	books of a savings bank, so that the entry accurately describes the
482	482	subject matter of the entry;
483	483	(8) [(9)] the conditions under which the commissioner
484	484	may require an asset to be charged off or reserves established by
485	485	transfer from surplus or paid-in capital because of depreciation of
486	486	or overstated value of the asset;
487	487	(9) [(10)] the change of control of a savings bank;
488	488	(10) [(11)] the conduct, management, and operation of
489	489	a savings bank;
490	490	(11) [(12)] the withdrawable accounts, bonuses,
491	491	plans, and contracts for savings programs;
492	492	(12) [(13)] the merger, consolidation,
493	493	reorganization, conversion, and liquidation of a savings bank;
494	494	(13) [(14)] the establishment of an additional office
495	495	or the change of office location or name of a savings bank;
496	496	(14) [(15)] the requirements for a savings bank's
497	497	holding companies, including those relating to:
498	498	(A) registration and periodic reporting of a
499	499	holding company with the commissioner; and
500	500	(B) transactions between a holding company, an
501	501	affiliate of a holding company, or a savings bank; and
502	502	(15) [(16)] the powers of a savings bank to make loans
503	503	and investments that contain provisions reasonably necessary to
504	504	ensure that a loan made by a savings bank is consistent with sound
505	505	lending practices and that the savings bank's investment will
506	506	promote the purposes of this subtitle, including provisions
507	507	governing:
508	508	(A) the type of loans and the conditions under
509	509	which a savings bank may originate, make, or sell loans;
510	510	(B) the conditions under which a savings bank may
511	511	purchase or participate in a loan made by another lender;
512	512	(C) the conditions for the servicing of a loan
513	513	for another lender;
514	514	(D) the conditions under which a savings bank may
515	515	lend money on the security of a loan made by another person;
516	516	(E) the conditions under which a savings bank may
517	517	pledge loans held by it as collateral for borrowing by the savings
518	518	bank;
519	519	(F) the conditions under which a savings bank may
520	520	invest in securities and debt instruments;
521	521	(G) the documentation that a savings bank must
522	522	have in its files at the time of funding or purchase of a loan, an
523	523	investment, or a participation in a loan;
524	524	(H) the form and content of statements of
525	525	expenses and fees and other charges that are paid by a borrower or
526	526	that a borrower is obligated to pay;
527	527	(I) the title information that must be
528	528	maintained;
529	529	(J) the borrower's insurance coverage of
530	530	property securing a loan;
531	531	(K) an appraisal report;
532	532	(L) the financial statement of a borrower;
533	533	(M) the fees or other compensation that may be
534	534	paid to a person in connection with obtaining a loan for a savings
535	535	bank, including an officer, director, employee, affiliated person,
536	536	consultant, or third party;
537	537	(N) the conditions under which the savings bank
538	538	may advance money to pay a tax, assessment, insurance premium, or
539	539	other similar charge for the protection of the savings bank's
540	540	interest in property securing the savings bank's loans;
541	541	(O) the terms under which a savings bank may
542	542	acquire and deal in real property;
543	543	(P) the valuation on a savings bank's books of
544	544	real property held by the savings bank;
545	545	(Q) the terms governing the investment by a
546	546	savings bank in a subsidiary, the powers that may be exercised by a
547	547	subsidiary, and the activities that may be engaged in by a
548	548	subsidiary; and
549	549	(R) any other matter considered necessary to
550	550	administer each type of transaction.
551	551	SECTION 38. Section 96.101(a), Finance Code, is amended to
552	552	read as follows:
553	553	(a) The commissioner may intervene in the affairs of a
554	554	savings bank if the savings bank or a person who participates in the
555	555	affairs of the savings bank or a subsidiary or holding company of
556	556	the savings bank:
557	557	(1) engages in or is about to engage in an unsafe and
558	558	unsound practice in conducting the affairs of the savings bank; or
559	559	(2) violates or is about to violate:
560	560	(A) the certificate of formation [articles of
561	561	incorporation] or bylaws of the savings bank;
562	562	(B) a law or supervisory order applicable to the
563	563	savings bank; or
564	564	(C) a condition that the commissioner or the
565	565	finance commission has imposed on the savings bank by written
566	566	order, directive, or agreement.
567	567	SECTION 39. Section 97.052, Finance Code, is amended to
568	568	read as follows:
569	569	Sec. 97.052. APPLICATION FOR APPROVAL OF REORGANIZATION.
570	570	The application for approval of reorganization must contain:
571	571	(1) a brief statement summarizing a reorganization
572	572	plan;
573	573	(2) two copies of the proposed certificate of
574	574	formation [articles of incorporation] of the subsidiary savings
575	575	bank acknowledged by the incorporators of the subsidiary savings
576	576	bank;
577	577	(3) two copies of the proposed bylaws of the savings
578	578	bank;
579	579	(4) a statement that the plan of reorganization was
580	580	advised, authorized, and approved by the savings bank in the manner
581	581	and by the vote required by its charter and the laws of this state;
582	582	and
583	583	(5) a statement of the manner of approval.
584	584	SECTION 40. Section 98.001(b), Finance Code, is amended to
585	585	read as follows:
586	586	(b) Subsection (a) does not prohibit activity that is not
587	587	considered to be transacting business in this state under Section
588	588	9.251, Business Organizations Code [Section B, Article 8.01, Texas
589	589	Business Corporation Act].
590	590	SECTION 41. Section 119.101(c), Finance Code, is amended to
591	591	read as follows:
592	592	(c) A stockholder of a capital stock savings bank has the
593	593	same right to examine the relevant books and records of a savings
594	594	bank as a shareholder of a business corporation under the Business
595	595	Organizations Code [Texas Business Corporation Act].
596	596	SECTION 42. Section 156.004(a), Finance Code, is amended to
597	597	read as follows:
598	598	(a) At the time a residential mortgage loan [an] applicant
599	599	submits an application to a residential mortgage loan originator
600	600	sponsored by and conducting business for a licensed or registered
601	601	residential mortgage loan company under this chapter, the
602	602	residential mortgage loan originator shall provide to the applicant
603	603	a disclosure form. The form must [that specifies]:
604	604	(1) include the name, address, and toll-free telephone
605	605	number for the department [the nature of the relationship between
606	606	the applicant and the residential mortgage loan originator]; and
607	607	(2) contain information on how to file a complaint or
608	608	recovery fund claim [the duties the residential mortgage loan
609	609	originator has to the applicant; and
610	610	[(3) how the residential mortgage loan originator will
611	611	be compensated].
612	612	SECTION 43. Section 157.0021(b), Finance Code, is amended
613	613	to read as follows:
614	614	(b) A mortgage banker that indicates in its registration
615	615	that it acts as a residential mortgage loan servicer shall provide
616	616	to the borrower of each residential mortgage loan that it services
617	617	and that is secured by a lien on residential real estate located in
618	618	this state the following notice not later than the 30th day after
619	619	the date the mortgage banker commences servicing the loan:
620	620	"COMPLAINTS REGARDING THE SERVICING OF YOUR TEXAS MORTGAGE
621	621	SHOULD BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
622	622	______________________________ (street address of the Department
623	623	of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
624	624	AVAILABLE AT _______________ (telephone number of the Department of
625	625	Savings and Mortgage Lending's toll-free consumer hotline)."
626	626	SECTION 44. The heading to Subchapter C, Chapter 158,
627	627	Finance Code, is amended to read as follows:
628	628	SUBCHAPTER C. INVESTIGATIONS;[,] COMPLAINTS[,] AND ACTIONS
629	629	AGAINST REGISTRANT
630	630	SECTION 45. Section 158.101, Finance Code, is amended to
631	631	read as follows:
632	632	Sec. 158.101. DISCLOSURE STATEMENT. A registrant shall
633	633	provide to the borrower of each residential mortgage loan that it
634	634	services and that is secured by a lien on residential real estate
635	635	located in this state the following notice not later than the 30th
636	636	day after the registrant commences servicing the loan:
637	637	"COMPLAINTS REGARDING THE SERVICING OF YOUR TEXAS MORTGAGE
638	638	SHOULD BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
639	639	______________________________ (street address of the Department
640	640	of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
641	641	AVAILABLE AT _______________ (telephone number of the Department of
642	642	Savings and Mortgage Lending's toll-free consumer hotline)."
643	643	SECTION 46. The heading to Section 158.102, Finance Code,
644	644	is amended to read as follows:
645	645	Sec. 158.102. INSPECTIONS; INVESTIGATIONS [INVESTIGATION
646	646	OF COMPLAINTS AGAINST REGISTRANT]; SURCHARGE.
647	647	SECTION 47. Section 158.102, Finance Code, is amended by
648	648	adding Subsections (a-1), (a-2), and (e) to read as follows:
649	649	(a-1) The commissioner may conduct an inspection of a
650	650	registrant as the commissioner determines necessary to determine
651	651	whether the registrant is complying with this chapter and
652	652	applicable rules. The inspection under this subsection may include
653	653	an inspection of the books, records, documents, operations, and
654	654	facilities of the registrant.
655	655	(a-2) For reasonable cause, the commissioner at any time may
656	656	investigate a registrant to determine whether the registrant is
657	657	complying with this chapter and applicable rules.
658	658	(e) The commissioner may conduct an undercover or covert
659	659	investigation only if the commissioner, after due consideration of
660	660	the circumstances, determines that the investigation is necessary
661	661	to prevent immediate harm and to carry out the purposes of this
662	662	chapter.
663	663	SECTION 48. Subchapter C, Chapter 158, Finance Code, is
664	664	amended by adding Section 158.107 to read as follows:
665	665	Sec. 158.107. UNREGISTERED ACTIVITY; OFFENSE. (a) An
666	666	individual who is not exempt under this chapter or other applicable
667	667	law and who acts as a residential mortgage loan servicer without
668	668	first obtaining a registration as required under this chapter
669	669	commits an offense.
670	670	(b) An offense under this section is a Class B misdemeanor.
671	671	A second or subsequent conviction for an offense under this section
672	672	is a Class A misdemeanor.
673	673	SECTION 49. The Finance Commission of Texas shall adopt
674	674	rules to implement Section 156.004(a), Finance Code, as amended by
675	675	this Act, not later than January 1, 2018.
676	676	SECTION 50. Section 156.004(a), Finance Code, as amended by
677	677	this Act, applies only to an application for a residential mortgage
678	678	loan that is submitted on or after January 1, 2018. An application
679	679	for a residential mortgage loan that is submitted before January 1,
680	680	2018, is governed by the law in effect on the date the application
681	681	was submitted, and the former law is continued in effect for that
682	682	purpose.
683	683	SECTION 51. Section 157.0021(b), Finance Code, as amended
684	684	by this Act, and Section 158.101, Finance Code, as amended by this
685	685	Act, apply only to a residential mortgage loan that is made on or
686	686	after the effective date of this Act. A residential mortgage loan
687	687	that is made before the effective date of this Act is governed by
688	688	the law in effect on the date the residential mortgage loan was
689	689	made, and the former law is continued in effect for that purpose.
690	690	SECTION 52. (a) Except as otherwise provided by this
691	691	section, this Act takes effect September 1, 2017.
692	692	(b) Section 156.004(a), Finance Code, as amended by this
693	693	Act, takes effect January 1, 2018.