H.B. No. 3617
AN ACT
relating to certain qualifications and requirements for
residential mortgage loan companies, the investment and use of
excess residential mortgage loan originator recovery fund fees, and
the creation of the mortgage grant fund; changing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.016, Finance Code, is amended to read
as follows:
Sec. 13.016. RECOVERY FUND. (a) Except as provided by
Subchapter G, Chapter 156, the [The] savings and mortgage lending
commissioner shall establish, administer, and maintain one
recovery fund for the purposes of Chapters 156 and 157. The
recovery fund shall be administered and maintained under Subchapter
F, Chapter 156.
(b) The savings and mortgage lending commissioner's
authority under this section includes the authority to[:
[(1) set fee amounts under Chapters 156 and 157 for
deposit in the recovery fund; and
[(2)] enforce disciplinary action as provided by
Chapters 156 and 157 for a person's failure to comply with the
applicable provisions of those chapters relating to the recovery
fund and with applicable rules adopted under those chapters.
SECTION 2. Section 156.2041, Finance Code, is amended to
read as follows:
Sec. 156.2041. QUALIFICATIONS AND REQUIREMENTS FOR
LICENSE: MORTGAGE COMPANY. [(a)] To be issued a mortgage company
license, an applicant must:
(1) submit a completed application together with the
payment of applicable fees through the Nationwide Mortgage
Licensing System and Registry;
(2) designate control persons for the mortgage company
through the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under Chapter 157 as the company's
qualifying individual;
(4) if applicable, submit a completed branch
application through the Nationwide Mortgage Licensing System and
Registry for each branch office that engages in residential
mortgage loan activity on residential real estate located in this
state;
(5) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant;
(6) have the company name or assumed name properly
filed with either the secretary of state or with the appropriate
county clerk's office; and
(7) [maintain a physical office in this state; and
[(8)] provide financial statements and any other
information required by the commissioner.
SECTION 3. Section 156.2042, Finance Code, is amended to
read as follows:
Sec. 156.2042. QUALIFICATIONS AND REQUIREMENTS FOR
LICENSE: CREDIT UNION SUBSIDIARY ORGANIZATION. [(a)] To be issued
a credit union subsidiary organization license, an applicant must:
(1) submit a completed application together with the
payment of applicable fees through the Nationwide Mortgage
Licensing System and Registry;
(2) designate control persons for the organization
through the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under Chapter 157 as the company's
qualifying individual;
(4) submit a completed branch application through the
Nationwide Mortgage Licensing System and Registry for each branch
office that engages in residential mortgage loan activity on
residential real estate located in this state; and
(5) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant[; and
[(6) maintain a physical office in this state].
SECTION 4. Section 156.212, Finance Code, is amended to
read as follows:
Sec. 156.212. MAINTENANCE AND LOCATION OF OFFICES. [(a)
Each residential mortgage loan company licensed under this chapter
shall maintain a physical office in this state.
[(a-1) If a residential mortgage loan company's main office
is outside this state, the requirement of Subsection (a) is
satisfied if the company has a branch office located in this state.
[(b)] If a residential mortgage loan company maintains an
office separate and distinct from the company's main office,
whether located in this state or not, that conducts mortgage
business with consumers of this state or regarding residential real
estate in this state, the company shall apply for, pay a fee of $50
for, and obtain an additional license to be known as a branch office
license for each additional office to be maintained by the company.
SECTION 5. Sections 156.501(b) and (c), Finance Code, are
amended to read as follows:
(b) Subject to this subsection and Section 156.502(b), the
recovery fund shall be used to reimburse residential mortgage loan
applicants for actual damages incurred because of acts committed by
a residential mortgage loan originator who was licensed under
Chapter 157 when the act was committed. The use of the fund is
limited to reimbursement for out-of-pocket losses caused by an act
by a residential mortgage loan originator licensed under Chapter
157 that constitutes a violation of Section 157.024(a)(2), (3),
(5), (7), (8), (9), (10), (13), (16), (17), or (18) or 156.304(b).
(c) Amounts in the recovery fund may be invested and
reinvested in accordance with Chapter 2256, Government Code, and
under the prudent person standard described in Section 11b, Article
VII, Texas Constitution [in the same manner as funds of the
Employees Retirement System of Texas], and the interest from these
investments shall be deposited to the credit of the fund. An
investment may not be made under this subsection if the investment
will impair the necessary liquidity required to satisfy claims
[judgment payments] awarded under this subchapter.
SECTION 6. Section 156.502, Finance Code, is amended to
read as follows:
Sec. 156.502. FUNDING. (a) On an application for an
original license [or for renewal of a license] issued under Chapter
157, the applicant, in addition to paying the original application
fee [or renewal fee], shall pay a fee in the [an] amount of
[determined by the commissioner, not to exceed] $20. The fee shall
be deposited in the recovery fund.
(a-1) All or any portion of the amount of a penalty that is
collected by the commissioner under Sections 156.302, 156.303,
157.023, 157.024, 157.031, 158.105, and 180.202, as determined by
the commissioner, may be deposited to the credit of the recovery
fund at the end of each fiscal year.
(b) If the balance remaining in the recovery fund at the end
of a calendar year is more than $3.5 million, the amount of money in
excess of that amount shall be remitted by the commissioner to the
comptroller for deposit in the mortgage grant fund established
under Subchapter G [available to the commissioner to offset the
expenses of participating in and sharing information with the
Nationwide Mortgage Licensing System and Registry in accordance
with Chapter 180].
SECTION 7. Chapter 156, Finance Code, is amended by adding
Subchapter G to read as follows:
SUBCHAPTER G. MORTGAGE GRANT FUND
Sec. 156.551. MORTGAGE GRANT FUND. (a) The commissioner
shall establish, administer, and maintain a mortgage grant fund as
provided by this subchapter. The amounts received by the
commissioner for deposit in the fund shall be held by the
commissioner in trust for carrying out the purposes of the fund.
(b) Subject to Subsection (c), all or any portion of the
amount of a penalty that is collected by the commissioner under
Sections 156.302, 156.303, 157.023, 157.024, 157.031, 158.105, and
180.202, as determined by the commissioner, may be deposited to the
credit of the mortgage grant fund at the end of each fiscal year.
(c) The balance of the mortgage grant fund may not at any
time exceed $300,000.
Sec. 156.552. FUNDING. The mortgage grant fund consists
of:
(1) penalties collected by the commissioner and
deposited to the credit of the fund in accordance with Section
156.551(b); and
(2) excess amounts transferred from the recovery fund
under Section 156.502(b).
Sec. 156.553. MANAGEMENT OF FUND. (a) The commissioner, as
manager of the mortgage grant fund, shall:
(1) subject to Subsection (b), invest and reinvest the
assets of the fund;
(2) make disbursements from the fund in accordance
with Section 156.554;
(3) advise the finance commission regarding the fund;
(4) maintain books and records for the fund as
required by the finance commission; and
(5) appear at hearings or judicial proceedings related
to the fund.
(b) Amounts in the mortgage grant fund may be invested and
reinvested in accordance with Chapter 2256, Government Code, and
under the prudent person standard described in Section 11b, Article
VII, Texas Constitution.
Sec. 156.554. DISBURSEMENT FROM FUND. (a) The
commissioner shall approve each disbursement from the mortgage
grant fund, which must be for a purpose authorized by Subsection
(b).
(b) The commissioner:
(1) may provide grants in an aggregate amount of not
more than $100,000 each year to an auxiliary mortgage loan activity
company or another nonprofit organization for the purposes of:
(A) providing to consumers financial education
relating to mortgage loans; and
(B) providing to other nonprofit organizations
training in order for those organizations to provide to consumers
financial education relating to mortgage loans;
(2) shall make disbursements from the fund to pay
claims made under Section 156.555 that meet the requirements for
payment under that section; and
(3) may make disbursements from the fund to provide
support for statewide financial education, activities, and
programs specifically related to mortgage loans for consumers,
including activities and programs described by Section 393.628(c).
Sec. 156.555. PAYMENT OF CLAIMS FOR FRAUDULENT UNLICENSED
ACTIVITY. (a) A residential mortgage loan applicant may make a
claim on and receive payment from the mortgage grant fund for the
recovery of the applicant's actual, out-of-pocket damages incurred
because of fraud committed by an individual who acted as a
residential mortgage loan originator but who did not hold the
required license issued under Chapter 157 at the time the
individual committed the fraudulent act.
(b) The eligibility and procedural requirements for a claim
made under Section 156.504 and the statute of limitations under
Section 156.503 apply to a residential mortgage loan applicant who
makes a claim under this section.
(c) Payments made from the mortgage grant fund to a
residential mortgage loan applicant under this section are subject
to the limits provided by Section 156.505.
Sec. 156.556. RULES. The finance commission shall adopt
rules to administer this subchapter, including rules governing
implementation of Section 156.554 that:
(1) ensure a grant awarded under that section is used
for a public purpose described by that section; and
(2) provide a means of recovering money awarded that
is not used in compliance with that section.
SECTION 8. Section 157.013(b), Finance Code, is amended to
read as follows:
(b) An application for a residential mortgage loan
originator license must be accompanied by:
(1) an application fee in an amount determined by the
commissioner, not to exceed $500; and
(2) for an original license, a recovery fund fee in the
[an] amount of [determined by the commissioner, not to exceed] $20.
SECTION 9. Sections 156.501(d) and (f), Finance Code, are
repealed.
SECTION 10. Section 156.501(c), Finance Code, as amended by
this Act, applies only to an investment made on or after the
effective date of this Act. An investment made before the effective
date of this Act is governed by the law as it existed immediately
before that date, and that law is continued in effect for that
purpose.
SECTION 11. This Act takes effect September 1, 2021.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3617 was passed by the House on April
30, 2021, by the following vote: Yeas 133, Nays 8, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 3617 on May 28, 2021, by the following vote: Yeas 99, Nays 49,
1 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3617 was passed by the Senate, with
amendments, on May 24, 2021, by the following vote: Yeas 25, Nays
5.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor