Bill Text: TX HB3472 | 2021-2022 | 87th Legislature | Comm Sub


Bill Title: Relating to the investment and use of excess residential mortgage loan originator recovery fund fees and to the creation of the mortgage grant fund; changing a fee.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2021-05-14 - Placed on Local, Consent, and Res. Calendar [HB3472 Detail]

Download: Texas-2021-HB3472-Comm_Sub.html
  87R18914 JES-F
 
  By: Deshotel H.B. No. 3472
 
  Substitute the following for H.B. No. 3472:
 
  By:  Perez C.S.H.B. No. 3472
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the investment and use of excess residential mortgage
  loan originator recovery fund fees and to 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.  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 3.  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 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 4.  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)  All or any portion of the amount of a penalty that is
  collected 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.
         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)  to the extent the commissioner determines the fund
  has sufficient assets available, shall provide a grant in an amount
  of not less than $100,000 each year to an auxiliary mortgage loan
  activity company or another statewide nonprofit organization that
  supports organizations described by Section 156.202(a-1)(1) for
  the purposes of:
                     (A)  providing statewide training and technical
  assistance to entities described by Section 156.202(a-1);
                     (B)  servicing third-party mortgage loans;
                     (C)  providing financial education to consumers
  that relates to mortgage loans; and
                     (D)  administering disaster repair programs and
  preparedness resources for consumers with 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:
                     (A)  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); and
                     (B)  if a governor's declaration of a state of
  disaster under Section 418.014, Government Code, is in effect, a
  governmental or nonprofit organization providing mortgage payment
  assistance for residence homesteads, as defined by Section 11.13,
  Tax Code, as needed due to the disaster.
         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 5.  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 6.  Sections 156.501(d) and (f), Finance Code, are
  repealed.
         SECTION 7.  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 8.  This Act takes effect September 1, 2021.
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