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

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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: (Engrossed - Dead) 2021-05-17 - Received from the House [HB3472 Detail]

Download: Texas-2021-HB3472-Comm_Sub.html

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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.