Bill Text: TX SB1124 | 2011-2012 | 82nd Legislature | Enrolled

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Bill Title: Relating to licensing and regulation of certain persons involved in residential mortgage lending pursuant to the Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009; providing penalties.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Passed) 2011-06-17 - See remarks for effective date [SB1124 Detail]

Download: Texas-2011-SB1124-Enrolled.html

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S.B. No. 1124

AN ACT
relating to licensing and regulation of certain persons involved in
residential mortgage lending pursuant to the Texas Secure and Fair
Enforcement for Mortgage Licensing Act of 2009; providing
penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 11.306, Finance Code, is amended to read
as follows:
Sec. 11.306. RESIDENTIAL MORTGAGE LOAN ORIGINATION
[MORTGAGE BROKER] RULES. The finance commission may adopt
residential mortgage loan origination [mortgage broker] rules as
provided by Chapter 156.
SECTION 2. Chapter 13, Finance Code, is amended by adding
Section 13.016 to read as follows:
Sec. 13.016. RECOVERY FUND. (a) 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 3. The heading to Chapter 156, Finance Code, is
amended to read as follows:
CHAPTER 156. RESIDENTIAL MORTGAGE LOAN COMPANIES AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS [MORTGAGE BROKERS]
SECTION 4. Section 156.001, Finance Code, is amended to
read as follows:
Sec. 156.001. SHORT TITLE. This chapter may be cited as the
Residential Mortgage Loan Company and Residential Mortgage Loan
Originator Licensing and Registration [Mortgage Broker License]
Act.
SECTION 5. Section 156.002, Finance Code, is amended by
amending Subdivisions (1), (2), (7), and (8) and adding
Subdivisions (1-a), (1-b), (1-c), (4-a), (6-a), (8-a), (10-a),
(10-b), (10-c), (12), (13), (14), and (15) to read as follows:
(1) "Auxiliary mortgage loan activity company" means a
political subdivision of this state or the federal government doing
business for consumers in this state, or an organization that
qualifies for an exemption from state franchise and sales and use
tax as a 501(c)(3) organization, that is involved in affordable
home ownership lending programs.
(1-a) "Commissioner" means the savings and mortgage
lending commissioner.
(1-b) "Credit union subsidiary organization" has the
meaning assigned by Section 180.002.
(1-c) "Department" means the Department of Savings and
Mortgage Lending.
(2) "Disciplinary action" means an order by the
commissioner that requires one or more of the following:
(A) suspension or revocation of a license or
registration under this chapter;
(B) probation of a suspension or revocation of a
license or registration under this chapter on terms and conditions
that the commissioner determines appropriate;
(C) a reprimand of a person licensed or
registered under this chapter; or
(D) an administrative penalty imposed on a person
licensed or registered under this chapter under Section 156.302.
(4-a) "Independent contractor loan processor or
underwriter company" means a corporation, company, partnership, or
sole proprietorship that receives compensation for an individual
performing clerical or support duties as an independent contractor
loan processor or underwriter at the direction of a licensed
residential mortgage loan originator.
(6-a) "Loan processor or underwriter" has the meaning
assigned by Section 180.002.
(7) "Mortgage applicant" means:
(A) an applicant for a residential mortgage loan;
or
(B) a person who is solicited to [use or who uses
a mortgage broker to] obtain a residential mortgage loan.
(8) "Mortgage banker" has the meaning assigned by
Section 157.002 [means a person who is:
[(A) approved or authorized by the United States
Department of Housing and Urban Development as a mortgagee with
direct endorsement underwriting authority;
[(B) an approved seller or servicer of the
Federal National Mortgage Association;
[(C) an approved seller or servicer of the
Federal Home Loan Mortgage Association; or
[(D) an approved issuer for the Governmental
National Mortgage Association].
(8-a) "Mortgage company" means a corporation,
company, partnership, or sole proprietorship that engages in the
business of residential mortgage loan origination on residential
real estate located in this state.
(10-a) "Nationwide Mortgage Licensing System and
Registry" has the meaning assigned by Section 180.002.
(10-b) "Qualifying individual" means an individual
who is licensed under this chapter as a residential mortgage loan
originator and is designated by a residential mortgage loan company
as the company's representative for purposes of the Nationwide
Mortgage Licensing System and Registry.
(10-c) "Recovery fund" means the fund established and
maintained by the commissioner under Subchapter F and Section
13.016.
(12) "Residential mortgage loan" has the meaning
assigned by Section 180.002.
(13) "Residential mortgage loan company" means a
person, other than an individual, that engages in the business of
residential mortgage loan origination on residential real estate
located in this state. The term includes a credit union subsidiary
organization, auxiliary mortgage loan activity company, mortgage
company, independent contractor loan processor or underwriter
company, and financial services company.
(14) "Residential mortgage loan originator" has the
meaning assigned by Section 180.002.
(15) "Residential real estate" has the meaning
assigned by Section 180.002.
SECTION 6. Section 156.003, Finance Code, is amended to
read as follows:
Sec. 156.003. SECONDARY MARKET TRANSACTIONS. This chapter
does not prohibit a residential mortgage loan originator [mortgage
broker] from receiving compensation from a party other than the
mortgage applicant for the sale, transfer, assignment, or release
of rights on the closing of a mortgage transaction.
SECTION 7. Section 156.004, Finance Code, is amended to
read as follows:
Sec. 156.004. DISCLOSURE TO APPLICANT. (a) At the time an
applicant submits an application to a residential mortgage loan
originator [mortgage broker], the residential mortgage loan
originator [mortgage broker] shall provide to the applicant a
disclosure that specifies:
(1) the nature of the relationship between the
applicant and the residential mortgage loan originator;
(2) [broker,] the duties the residential mortgage loan
originator [broker] has to the applicant;[,] and
(3) how the residential mortgage loan originator
[mortgage broker] will be compensated.
(b) The finance commission, by rule, shall adopt
[promulgate] a standard disclosure form to be used by the
residential mortgage loan originator [mortgage broker].
SECTION 8. Section 156.005, Finance Code, is amended to
read as follows:
Sec. 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless
prohibited by federal or state law, this chapter may not be
construed to prevent affiliated or controlled business
arrangements or loan origination services by or between residential
mortgage loan originators [mortgage brokers] and other
professionals if the residential mortgage loan originator
[mortgage broker] complies with all applicable federal and state
laws permitting those arrangements or services.
SECTION 9. Subsections (b) and (b-1), Section 156.102,
Finance Code, are amended to read as follows:
(b) The finance commission may adopt rules to prohibit
false, misleading, or deceptive practices by residential mortgage
loan originators [mortgage brokers and loan officers] but may not
adopt any other rules restricting competitive bidding or
advertising by residential mortgage loan originators [mortgage
brokers or loan officers]. When adopting rules under this
subsection, the finance commission may not restrict:
(1) the use of any medium for an advertisement;
(2) the personal appearance of or voice of a person in
an advertisement;
(3) the size or duration of an advertisement; or
(4) a residential mortgage loan originator's [mortgage
broker's or loan officer's] advertisement under a trade name.
(b-1) The finance commission on the commissioner's
recommendation may adopt rules to promote a fair and orderly
administration of the recovery fund consistent with the purposes of
Subchapter F.
SECTION 10. Subsections (b-1) and (h), Section 156.104,
Finance Code, are amended to read as follows:
(b-1) The members of the committee must include six[:
[(1) three] individuals licensed by the department as
residential mortgage loan originators [under this chapter], two
[one] of whom must hold an active real estate broker or salesperson
license issued under Chapter 1101, Occupations Code[; and
[(2) three individuals licensed as residential
mortgage loan originators under Chapter 157, one of whom must hold
an active real estate broker or salesperson license issued under
Chapter 1101, Occupations Code].
(h) In addition to other powers and duties delegated to the
advisory committee [it] by the commissioner, the advisory committee
shall advise the commissioner with respect to:
(1) the proposal and adoption of rules relating to:
(A) the licensing of residential mortgage loan
originators or residential mortgage loan companies [mortgage
brokers and loan officers];
(B) the education and experience requirements
for licensing residential mortgage loan originators [mortgage
brokers and loan officers]; and
(C) the conduct and ethics of residential
mortgage loan originators [mortgage brokers and loan officers];
(2) the form of or format for any applications or other
documents under this chapter; and
(3) the interpretation, implementation, and
enforcement of this chapter.
SECTION 11. Section 156.105, Finance Code, is amended to
read as follows:
Sec. 156.105. STANDARD FORMS. (a) The finance
commission, by rule, shall adopt one or more standard forms for use
by a residential mortgage loan originator [mortgage broker or loan
officer] in representing that an applicant for a residential
mortgage loan is preapproved or has prequalified for the loan.
(b) The finance commission shall adopt rules requiring a
residential mortgage loan originator [mortgage broker or loan
officer] licensed under this chapter to use the forms adopted by the
finance commission under Subsection (a).
SECTION 12. The heading to Subchapter C, Chapter 156,
Finance Code, is amended to read as follows:
SUBCHAPTER C. RESIDENTIAL MORTGAGE LOAN COMPANY AND RESIDENTIAL
MORTGAGE LOAN ORIGINATOR LICENSES AND REGISTRATION [MORTGAGE
BROKER LICENSE AND LOAN OFFICER LICENSE]
SECTION 13. Section 156.201, Finance Code, is amended to
read as follows:
Sec. 156.201. LICENSES REQUIRED. (a) A person may not act
in the capacity of, engage in the business of, or advertise or hold
that person out as engaging in or conducting the business of a
residential mortgage loan company [mortgage broker] in this state
unless the person holds an active residential mortgage loan company
[mortgage broker] license, is registered under Section 156.214, or
is exempt under Section 156.202.
(b) Except as provided by Subsection (b-1), an [An]
individual may not act or attempt to act as a residential mortgage
loan originator [loan officer] unless the individual at the time
is:
(1) licensed under this chapter and sponsored by a
licensed residential mortgage loan company [mortgage broker] and is
acting for the residential mortgage loan company [mortgage broker];
or
(2) exempt under Section 156.202.
(b-1) Unless exempt under Section 180.003(b), an exclusive
agent of a registered financial services company may not act or
attempt to act as a residential mortgage loan originator unless the
exclusive agent at the time is licensed under this chapter and
sponsored by a registered financial services company and is acting
for the company.
(b-2) A residential mortgage loan originator must be
sponsored by at least one residential mortgage loan company.
(c) Each residential mortgage loan company and the
company's qualifying individual [mortgage broker] licensed under
this chapter is responsible to the commissioner and members of the
public for any act or conduct performed by the residential mortgage
loan originator [mortgage broker or a loan officer] sponsored by or
acting for the residential mortgage loan company [mortgage broker]
in connection with:
(1) the origination of a residential mortgage loan; or
(2) a transaction that is related to the origination
of a residential mortgage loan in which the qualifying individual
[mortgage broker] knew or should have known of the transaction.
SECTION 14. Section 156.202, Finance Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (a-2), and
(c) to read as follows:
(a) In this section, "depository institution," "dwelling,"
"federal banking agency," and "immediate family member" have the
meanings assigned by Section 180.002.
(a-1) The following individuals or entities, and employees
of those entities when acting for the benefit of those entities,
[persons] are exempt from this chapter:
(1) a registered mortgage loan originator when acting
for:
(A) a depository institution;
(B) a subsidiary of a depository institution that
is:
(i) owned and controlled by the depository
institution; and
(ii) regulated by a federal banking agency;
or
(C) an institution regulated by the Farm Credit
Administration;
(2) an individual who offers or negotiates the terms
of a residential mortgage loan with or on behalf of an immediate
family member of the individual;
(3) a licensed attorney who negotiates the terms of a
residential mortgage loan on behalf of a client as an ancillary
matter to the attorney's representation of the client, unless the
attorney:
(A) takes a residential mortgage loan
application; and
(B) offers or negotiates the terms of a
residential mortgage loan;
(4) an individual who offers or negotiates terms of a
residential mortgage loan secured by a dwelling that serves as the
individual's residence;
(5) a nonprofit organization providing self-help
housing that originates zero interest residential mortgage loans
for borrowers who have provided part of the labor to construct the
dwelling securing the loan;
(6) a mortgage banker registered under Chapter 157;
(7) any owner of residential real estate who in any
12-consecutive-month period makes no more than five residential
mortgage loans to purchasers of the property for all or part of the
purchase price of the residential real estate against which the
mortgage is secured;
(8) an entity that is:
(A) a depository institution;
(B) a subsidiary of a depository institution that
is:
(i) owned and controlled by the depository
institution; and
(ii) regulated by a federal banking agency;
or
(C) an institution regulated by the Farm Credit
Administration; and
(9) an individual who is exempt as provided by Section
180.003(b) [any of the following entities or an employee of any of
the following entities provided the employee is acting for the
benefit of the employer:
[(A) a bank, savings bank, or savings and loan
association, or a subsidiary or an affiliate of a bank, savings
bank, or savings and loan association;
[(B) a state or federal credit union, or a
subsidiary, affiliate, or credit union service organization of a
state or federal credit union;
[(C) an insurance company licensed or authorized
to do business in this state under the Insurance Code;
[(D) a mortgage banker registered under Chapter
157;
[(E) an organization that qualifies for an
exemption from state franchise and sales tax as a 501(c)(3)
organization;
[(F) a Farm Credit System institution; or
[(G) a political subdivision of this state
involved in affordable home ownership programs;
[(2) an individual who makes a mortgage loan from the
individual's own funds to a spouse, former spouse, or persons in the
lineal line of consanguinity of the individual lending the money;
[(3) an owner of real property who in any
12-consecutive-month period makes no more than five mortgage loans
to purchasers of the property for all or part of the purchase price
of the real estate against which the mortgage is secured;
[(4) an individual who:
[(A) makes a mortgage loan from the individual's
own funds;
[(B) is not an authorized lender under Chapter
342, Finance Code; and
[(C) does not regularly engage in the business of
making or brokering mortgage loans; or
[(5) an individual who is an exclusive agent of a
registered financial services company under a written agreement
prohibiting the individual from soliciting, processing,
negotiating, or placing a mortgage loan with a person other than the
registered financial services company or an affiliate of that
company].
(a-2) A person is not required to obtain a license or
registration under this chapter to originate a loan subject to
Chapter 342 or a loan governed by Section 50(a)(6), Article XVI,
Texas Constitution, if the person:
(1) is enrolled in the Nationwide Mortgage Licensing
System and Registry;
(2) is licensed under Chapter 342; and
(3) makes consumer loans subject to:
(A) Subchapter G, Chapter 342; and
(B) Subchapter E or F, Chapter 342.
(c) The finance commission may grant an exemption from the
residential mortgage loan originator licensing requirements of
this chapter to a municipality, county, community development
corporation, or public or private grant administrator to the extent
the entity is administering the Texas HOME Investment Partnerships
program if the commission determines that granting the exemption is
not inconsistent with the intentions of the federal Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
110-289).
SECTION 15. Section 156.203, Finance Code, is amended by
amending Subsections (a), (b), and (c) and adding Subsections (a-1)
and (a-2) to read as follows:
(a) For purposes of this section, an application for a
residential mortgage loan company license means an application for:
(1) a mortgage company license;
(2) a credit union subsidiary organization license;
(3) an auxiliary mortgage loan activity company
license; or
(4) an independent contractor loan processor or
underwriter company license.
(a-1) An application for a residential mortgage loan
company license and a residential mortgage loan originator
[mortgage broker or loan officer] license must be:
(1) in writing;
(2) under oath; and
(3) on the form prescribed by the commissioner.
(a-2) An application for a financial services company
registration under Section 156.214 must be:
(1) in writing;
(2) under oath; and
(3) on the form prescribed by the commissioner.
(b) An application for a residential mortgage loan company
[mortgage broker] license must be accompanied by[:
[(1)] an application fee in an amount determined by
the commissioner not to exceed $375[; and
[(2) a recovery fund fee as provided by Section
156.502].
(c) An application for a residential mortgage loan
originator [loan officer] license must be accompanied by:
(1) an application fee in an amount determined by the
commissioner not to exceed $375 [$275]; and
(2) a recovery fund fee as provided by Section
156.502.
SECTION 16. Subchapter C, Chapter 156, Finance Code, is
amended by adding Sections 156.2041, 156.2042, 156.2043, 156.2044,
156.2045, and 156.2046 to read as follows:
Sec. 156.2041. QUALIFICATIONS AND REQUIREMENTS FOR
LICENSES: MORTGAGE COMPANY AND RESIDENTIAL MORTGAGE LOAN
ORIGINATORS. (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 this chapter 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;
(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;
(7) maintain a physical office in this state; and
(8) provide financial statements and any other
information required by the commissioner.
(b) To be issued a license to act as a mortgage company
residential mortgage loan originator, an individual must submit a
completed application through the Nationwide Mortgage Licensing
System and Registry together with the payment of applicable fees
and must establish to the satisfaction of the commissioner that the
applicant:
(1) has not had a residential mortgage loan originator
license revoked in any governmental jurisdiction;
(2) is not in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant;
(3) has not been convicted of, or pled guilty or no
contest to, a felony in a domestic, foreign, or military court
during the seven-year period preceding the date of the application;
(4) at any time preceding the date of the application,
has not been convicted of, or pled guilty or no contest to, a felony
in a domestic, foreign, or military court involving fraud,
dishonesty, breach of trust, or money laundering;
(5) demonstrates the financial responsibility, good
moral character, and general fitness necessary to operate in an
honest, trustworthy, fair, and efficient manner as a residential
mortgage loan originator under this chapter;
(6) has successfully completed at least 20 hours of
prelicensing education courses approved by the Nationwide Mortgage
Licensing System and Registry;
(7) has passed both the state and national components
of a written test that meets the requirements of Section 180.057;
(8) has paid a recovery fund fee as required by Section
156.502(a); and
(9) is a citizen of the United States or a lawfully
admitted alien.
Sec. 156.2042. QUALIFICATIONS AND REQUIREMENTS FOR
LICENSES: CREDIT UNION SUBSIDIARY ORGANIZATION AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS. (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 this chapter 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.
(b) To be issued a license to act as a credit union
subsidiary organization residential mortgage loan originator, an
individual must submit a completed application through the
Nationwide Mortgage Licensing System and Registry together with the
payment of applicable fees and must establish to the satisfaction
of the commissioner that the applicant:
(1) has not had a residential mortgage loan originator
license revoked in any governmental jurisdiction;
(2) is not in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant;
(3) has not been convicted of, or pled guilty or no
contest to, a felony in a domestic, foreign, or military court
during the seven-year period preceding the date of the application;
(4) at any time preceding the date of the application,
has not been convicted of, or pled guilty or no contest to, a felony
in a domestic, foreign, or military court involving fraud,
dishonesty, breach of trust, or money laundering;
(5) demonstrates the financial responsibility, good
moral character, and general fitness necessary to operate in an
honest, trustworthy, fair, and efficient manner as a residential
mortgage loan originator under this chapter;
(6) has successfully completed at least 20 hours of
prelicensing education courses approved by the Nationwide Mortgage
Licensing System and Registry;
(7) has passed both the state and national components
of a written test that meets the requirements of Section 180.057;
(8) has paid a recovery fund fee as required by Section
156.502(a); and
(9) is a citizen of the United States or a lawfully
admitted alien.
Sec. 156.2043. QUALIFICATIONS AND REQUIREMENTS FOR
LICENSES: AUXILIARY MORTGAGE LOAN ACTIVITY COMPANY AND RESIDENTIAL
MORTGAGE LOAN ORIGINATORS. (a) To be issued an auxiliary mortgage
loan activity 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 company through
the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under this chapter as the company's
qualifying individual; and
(4) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant.
(b) To be issued a license to act as an auxiliary mortgage
loan activity residential mortgage loan originator, an individual
must submit a completed application through the Nationwide Mortgage
Licensing System and Registry together with the payment of
applicable fees and must establish to the satisfaction of the
commissioner that the applicant:
(1) has not had a residential mortgage loan originator
license revoked in any governmental jurisdiction;
(2) is not in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant;
(3) has not been convicted of, or pled guilty or no
contest to, a felony in a domestic, foreign, or military court
during the seven-year period preceding the date of the application;
(4) at any time preceding the date of the application,
has not been convicted of, or pled guilty or no contest to, a felony
in a domestic, foreign, or military court involving fraud,
dishonesty, breach of trust, or money laundering;
(5) demonstrates the financial responsibility, good
moral character, and general fitness necessary to operate in an
honest, trustworthy, fair, and efficient manner as a residential
mortgage loan originator under this chapter;
(6) has successfully completed at least 20 hours of
prelicensing education courses approved by the Nationwide Mortgage
Licensing System and Registry;
(7) has passed both the state and national components
of a written test that meets the requirements of Section 180.057;
(8) has paid a recovery fund fee as required by Section
156.502(a); and
(9) is a citizen of the United States or a lawfully
admitted alien.
Sec. 156.2044. QUALIFICATIONS AND REQUIREMENTS FOR
LICENSES: INDEPENDENT CONTRACTOR LOAN PROCESSOR OR UNDERWRITER
COMPANY AND INDIVIDUAL LOAN PROCESSORS OR UNDERWRITERS. (a) To be
issued an independent contractor loan processor or underwriter
company license under this chapter, 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 company through
the Nationwide Mortgage Licensing System and Registry;
(3) designate an individual licensed as a residential
mortgage loan originator under this chapter as the company's
qualifying individual; and
(4) not be in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant.
(b) An independent contractor loan processor or underwriter
company is not authorized to originate residential mortgage loans
with a license issued under Subsection (a).
(c) To be issued a license to act as an independent
contractor loan processor or underwriter, an individual must submit
a completed application through the Nationwide Mortgage Licensing
System and Registry together with the payment of applicable fees
and must establish to the satisfaction of the commissioner that the
applicant:
(1) has not had a residential mortgage loan originator
license revoked in any governmental jurisdiction;
(2) is not in violation of this chapter, a rule adopted
under this chapter, or any order previously issued by the
commissioner to the applicant;
(3) has not been convicted of, or pled guilty or no
contest to, a felony in a domestic, foreign, or military court
during the seven-year period preceding the date of the application;
(4) at any time preceding the date of the application,
has not been convicted of, or pled guilty or no contest to, a felony
in a domestic, foreign, or military court involving fraud,
dishonesty, breach of trust, or money laundering;
(5) demonstrates the financial responsibility, good
moral character, and general fitness necessary to operate in an
honest, trustworthy, fair, and efficient manner as a residential
mortgage loan originator under this chapter;
(6) has successfully completed at least 20 hours of
prelicensing education courses approved by the Nationwide Mortgage
Licensing System and Registry;
(7) has passed both the state and national components
of a written test that meets the requirements of Section 180.057;
(8) has paid a recovery fund fee as required by Section
156.502(a); and
(9) is a citizen of the United States or a lawfully
admitted alien.
Sec. 156.2045. QUALIFICATIONS AND REQUIREMENTS FOR
REGISTRATION AND LICENSE: FINANCIAL SERVICES COMPANY AND EXCLUSIVE
AGENTS. (a) To be issued a financial services company
registration under Section 156.214(c), an applicant must:
(1) obtain preapproval from the commissioner that the
company meets the eligibility requirements for registration as a
financial services company under Section 156.214(b);
(2) submit a completed application through the
Nationwide Mortgage Licensing System and Registry together with
applicable fees required by Section 156.214(b)(4);
(3) provide evidence to the commissioner that the
company has obtained surety bond coverage in an amount equal to $1
million;
(4) designate an officer of the company to be
responsible for the activities of the company's exclusive agents;
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.
(b) To be issued a license to act as a financial services
company exclusive agent, an individual must submit a completed
application through the Nationwide Mortgage Licensing System and
Registry and must establish to the satisfaction of the commissioner
that the applicant:
(1) has not had a residential mortgage loan originator
license revoked in any governmental jurisdiction;
(2) is not in violation of this chapter, a rule adopted
under this chapter, or any order previously issued to the applicant
by the commissioner;
(3) has not been convicted of, or pled guilty or no
contest to, a felony in a domestic, foreign, or military court
during the seven-year period preceding the date of the application;
(4) at any time preceding the date of the application,
has not been convicted of, or pled guilty or no contest to, a felony
in a domestic, foreign, or military court involving fraud,
dishonesty, breach of trust, or money laundering;
(5) demonstrates the financial responsibility, good
moral character, and general fitness necessary to operate in an
honest, trustworthy, fair, and efficient manner as a residential
mortgage loan originator under this chapter;
(6) has successfully completed at least 20 hours of
prelicensing education courses approved by the Nationwide Mortgage
Licensing System and Registry;
(7) has passed both the state and national components
of a written test that meets the requirements of Section 180.057;
and
(8) is a citizen of the United States or a lawfully
admitted alien.
Sec. 156.2046. CONVICTION OF OFFENSE. For the purposes of
Section 156.2041, 156.2042, 156.2043, 156.2044, or 156.2045, a
person is considered to have been convicted of a criminal offense
if:
(1) a sentence is imposed on the person;
(2) the person received probation or community
supervision, including deferred adjudication or community service;
or
(3) the court deferred final disposition of the
person's case.
SECTION 17. Section 156.205, Finance Code, is amended to
read as follows:
Sec. 156.205. FINANCIAL REQUIREMENTS. (a) Except as
provided by Subsection (b), financial [Financial] requirements
for holding a residential mortgage loan originator [mortgage broker
or loan officer] license shall be met through participation in the
recovery fund.
(b) An exclusive agent of a financial services company meets
the agent's financial requirements for holding a residential
mortgage loan originator license by obtaining surety bond coverage
in an amount equal to $1 million.
SECTION 18. The heading to Section 156.206, Finance Code,
is amended to read as follows:
Sec. 156.206. CRIMINAL AND OTHER BACKGROUND CHECKS [CHECK].
SECTION 19. Subsections (a), (b), and (c), Section 156.206,
Finance Code, are amended to read as follows:
(a) On receipt of an application for a residential mortgage
loan originator [mortgage broker license or a loan officer]
license, the commissioner shall, at a minimum, conduct a criminal
background and credit history check of the applicant.
(b) The commissioner shall conduct criminal background and
credit history checks in accordance with Section 180.054, and, in
connection with each application for a residential mortgage loan
originator license or other individual license, the commissioner
may conduct a criminal background check through the Department of
Public Safety [obtain criminal history record information on an
applicant that is maintained by the Department of Public Safety and
shall obtain criminal history record information from the Federal
Bureau of Investigation on each applicant. Each applicant must
submit with the application fingerprint and other information
necessary to implement this section. The commissioner may submit
the fingerprint and other information to the Federal Bureau of
Investigation, and the Department of Public Safety is designated to
be the recipient of the criminal history record information. The
commissioner may also obtain criminal history record information
from any court or any local, state, or national governmental
agency].
(c) The commissioner shall keep confidential any [criminal]
background information obtained under this section [subsection]
and may not release or disclose the information unless:
(1) the information is a public record at the time the
commissioner obtains the information; or
(2) the commissioner releases the information:
(A) under order from a court;
(B) with the permission of the applicant;
(C) to a person through whom the applicant is
conducting or will conduct business; or
(D) to a governmental agency.
SECTION 20. The heading to Section 156.207, Finance Code,
is amended to read as follows:
Sec. 156.207. ISSUANCE OF LICENSE [CERTIFICATE];
PROVISIONAL LICENSE.
SECTION 21. Subsections (a) and (b), Section 156.207,
Finance Code, are amended to read as follows:
(a) The commissioner shall issue a license [certificate] to
an applicant for a residential mortgage loan company [mortgage
broker] license if the commissioner finds that the applicant meets
all requirements and conditions for the license.
(b) When an applicant for a residential mortgage loan
originator [loan officer] license has met all requirements and
conditions for the license, the commissioner shall issue a license
[certificate] to the individual [mortgage broker sponsoring the
loan officer].
SECTION 22. Section 156.208, Finance Code, is amended by
amending Subsections (a-1), (b-1), (c), and (j) and adding
Subsection (b-2) to read as follows:
(a-1) A residential mortgage loan company [mortgage broker]
license issued under this chapter is valid through December 31 of
the year of issuance [for a term of not more than two years] and may
be renewed on or before its expiration date if the residential
mortgage loan company [mortgage broker]:
(1) pays to the commissioner a renewal fee in an amount
determined by the commissioner not to exceed $375 [and a recovery
fund fee provided by Section 156.502]; and
(2) has not shown a pattern or practice of abusive
mortgage activity and has no civil judgments or liens that, in the
commissioner's opinion, directly impact the ability of the
residential mortgage loan company to conduct business while
safeguarding and protecting the public interest [has not been
convicted of a criminal offense the commissioner determines is
directly related to the occupation of a mortgage broker as provided
by Chapter 53, Occupations Code; and
[(3) provides the commissioner with satisfactory
evidence that the mortgage broker has attended, during the term of
the current license, continuing education courses in accordance
with the applicable requirements of Chapter 180].
(b-1) Except as provided by Subsection (b-2), a residential
mortgage loan originator [A loan officer] license issued under this
chapter is valid through December 31 of the year of issuance [for a
term of not more than two years] and may be renewed on or before its
expiration date if the residential mortgage loan originator [loan
officer]:
(1) pays to the commissioner a renewal fee in an amount
determined by the commissioner not to exceed $375 [$275] and a
recovery fund fee provided by Section 156.502;
(2) continues to meet the minimum requirements for
license issuance [has not been convicted of a criminal offense the
commissioner determines is directly related to the occupation of a
loan officer as provided by Chapter 53, Occupations Code]; and
(3) provides the commissioner with satisfactory
evidence that the residential mortgage loan originator [loan
officer] has attended, during the term of the current license,
continuing education courses in accordance with the applicable
requirements of Chapter 180.
(b-2) A license issued under this chapter to a registered
financial services company's exclusive agent is valid through
December 31 of the year of issuance and may be renewed on or before
the expiration date if the exclusive agent complies with the
requirements of Subsections (b-1)(2) and (3).
(c) The commissioner may require residential mortgage loan
originators [mortgage brokers or loan officers] to submit requests
for renewal on a form prescribed by the commissioner.
(j) The commissioner may deny the renewal of a residential
mortgage loan originator [mortgage broker license or a loan
officer] license if:
(1) the residential mortgage loan originator
[mortgage broker or loan officer] is in violation of this chapter, a
rule adopted under this chapter, or any order previously issued to
the individual by the commissioner;
(2) the residential mortgage loan originator
[mortgage broker or loan officer] is in default in the payment of
any administrative penalty, fee, charge, or other indebtedness owed
under this title;
(3) during the current term of the license, the
commissioner becomes aware of any fact that would have been grounds
for denial of an original license if the fact had been known by the
commissioner on the date the license was granted; or
(4) the residential mortgage loan originator
[mortgage broker or loan officer] is in default on a student loan
administered by the Texas Guaranteed Student Loan Corporation,
pursuant to Section 57.491, Education Code.
SECTION 23. The heading to Section 156.2081, Finance Code,
is amended to read as follows:
Sec. 156.2081. REINSTATEMENT [RENEWAL] AFTER EXPIRATION[;
NOTICE].
SECTION 24. Subsections (b) and (c), Section 156.2081,
Finance Code, are amended to read as follows:
(b) A person who is otherwise eligible to renew a license,
but has not done so before January 1, may renew the license before
March 1 by paying the commissioner a reinstatement fee in an amount
equal to 150 percent of the [whose license has been expired for 90
days or less but who is otherwise eligible to renew a license may
renew the license by paying to the commissioner a renewal fee that
is equal to 1-1/2 times the normally] required renewal fee.
(c) A person whose residential mortgage loan originator
license has not been renewed before March 1 [has been expired for 91
days or more] may not renew the license. The person may obtain a
new license by complying with the requirements and procedures for
obtaining an original license.
SECTION 25. Section 156.210, Finance Code, is amended to
read as follows:
Sec. 156.210. CONDITIONAL [PROBATIONARY] LICENSE. The
commissioner may issue a conditional [probationary] license. The
finance commission by rule shall adopt reasonable terms and
conditions for a conditional [probationary] license.
SECTION 26. Subsections (a), (b), (b-1), (b-2), and (b-3),
Section 156.211, Finance Code, are amended to read as follows:
(a) Before the 10th day preceding the effective date of an
address change, a residential mortgage loan company [mortgage
broker] shall notify the commissioner in writing of the new address
accompanied by a change of address fee of $25. [A new license
certificate must be obtained before the mortgage broker may conduct
business at the new location.]
(b) [A loan officer may act only for the mortgage broker
sponsoring the loan officer. A loan officer may be sponsored by
only one mortgage broker at a time.] When the sponsorship of a
residential mortgage loan originator [loan officer] is terminated,
the residential mortgage loan originator [loan officer] and the
residential mortgage loan company [mortgage broker] shall
immediately notify the commissioner [and the mortgage broker shall
return the loan officer license to the commissioner]. The
residential mortgage loan originator's [loan officer's] license
then becomes inactive. The residential mortgage loan originator
[loan officer] license may be activated if, before the license
expires, a residential mortgage loan company [mortgage broker]
files a request, accompanied by a $25 fee, notifying the
commissioner that the residential mortgage loan company [mortgage
broker] will sponsor the residential mortgage loan originator [loan
officer] and will assume responsibility for the actions of the
residential mortgage loan originator [loan officer].
(b-1) Not later than the 10th day before a residential
mortgage loan company [mortgage broker] begins doing business under
an assumed name, the residential mortgage loan company [mortgage
broker] shall file with the commissioner a copy of an assumed name
certificate for each assumed name under which the residential
mortgage loan company [mortgage broker] intends to conduct business
and pay a $25 registration fee for each assumed name. A residential
mortgage loan originator [loan officer] may not conduct business
under any assumed name that is not the registered assumed name of
the sponsoring residential mortgage loan company [mortgage
broker].
(b-2) A person licensed under this chapter must notify the
commissioner not later than the 10th day after the date of any
change of the person's name [and pay to the commissioner a change of
name fee of $25] for the issuance of an amended license
[certificate].
(b-3) A residential mortgage loan company [business entity]
licensed under this chapter that changes the company's qualifying
individual shall notify the commissioner not later than the 10th
business day after the date of the change [of any change of its
designated representative]. The commissioner may charge a fee of
$25 for each change of a designated representative.
SECTION 27. 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 [mortgage broker]
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
[The address of the office shall be designated on the license
certificate].
(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 [mortgage broker maintains more
than one place of business in this state, the mortgage broker] shall
apply for, pay a fee of $50 for, and obtain an additional license
[certificate] to be known as a branch office license for each
additional office to be maintained by the company [mortgage
broker].
SECTION 28. Section 156.213, Finance Code, as added by
Chapter 337 (H.B. 1636), Acts of the 77th Legislature, Regular
Session, 2001, is amended to read as follows:
Sec. 156.213. MORTGAGE CALL [ANNUAL] REPORT. (a) Each
licensed residential mortgage loan company or licensed residential
mortgage loan originator, as required by the commissioner,
[mortgage broker] shall file a mortgage call [an annual] report
with the commissioner or the commissioner's authorized designee on
a form prescribed by the commissioner or authorized designee
[Savings and Loan Department]. The report [must include]:
(1) is a statement of condition of the residential
mortgage loan company and the company's operations, or a statement
of condition of the residential mortgage loan originators sponsored
by the company, as applicable, including financial statements and
production activity volumes;
(2) must include any other information required by the
commissioner; and
(3) must be filed as frequently as required by the
commissioner [data on loan originations in this state for the
mortgage broker;
[(2) information on each loan officer sponsored by the
mortgage broker; and
[(3) any other information required by finance
commission rule].
(b) Information contained in the mortgage call report
related to residential mortgage loan origination volume or other
trade [Trade] information, including information used to determine
statistical entries in the report related to loan origination
volume, is confidential and may not be disclosed by the
commissioner, the commissioner's authorized designee, or any other
employee of the department [Savings and Loan Department].
SECTION 29. Subsections (a) through (d), Section 156.214,
Finance Code, are amended to read as follows:
(a) A registered financial services company may perform the
services of another residential mortgage loan company [a mortgage
broker] as if the company were licensed as a residential mortgage
loan company [mortgage broker] under this chapter, through
individuals who are the exclusive agents of the registered
financial services company.
(b) To be eligible to register as a registered financial
services company, a person must:
(1) be a depository institution exempt from this
chapter under Section 156.202(a-1)(8)(A) [156.202(1)(A) or (B)]
and chartered and regulated by the Office of Thrift Supervision or
the Office of the Comptroller of the Currency, or be a subsidiary of
the institution;
(2) provide the commissioner with satisfactory
evidence of an undertaking of accountability in a form acceptable
to the commissioner, supported by a surety bond equal to $1 million
to cover the person's responsibility for residential mortgage loan
company [mortgage broker] activities of each exclusive agent;
(3) provide a business plan satisfactory to the
commissioner that sets forth the person's plan to provide education
to its exclusive agents, handle consumer complaints relating to its
exclusive agents, and supervise the residential mortgage loan
origination activities of its exclusive agents;
(4) pay an annual registration fee in an amount
determined as follows:
(A) if the registered financial services company
has 2,000 or fewer exclusive agents acting in this state, an amount
equal to the lesser of:
(i) one-half of the license fee for a
residential mortgage loan originator [loan officer] under Section
156.203(c)(1), multiplied by the number of exclusive agents under
contract to act for the person in this state; or
(ii) $200,000;
(B) if the registered financial services company
has at least 2,001 but not more than 2,500 exclusive agents acting
in this state, $225,000;
(C) if the registered financial services company
has at least 2,501 but not more than 3,000 exclusive agents acting
in this state, $250,000;
(D) if the registered financial services company
has at least 3,001 but not more than 5,000 exclusive agents acting
in this state, $300,000; or
(E) if the registered financial services company
has at least 5,001 exclusive agents acting in this state, $350,000;
and
(5) designate an officer of the person to be
responsible for the activities of the exclusive agents.
(c) If the commissioner determines that a person has met the
requirements of Subsection (b) and Section 156.2045(a), the
commissioner shall issue a registration to the person. The
registration is valid for one year, expires on December 31 of each
year, and must [may] be renewed annually [on or before its
expiration date]. A person must [may] renew an expired
registration in the [same] manner determined by the commissioner
[as a person may renew an expired license under Section
156.2081(b)].
(d) A registered financial services company is subject to
Subchapters D and E as if the company were licensed as a residential
mortgage loan company [mortgage broker].
SECTION 30. Subsections (b) and (h), Section 156.301,
Finance Code, are amended to read as follows:
(b) On the signed written complaint of a person, the
commissioner shall investigate the actions and records of a person
licensed under this chapter if the complaint, or the complaint and
documentary or other evidence presented in connection with the
complaint, provides reasonable cause. The commissioner, before
commencing an investigation, shall notify a residential mortgage
loan company [mortgage broker or loan officer] in writing of the
complaint and that the commissioner intends to investigate the
matter.
(h) The commissioner may require reimbursement in an amount
not to exceed $325 for each examiner a day for on-site examination
or investigation of a residential mortgage loan company [mortgage
broker] if records are located out of state or if the review is
considered necessary beyond the routine examination process.
SECTION 31. Subsection (b), Section 156.302, Finance Code,
is amended to read as follows:
(b) The amount of the penalty may not exceed $25,000 for
[$2,500, and] each [day a] violation [continues or occurs is a
separate violation for the purpose of imposing a penalty]. The
amount shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
(2) the economic harm to property caused by the
violation;
(3) the history of previous violations;
(4) [(3)] the amount necessary to deter a future
violation;
(5) [(4)] efforts to correct the violation; and
(6) [(5)] any other matter that justice may require.
SECTION 32. Subsections (a), (a-1), (g), and (i), Section
156.303, Finance Code, are amended to read as follows:
(a) The commissioner may order disciplinary action against
a licensed or registered residential mortgage loan company
[mortgage broker] or a licensed residential mortgage loan
originator [loan officer] when the commissioner, after notice and
opportunity for hearing, has determined that the person:
(1) obtained a license or registration, including a
renewal of a license or registration, under this chapter through a
false or fraudulent representation or made a material
misrepresentation in an application for a license or registration
or for the renewal of a license or registration under this chapter;
(2) published or caused to be published an
advertisement related to the business of a residential mortgage
loan company [mortgage broker] or residential mortgage loan
originator [loan officer] that:
(A) is misleading;
(B) is likely to deceive the public;
(C) in any manner tends to create a misleading
impression;
(D) fails to identify as a residential mortgage
loan company [mortgage broker] or residential mortgage loan
originator [loan officer] the person causing the advertisement to
be published; or
(E) violates federal or state law;
(3) while performing an act for which a license or
registration under this chapter is required, engaged in conduct
that constitutes improper, fraudulent, or dishonest dealings;
(4) entered a plea of guilty or nolo contendere to, or
is convicted of, a criminal offense that is a felony or that
involves fraud or moral turpitude in a court of this or another
state or in a federal court;
(5) failed to use a fee collected in advance of closing
of a residential mortgage loan for a purpose for which the fee was
paid;
(6) charged or received, directly or indirectly, a fee
for assisting a mortgage applicant in obtaining a residential
mortgage loan before all of the services that the person agreed to
perform for the mortgage applicant are completed, and the proceeds
of the residential mortgage loan have been disbursed to or on behalf
of the mortgage applicant, except as provided by Section 156.304;
(7) failed within a reasonable time to honor a check
issued to the commissioner after the commissioner has mailed a
request for payment of the check and any applicable fees by
certified mail to the person's last known business address as
reflected by the commissioner's records;
(8) paid compensation to a person who is not licensed,
registered, or exempt under this chapter for acts for which a
license or registration under this chapter is required;
(9) induced or attempted to induce a party to a
contract to breach the contract so the person may make a residential
mortgage loan;
(10) published or circulated an unjustified or
unwarranted threat of legal proceedings in matters related to the
person's actions or services as a residential mortgage loan company
[mortgage broker] or residential mortgage loan originator [loan
officer], as applicable;
(11) established an association, by employment or
otherwise, with a person not licensed, registered, or exempt under
this chapter who was expected or required to act as a residential
mortgage loan company [mortgage broker] or residential mortgage
loan originator [loan officer];
(12) aided, abetted, or conspired with a person to
circumvent the requirements of this chapter;
(13) acted in the dual capacity of a residential
mortgage loan company [mortgage broker] or residential mortgage
loan originator [loan officer] and real estate broker, salesperson,
or attorney in a transaction without the knowledge and written
consent of the mortgage applicant or in violation of applicable
requirements under federal law;
(14) discriminated against a prospective borrower on
the basis of race, color, religion, sex, national origin, ancestry,
familial status, or a disability;
(15) failed or refused on demand to:
(A) produce a document, book, or record
concerning a residential mortgage loan transaction conducted by the
residential mortgage loan originator [mortgage broker or loan
officer] for inspection by the commissioner or the commissioner's
authorized personnel or representative;
(B) give the commissioner or the commissioner's
authorized personnel or representative free access to the books or
records relating to the person's business kept by an officer,
agent, or employee of the person or any business entity through
which the person conducts residential mortgage loan origination
[mortgage brokerage] activities, including a subsidiary or holding
company affiliate; or
(C) provide information requested by the
commissioner as a result of a formal or informal complaint made to
the commissioner;
(16) failed without just cause to surrender, on
demand, a copy of a document or other instrument coming into the
person's possession that was provided to the person by another
person making the demand or that the person making the demand is
under law entitled to receive;
(17) disregarded or violated this chapter, a rule
adopted by the finance commission under this chapter, or an order
issued by the commissioner under this chapter; or
(18) provided false information to the commissioner
during the course of an investigation or inspection.
(a-1) The commissioner may also order disciplinary action
after notice and opportunity for hearing against a licensed or
registered residential mortgage loan company [mortgage broker] or a
licensed residential mortgage loan originator [loan officer] if the
commissioner becomes aware during the term of the license of any
fact that would have been grounds for denial of an original license
if the fact had been known by the commissioner on the date the
license was issued.
(g) If a person fails to pay an administrative penalty that
has become final or fails to comply with an order of the
commissioner that has become final, in addition to any other remedy
provided under law the commissioner, on not less than 10 days'
notice to the person, may without a prior hearing suspend the
person's residential mortgage loan company [mortgage broker]
license or registration or residential mortgage loan originator
[loan officer] license. The suspension shall continue until the
person has complied with the order or paid the administrative
penalty. During the period of suspension, the person may not
originate a residential mortgage loan and all compensation received
by the person during the period of suspension is subject to
forfeiture as provided by Section 156.406(b).
(i) An order revoking the license or registration of a
residential mortgage loan company [mortgage broker] or the license
of a residential mortgage loan originator [loan officer] may
provide that the person is prohibited, without obtaining prior
written consent of the commissioner, from:
(1) engaging in the business of originating or making
residential mortgage loans;
(2) being an employee, officer, director, manager,
shareholder, member, agent, contractor, or processor of a
residential mortgage loan company [mortgage broker] or residential
mortgage loan originator [loan officer]; or
(3) otherwise affiliating with a person for the
purpose of engaging in the business of originating or making
residential mortgage loans.
SECTION 33. Section 156.304, Finance Code, is amended to
read as follows:
Sec. 156.304. FEE ASSESSMENT AND DISCLOSURE. (a) Before
the completion of all services to be performed, a residential
mortgage loan originator [mortgage broker] may charge and receive,
unless prohibited by law, the following fees for services in
assisting a mortgage applicant to obtain a residential mortgage
loan:
(1) a fee to obtain a credit report;
(2) a fee for the appraisal of the real estate;
(3) a fee for processing a residential mortgage loan
application;
(4) a fee for taking a residential mortgage loan
application;
(5) a fee for automated underwriting;
(6) a fee for a courier service;
(7) a fee to issue a loan commitment; or
(8) subject to Subsection (b), a fee for locking in an
interest rate.
(b) A residential mortgage loan originator [mortgage broker
or loan officer] may not charge or receive a fee for locking in an
interest rate unless there is a written agreement signed by the
mortgage applicant and residential mortgage loan originator
[mortgage broker] that contains a statement of whether the fee to
lock in the interest rate is refundable and, if so, the terms and
conditions necessary to obtain the refund.
SECTION 34. Section 156.305, Finance Code, is amended to
read as follows:
Sec. 156.305. RESTITUTION. The commissioner may order a
person to make restitution for any amount received by that person in
violation of this chapter. A residential mortgage loan company
[mortgage broker] may be required to make restitution for any
amount received by a sponsored residential mortgage loan originator
[loan officer] in violation of this chapter.
SECTION 35. Section 156.401, Finance Code, is amended by
adding Subsection (e) to read as follows:
(e) The commissioner may, in the commissioner's discretion,
rescind or vacate any previously issued revocation order.
SECTION 36. Section 156.405, Finance Code, is amended to
read as follows:
Sec. 156.405. COMPLETION OF RESIDENTIAL MORTGAGE LOAN
ORIGINATOR [MORTGAGE BROKER] SERVICES. (a) On disbursement of
mortgage proceeds to or on behalf of the mortgage applicant, the
residential mortgage loan originator [mortgage broker and loan
officer] who assisted the mortgage applicant in obtaining the
residential mortgage loan is [are] considered to have completed the
performance of the residential mortgage loan originator's
[mortgage broker's and loan officer's] services for the mortgage
applicant and owes [owe] no additional duties or obligations to the
mortgage applicant with respect to the residential mortgage loan.
(b) This section does not limit or preclude the liability of
a residential mortgage loan originator [mortgage broker or loan
officer] for:
(1) failing to comply with this chapter or a rule
adopted under this chapter;
(2) failing to comply with a provision of or duty
arising under an agreement with a mortgage applicant or lender
under this chapter; or
(3) violating any other state or federal law.
SECTION 37. Subsections (a), (b), and (d), Section 156.406,
Finance Code, are amended to read as follows:
(a) A person who is not exempt under this chapter and who
acts as a residential mortgage loan originator [mortgage broker or
loan officer] without first obtaining a license required under this
chapter commits an offense. An offense under this subsection is a
Class B misdemeanor. A second or subsequent conviction for an
offense under this subsection shall be punished as a Class A
misdemeanor.
(b) A person who received money, or the equivalent of money,
as a fee or profit because of or in consequence of the person acting
as a residential mortgage loan originator [mortgage broker or loan
officer] without an active license or being exempt under this
chapter is liable for damages in an amount that is not less than the
amount of the fee or profit received and not to exceed three times
the amount of the fee or profit received, as may be determined by
the court. An aggrieved person may recover damages under this
subsection in a court.
(d) If a hearing has not been requested under Subsection (c)
not later than the 30th day after the date the order is made, the
order is considered final and not appealable. The commissioner,
after giving notice, may impose against a person who violates a
cease and desist order, an administrative penalty in an amount not
to exceed $1,000 for each day of a violation. In addition to any
other remedy provided by law, the commissioner may institute in
district court a suit for injunctive relief and to collect the
administrative penalty. A bond is not required of the commissioner
with respect to injunctive relief granted under this section. A
penalty collected under this subsection shall be deposited in the
recovery fund.
SECTION 38. Section 156.501, Finance Code, is amended to
read as follows:
Sec. 156.501. [MORTGAGE BROKER] RECOVERY FUND. (a) The
commissioner shall establish, administer, and maintain a [mortgage
broker] recovery fund as provided by Section 13.016 and 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 this subsection, 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 [mortgage broker or loan officer] who was
licensed under this chapter or 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:
(1) a residential mortgage loan originator licensed
under this chapter [a mortgage broker or loan officer] that
constitutes a violation of Section 156.303(a)(2), (3), (5), (6),
(8), (9), (10), (11), (12), (13), or (16) or 156.304; or
(2) 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), or (16).
(b-1) Payments from the recovery fund may not be made to a
lender who makes a residential mortgage loan originated by the
residential mortgage loan originator [mortgage broker or loan
officer] or who acquires a residential mortgage loan originated by
the residential mortgage loan originator [mortgage broker or loan
officer].
(c) Amounts in the recovery fund may be invested and
reinvested in the same manner as funds of the [Texas State]
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 judgment
payments awarded under this subchapter.
(d) The recovery fund may be used at the discretion of the
commissioner to reimburse expenses incurred to secure and destroy
residential mortgage loan documents that have been abandoned by a
current or former individual or entity under the regulatory
authority of the department.
(e) Payments from the recovery fund shall be reduced by the
amount of any recovery from the residential mortgage loan
originator [mortgage broker or loan officer] or from any surety,
insurer, or other person or entity making restitution to the
applicant on behalf of the residential mortgage loan originator
[mortgage broker or loan officer].
(f) The commissioner, as manager of the recovery fund, is
entitled to reimbursement for reasonable and necessary costs and
expenses incurred in the management of the fund, including costs
and expenses incurred with regard to applications filed under
Section 156.504.
SECTION 39. 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 this
chapter, the applicant, in addition to paying the original
application fee or renewal fee, shall pay a fee in an amount
determined by the commissioner, not to exceed $20. The fee shall
be deposited in the recovery fund.
(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 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 40. Section 156.503, Finance Code, is amended to
read as follows:
Sec. 156.503. STATUTE OF LIMITATIONS. (a) An application
for the recovery of actual damages from the recovery fund under
Section 156.504 may not be filed after the second anniversary of the
date of the alleged act or omission causing the actual damages or
the date the act or omission should reasonably have been
discovered.
(b) This section does not apply to a subrogation claim
brought by the commissioner for recovery of money paid out of the
recovery fund.
SECTION 41. Subsections (a), (b), and (d), Section 156.504,
Finance Code, are amended to read as follows:
(a) To recover from the recovery fund, a residential
mortgage loan applicant must file a written sworn application with
the commissioner in the form prescribed by the commissioner,
subject to Section 156.503. A person who knowingly makes a false
statement in connection with applying for money out of the fund may
be subject to criminal prosecution under Section 37.10, Penal Code.
(b) The residential mortgage loan applicant is required to
show:
(1) that the applicant's claim is based on facts
allowing recovery under Section 156.501; and
(2) that the applicant:
(A) is not a spouse of the licensed residential
mortgage loan originator [mortgage broker or loan officer];
(B) is not a child, parent, grandchild,
grandparent, or sibling, including relationships by adoption, of
the licensed residential mortgage loan originator [mortgage broker
or loan officer];
(C) is not a person sharing living quarters with
the licensed residential mortgage loan originator [mortgage broker
or loan officer] or a current or former employer, employee, or
associate of the licensed residential mortgage loan originator
[mortgage broker or loan officer];
(D) is not a person who has aided, abetted, or
participated other than as a victim with the licensed residential
mortgage loan originator [mortgage broker or loan officer] in any
activity that is illegal under Section 156.303(a)(2), (3), (5),
(6), (8), (9), (10), (11), (12), (13), or (16), [or] Section
156.304, or Section 157.024(a)(2), (3), (5), (7), (8), (9), (10),
(13), or (16), or is not the personal representative of a licensed
residential mortgage loan originator [mortgage broker or loan
officer]; and
(E) is not licensed as a residential mortgage
loan originator [mortgage broker or loan officer] under this
chapter who is seeking to recover any compensation in the
transaction or transactions for which the application for payment
is made.
(d) If the preliminary determination under Subsection
(c)(2) is not otherwise resolved by agreement and is not disputed by
written notice to the commissioner before the 31st day after the
notification date, the preliminary determination automatically
becomes final and the commissioner shall make payment from the
recovery fund, subject to the limits of Section 156.505.
SECTION 42. Section 156.505, Finance Code, is amended to
read as follows:
Sec. 156.505. RECOVERY LIMITS. (a) A person entitled to
receive payment out of the recovery fund is entitled to receive
reimbursement of actual, out-of-pocket damages as provided by this
section.
(b) A payment from the recovery fund may be made as provided
by Section 156.504 and this section. A payment for claims:
(1) arising out of the same transaction, including
interest, is limited in the aggregate to $25,000, regardless of the
number of claimants; and
(2) against a single person licensed as a residential
mortgage loan originator [mortgage broker or loan officer] under
this chapter or Chapter 157 arising out of separate transactions,
including interest, is limited in the aggregate to $50,000 until
the fund has been reimbursed for all amounts paid.
(c) In the event there are concurrent claims under
Subsections (b)(1) and (2) that exceed the amounts available under
the recovery fund, the commissioner shall prorate recovery based on
the amount of damage suffered by each claimant.
SECTION 43. Section 156.506, Finance Code, is amended to
read as follows:
Sec. 156.506. REVOCATION OR SUSPENSION OF LICENSE FOR
PAYMENT FROM RECOVERY FUND. (a) The commissioner may revoke or
suspend a license issued under this chapter on proof that the
commissioner has made a payment from the recovery fund of any amount
toward satisfaction of a claim against a residential mortgage loan
originator [mortgage broker or loan officer] under this chapter.
(a-1) The commissioner may seek to collect from a
residential mortgage loan originator [mortgage broker or loan
officer] the amount paid from the recovery fund on behalf of the
residential mortgage loan originator [mortgage broker or loan
officer] and any costs associated with investigating and processing
the claim against the fund or with collection of reimbursement for
payments from the recovery fund, plus interest at the current legal
rate until the amount has been repaid in full. Any amount,
including interest, recovered by the commissioner shall be
deposited to the credit of the fund.
(b) The commissioner may probate an order revoking or
suspending a license under this section.
(c) A person on whose behalf payment was made from the
recovery fund is not eligible to receive a new license or have a
suspension lifted under this chapter until the person has repaid in
full, plus interest at the current legal rate, the amount paid from
the fund on the person's behalf and any costs associated with
investigating and processing the claim against the fund or with
collection of reimbursement for payments from the fund.
(d) This section does not limit the authority of the
commissioner to take disciplinary action against a residential
mortgage loan originator [mortgage broker or loan officer] for a
violation of this chapter or the rules adopted by the finance
commission under this chapter. The repayment in full to the
recovery fund of all obligations of a residential mortgage loan
originator [mortgage broker or loan officer] does not nullify or
modify the effect of any other disciplinary proceeding brought
under this chapter.
SECTION 44. Sections 156.507 and 156.508, Finance Code, are
amended to read as follows:
Sec. 156.507. SUBROGATION. When the commissioner has paid
an applicant an amount from the recovery fund under Section
156.504, the commissioner is subrogated to all of the rights of the
applicant to the extent of the amount paid. The applicant shall
assign all of the applicant's right, title, and interest in any
subsequent judgment against the license holder, up to the amount
paid by the commissioner. Any amount, including interest,
recovered by the commissioner on the assignment shall be deposited
to the credit of the fund.
Sec. 156.508. FAILURE TO COMPLY WITH SUBCHAPTER OR RULE
ADOPTED BY THE FINANCE COMMISSION. The failure of an applicant
under Section 156.504 to comply with a provision of this subchapter
relating to the recovery fund or with a rule adopted by the finance
commission relating to the fund constitutes a waiver of any rights
under this subchapter.
SECTION 45. Section 157.002, Finance Code, is amended by
adding Subdivisions (4-a) and (4-b) and amending Subdivision (5) to
read as follows:
(4-a) "Nationwide Mortgage Licensing System and
Registry" has the meaning assigned by Section 180.002.
(4-b) "Recovery fund" means the fund established and
maintained by the commissioner under Subchapter F, Chapter 156, and
Section 13.016.
(5) "Residential mortgage loan" has the meaning
assigned by Section 180.002 [means a debt secured by a lien on
residential real property designed principally for occupancy by one
to four families that is created by a deed of trust, security deed,
or other security instrument].
SECTION 46. Section 157.003, Finance Code, is amended by
amending Subsections (b) and (e) and adding Subsections (f) and (g)
to read as follows:
(b) To register under this chapter, a mortgage banker shall:
(1) enroll with the Nationwide Mortgage Licensing
System and Registry;
(2) be in good standing with the secretary of state;
(3) have a valid federal employer identification
number;
(4) meet the qualification requirements for a mortgage
banker; and
(5) provide to the commissioner a list of any offices
that are separate and distinct from the primary office identified
on the mortgage banker registration and that conduct residential
mortgage loan business relating to this state, regardless of
whether the offices are located in this state [file with the
commissioner a statement that contains:
[(1) the name and address of the mortgage banker;
[(2) the name, address, and telephone number of the
representative of the mortgage banker to be contacted regarding a
written complaint;
[(3) a list of the locations in this state at which the
person conducts the business of a mortgage banker; and
[(4) a list of employees of the mortgage banker who are
residential mortgage loan originators].
(e) The registration of a mortgage banker is valid on
approval of the commissioner and may be denied if the commissioner
determines the mortgage banker does not meet the requirements of
Subsection (b). If registration is denied, the mortgage banker may
appeal the determination in the same manner as an applicant for a
residential mortgage loan originator license may appeal a denial of
issuance of a license under Section 157.017.
(f) A mortgage banker registration is valid through
December 31 of the year in which the registration is approved.
(g) The registration may be [until] withdrawn or revoked.
[Periodic renewal of the registration is not required.]
SECTION 47. Section 157.005, Finance Code, is amended to
read as follows:
Sec. 157.005. UPDATE OF REGISTRATION [STATEMENT]. A
mortgage banker shall update information contained in the
registration [statement] not later than the 30th day after the date
the information changes.
SECTION 48. Section 157.006, Finance Code, is amended to
read as follows:
Sec. 157.006. REGISTRATION AND ADMINISTRATION FEE. The
commissioner may charge a mortgage banker a reasonable fee to cover
the costs of [filing] the registration [statement] and of
administering this chapter. The fee may not exceed $500 a year.
SECTION 49. Chapter 157, Finance Code, is amended by adding
Sections 157.0061 and 157.0062 to read as follows:
Sec. 157.0061. RENEWAL OF REGISTRATION. (a) The
registration of a mortgage banker expires on December 31 of the year
in which the registration is approved and must be renewed annually.
(b) To renew a registration, a mortgage banker must comply
with the requirements of Section 157.003 and pay a renewal fee in an
amount not to exceed $500.
Sec. 157.0062. REINSTATEMENT AFTER EXPIRATION OF
REGISTRATION. (a) A mortgage banker whose registration has
expired may not engage in an activity for which registration is
required under this chapter until the registration is renewed.
(b) A mortgage banker who is otherwise eligible to renew a
registration, but has not done so before January 1, may renew the
registration before March 1 by paying the commissioner a
reinstatement fee in an amount not to exceed $500.
(c) A mortgage banker whose registration has not been
renewed before March 1 may not renew the registration. The mortgage
banker may obtain a new registration by complying with the
requirements and procedures for obtaining an original
registration.
SECTION 50. Section 157.007, Finance Code, is amended to
read as follows:
Sec. 157.007. DISCLOSURE STATEMENT. A mortgage banker that
is a residential mortgage loan originator shall include a [the
following] notice to a residential mortgage loan applicant with an
application for a residential mortgage loan. The finance
commission by rule shall adopt a standard disclosure form to be used
by the mortgage banker. The form must:
(1) include the name, address, and toll-free telephone
number for the Department of Savings and Mortgage Lending;
(2) contain information on how to file a complaint or
recovery fund claim; and
(3) prescribe a method for proof of delivery to the
consumer.[:
["COMPLAINTS REGARDING MORTGAGE BANKERS SHOULD BE SENT TO THE
DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
______________________________ (street address of the Department
of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS
AVAILABLE AT _______________ (telephone number of the Department of
Savings and Mortgage Lending's toll-free consumer hotline)."]
SECTION 51. Section 157.012, Finance Code, as added by
Chapters 1104 (H.B. 10) and 1147 (H.B. 2779), Acts of the 81st
Legislature, Regular Session, 2009, is reenacted and amended to
read as follows:
Sec. 157.012. LICENSE REQUIRED FOR CERTAIN EMPLOYEES OF
MORTGAGE BANKERS. (a) [In this section, "Nationwide Mortgage
Licensing System and Registry" and "residential mortgage loan
originator" have the meanings assigned by Section 180.002.
[(b)] An employee of a mortgage banker may not act in the
capacity of a residential mortgage loan originator unless the
employee:
(1) is licensed under this chapter, sponsored by a
registered mortgage banker, and enrolled with the Nationwide
Mortgage Licensing System and Registry as required by Section
180.052; and
(2) complies with other applicable requirements of
Chapter 180 and rules adopted by the finance commission under that
chapter.
(b) [(c)] The finance commission may adopt rules under this
chapter as required to carry out the intentions of the federal
Secure and Fair Enforcement for Mortgage Licensing Act of 2008
(Pub. L. No. 110-289).
(c) [(d)] To be eligible to be licensed as a residential
mortgage loan originator, an employee of a mortgage banker, in
addition to the requirements of Subsection (a) [(b)], must:
(1) satisfy the commissioner as to the employee's good
moral character, including the employee's honesty,
trustworthiness, and integrity;
(2) not be in violation of this chapter, Chapter 180,
or any rules [a rule] adopted under this chapter or Chapter 180;
[and]
(3) provide the commissioner with satisfactory
evidence that the employee meets the qualifications provided by
Chapter 180; and
(4) be a citizen of the United States or a lawfully
admitted alien.
(d) A mortgage banker employee who is not a residential
mortgage loan originator is not required to enroll with the
Nationwide Mortgage Licensing System and Registry or be licensed
under this chapter.
SECTION 52. Subsection (b), Section 157.013, Finance Code,
is amended to read as follows:
(b) An application for a residential mortgage loan
originator license must be accompanied by an application fee in an
amount determined by the commissioner, not to exceed $500, and by a
recovery fund fee in an amount determined by the commissioner, not
to exceed $20.
SECTION 53. The heading to Section 157.016, Finance Code,
is amended to read as follows:
Sec. 157.016. REINSTATEMENT [RENEWAL] AFTER EXPIRATION OF
LICENSE; NOTICE.
SECTION 54. Section 157.019, Finance Code, is amended by
adding Subsection (c) to read as follows:
(c) A mortgage banker employee who is a residential mortgage
loan originator shall notify the commissioner or authorized
designee in writing of a change of sponsorship. The notice must be
accompanied by a fee of $25.
SECTION 55. Section 157.020, Finance Code, is amended to
read as follows:
Sec. 157.020. MORTGAGE [ANNUAL] CALL REPORT. (a) Each
mortgage banker shall file a mortgage [an annual] call report with
the commissioner or the commissioner's authorized designee on a
form prescribed by the commissioner or authorized designee. The
report must be filed as frequently as required by the Nationwide
Mortgage Licensing System and Registry. The report is a statement
of condition of the mortgage banker and the mortgage banker's
operations, including financial statements and production activity
volumes, and any other similar information required by the
Nationwide Mortgage Licensing System and Registry.
(b) The information contained in the mortgage call report
related to residential mortgage loan origination volume or other
trade information is confidential and may not be disclosed by the
commissioner, the commissioner's [or] authorized designee, or any
other employee of the Department of Savings and Mortgage Lending.
SECTION 56. Chapter 157, Finance Code, is amended by adding
Section 157.0201 to read as follows:
Sec. 157.0201. RECOVERY FUND. The recovery fund
established, administered, and maintained under Section 13.016 and
Subchapter F, Chapter 156, shall be used as provided by Subchapter
F, Chapter 156, to reimburse residential mortgage loan applicants
for actual damages incurred because of acts committed by
residential mortgage loan originators licensed under this chapter
when the act was committed.
SECTION 57. Subsections (a) and (b), Section 157.023,
Finance Code, are amended to read as follows:
(a) The commissioner, after notice and opportunity for a
hearing, may impose an administrative penalty on an individual who
is [a person] licensed or required to be licensed under this chapter
as a residential mortgage loan originator and [under this chapter]
who violates this chapter or a rule or order adopted under this
chapter.
(b) The amount of the penalty may not exceed $25,000 for
each violation [$2,500, and each day a violation continues or
occurs is a separate violation for the purpose of imposing a
penalty]. The amount shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
(2) the economic harm to property caused by the
violation;
(3) the history of previous violations;
(4) [(3)] the amount necessary to deter a future
violation;
(5) [(4)] efforts to correct the violation; and
(6) [(5)] any other matter that justice may require.
SECTION 58. Section 157.024, Finance Code, is amended by
amending Subsection (j) and adding Subsection (l) to read as
follows:
(j) An order revoking the license of a residential mortgage
loan originator may provide that the person is prohibited, without
previously obtaining written consent of the commissioner, from:
(1) engaging in the business of originating or making
residential mortgage loans, as defined by Section 180.002;
(2) otherwise affiliating with a person for the
purpose of engaging in the business of originating or making
residential mortgage loans, as defined by Section 180.002; and
(3) being an employee, officer, director, manager,
shareholder, member, agent, contractor, or processor of a mortgage
banker, residential mortgage loan company [mortgage broker], or
residential mortgage loan originator for a residential mortgage
loan company [mortgage broker loan officer].
(l) The commissioner may, in the commissioner's discretion,
rescind or vacate any previously issued order.
SECTION 59. Chapter 157, Finance Code, is amended by adding
Section 157.0241 to read as follows:
Sec. 157.0241. REVOCATION OR SUSPENSION OF LICENSE FOR
PAYMENT FROM RECOVERY FUND. (a) The commissioner may revoke or
suspend a license issued under this chapter on proof that the
commissioner has made a payment from the recovery fund of any amount
toward satisfaction of a claim against a residential mortgage loan
originator licensed under this chapter.
(b) The commissioner may seek to collect from a residential
mortgage loan originator the amount paid from the recovery fund on
behalf of the residential mortgage loan originator and any costs
associated with investigating and processing the claim against the
recovery fund or with collection of reimbursement for payments from
the recovery fund, plus interest at the current legal rate until the
amount has been repaid in full. Any amount, including interest,
recovered by the commissioner shall be deposited to the credit of
the recovery fund.
(c) The commissioner may probate an order revoking or
suspending a license under this section.
(d) A person on whose behalf payment was made from the
recovery fund is not eligible to receive a new license or have a
suspension lifted under this chapter until the person has repaid in
full, plus interest at the current legal rate, the amount paid from
the recovery fund on the person's behalf and any costs associated
with investigating and processing the claim against the recovery
fund or with collection of reimbursement for payments from the
recovery fund.
(e) This section does not limit the authority of the
commissioner to take disciplinary action against a residential
mortgage loan originator for a violation of this chapter or the
rules adopted by the finance commission under this chapter. The
repayment in full to the recovery fund of all obligations of a
residential mortgage loan originator does not nullify or modify the
effect of any other disciplinary proceeding brought under this
chapter.
SECTION 60. Subdivision (19), Section 180.002, Finance
Code, is amended to read as follows:
(19) "Residential mortgage loan originator":
(A) means an individual who for compensation or
gain or in the expectation of compensation or gain:
(i) takes a residential mortgage loan
application; or
(ii) offers or negotiates the terms of a
residential mortgage loan; and
(B) does not include:
(i) an individual who performs solely
administrative or clerical tasks on behalf of an individual
licensed as a residential mortgage loan originator or exempt from
licensure under Section 180.003, except as otherwise provided by
Section 180.051;
(ii) an individual who performs only real
estate brokerage activities and is licensed or registered by the
state as a real estate broker or salesperson, unless the individual
is compensated by:
(a) a lender[, mortgage broker,] or
other residential mortgage loan originator; or
(b) an agent of a lender[, mortgage
broker,] or other residential mortgage loan originator;
(iii) an individual licensed under Chapter
1201, Occupations Code, unless the individual is directly
compensated for arranging financing for activities regulated under
that chapter by:
(a) a lender[, mortgage broker,] or
other residential mortgage loan originator; or
(b) an agent of a lender[, mortgage
broker,] or other residential mortgage loan originator;
(iv) an individual who receives the same
benefits from a financed transaction as the individual would
receive if the transaction were a cash transaction; or
(v) an individual who is involved solely in
providing extensions of credit relating to timeshare plans, as
defined by 11 U.S.C. Section 101(53D).
SECTION 61. Section 180.003, Finance Code, is amended to
read as follows:
Sec. 180.003. EXEMPTION. (a) The following persons are
exempt from this chapter:
(1) a registered mortgage loan originator when acting
for an entity described by Section 180.002(16)(A)(i), (ii), or
(iii);
(2) an individual who offers or negotiates terms of a
residential mortgage loan with or on behalf of an immediate family
member of the individual;
(3) a licensed attorney who negotiates the terms of a
residential mortgage loan on behalf of a client as an ancillary
matter to the attorney's representation of the client, unless the
attorney:
(A) takes a residential mortgage loan
application; and
(B) offers or negotiates the terms of a
residential mortgage loan;
(4) [an individual who:
[(A) is an exclusive agent of a registered
financial services company;
[(B) is exempt from regulation under Chapter 156
as provided by Section 156.202(5); and
[(C) is individually enrolled as a registered
mortgage loan originator with the Nationwide Mortgage Licensing
System and Registry;
[(5)] an individual who offers or negotiates terms of
a residential mortgage loan secured by a dwelling that serves as the
individual's residence; [and]
(5) [(6)] a nonprofit organization providing
self-help housing that originates zero interest residential
mortgage loans for borrowers who have provided part of the labor to
construct the dwelling securing the loan;
(6) an owner of residential real estate who in any
12-consecutive-month period makes no more than five residential
mortgage loans to purchasers of the property for all or part of the
purchase price of the residential real estate against which the
mortgage is secured; and
(7) an owner of a dwelling who in any
12-consecutive-month period makes no more than five residential
mortgage loans to purchasers of the property for all or part of the
purchase price of the dwelling against which the mortgage or
security interest is secured.
(b) An individual is exempt from this chapter, other than
Section 180.171, if the individual:
(1) in any 12-consecutive-month period originates
five or fewer closed residential mortgage loans exclusively for a
single federally chartered depository institution and the loans are
closed within that period;
(2) is contractually prohibited from soliciting,
processing, negotiating, or placing a residential mortgage loan
with a person other than the depository institution described by
Subdivision (1); and
(3) is sponsored by a life insurance company, or an
affiliate of the company, authorized to engage in business in this
state.
(c) The finance commission may grant an exemption from the
licensing requirements of this chapter to a municipality, county,
community development corporation, or public or private grant
administrator to the extent the entity is administering the Texas
HOME Investment Partnerships program if the commission determines
that granting the exemption is not inconsistent with the intentions
of the federal Secure and Fair Enforcement for Mortgage Licensing
Act of 2008 (Pub. L. No. 110-289).
SECTION 62. Section 180.056, Finance Code, is amended by
adding Subsection (h) to read as follows:
(h) An individual who fails to maintain a residential
mortgage loan originator license for at least five consecutive
years must retake the prelicensing education requirements
prescribed by the S.A.F.E. Mortgage Licensing Act.
SECTION 63. Chapter 180, Finance Code, is amended by adding
Subchapter D-1 to read as follows:
SUBCHAPTER D-1. REQUIREMENT FOR INDIVIDUALS ORIGINATING
RESIDENTIAL MORTGAGE LOANS EXCLUSIVELY FOR CERTAIN DEPOSITORY
INSTITUTION
Sec. 180.171. ENROLLMENT WITH DEPARTMENT OF SAVINGS AND
MORTGAGE LENDING. (a) This section applies only to an individual
who:
(1) in any 12-consecutive-month period originates
five or fewer residential mortgage loans exclusively for a single
federally chartered depository institution and the loans are closed
within that period;
(2) is contractually prohibited from soliciting,
processing, negotiating, or placing a residential mortgage loan
with a person other than the depository institution described by
Subdivision (1); and
(3) is sponsored by a life insurance company, or an
affiliate of the company, authorized to engage in business in this
state.
(b) Before conducting business in this state with respect to
a residential mortgage loan, an individual to whom this section
applies must enroll as a financial exclusive agent with the
Department of Savings and Mortgage Lending until the time any
registration with the Nationwide Mortgage Licensing System and
Registry is required for the individual by federal law or
regulation and a suitable category is created for that registration
with that nationwide registry.
(c) An enrollment under this section must be renewed
annually.
(d) An individual required under this section to enroll as a
financial exclusive agent shall pay to the savings and mortgage
lending commissioner an annual fee in an amount not to exceed $40 as
prescribed by the commissioner.
SECTION 64. Section 342.051, Finance Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) A person who is licensed or registered under Chapter
156 or 157 is not required to obtain a license under this section to
make, negotiate, or transact a residential mortgage loan, as
defined by Section 180.002.
SECTION 65. (a) The following provisions of the Finance
Code are repealed:
(1) Subdivisions (4), (5), (6), (9), and (10), Section
156.002;
(2) Section 156.2011;
(3) Subsection (a), Section 156.2015;
(4) Subsection (b), Section 156.202;
(5) Section 156.204;
(6) Section 156.2071;
(7) Subsections (f), (g), (h), and (i), Section
156.208;
(8) Subsections (d) and (e), Section 156.2081;
(9) Subsections (e), (f), and (g), Section 156.214;
(10) Section 156.215;
(11) Subsections (b-1), (c), and (d), Section 157.003;
(12) Subsection (b), Section 157.009;
(13) Subsection (d), Section 157.016;
(14) Section 157.018; and
(15) Subsection (f), Section 342.051.
(b) Section 156.213, Finance Code, as added by Chapter 407
(H.B. 1493), Acts of the 77th Legislature, Regular Session, 2001,
is repealed.
SECTION 66. The provisions of this Act or the applications
of those provisions are severable as provided by Subsection (c),
Section 311.032, Government Code. If the secretary of the United
States Department of Housing and Urban Development or the director
of the federal Bureau of Consumer Financial Protection by final
administrative decision determines that any provision of this Act
or application of this Act to any person or circumstance is
considered to be inconsistent with or in conflict with the federal
Secure and Fair Enforcement for Mortgage Licensing Act of 2008
(Pub. L. No. 110-289), or any rules or regulations adopted under
that federal Act, that provision of this Act shall be held invalid;
however, the remainder of this Act or the application of the
provision to other persons or circumstances is not affected.
SECTION 67. To the extent of any conflict, this Act prevails
over another Act of the 82nd Legislature, Regular Session, 2011,
relating to nonsubstantive additions to and corrections in enacted
codes.
SECTION 68. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2011.
(b) Section 180.171, Finance Code, as added by this Act,
takes effect November 1, 2011.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1124 passed the Senate on
March 31, 2011, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendments on May 25, 2011, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1124 passed the House, with
amendments, on May 23, 2011, by the following vote: Yeas 146,
Nays 0, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor