Bill Text: TX SB17 | 2011-2012 | 82nd Legislature | Enrolled


Bill Title: Relating to the regulation of residential mortgage loan servicers; providing an administrative penalty.

Spectrum: Slight Partisan Bill (Republican 2-1)

Status: (Passed) 2011-06-17 - Effective on 9/1/11 [SB17 Detail]

Download: Texas-2011-SB17-Enrolled.html
 
 
  S.B. No. 17
 
 
 
 
AN ACT
  relating to the regulation of residential mortgage loan servicers;
  providing an administrative penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle E, Title 3, Finance Code, is amended by
  adding Chapter 158 to read as follows:
  CHAPTER 158. RESIDENTIAL MORTGAGE LOAN SERVICERS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 158.001.  SHORT TITLE. This chapter may be cited as the
  Residential Mortgage Loan Servicer Registration Act.
         Sec. 158.002.  DEFINITIONS. In this chapter:
               (1)  "Commissioner" means the savings and mortgage
  lending commissioner.
               (2)  "Finance commission" means the Finance Commission
  of Texas.
               (3)  "Person" means an individual, corporation,
  company, limited liability company, partnership, or association.
               (4)  "Registrant" means a person registered under this
  chapter.
               (5)  "Residential mortgage loan" means a loan primarily
  for personal, family, or household use that is secured by a
  mortgage, deed of trust, or other equivalent consensual security
  interest on a dwelling or on residential real estate.
               (6)  "Residential mortgage loan servicer" means a
  person who:
                     (A)  receives scheduled payments from a borrower
  under the terms of a residential mortgage loan, including amounts
  for escrow accounts; and
                     (B)  makes the payments of principal and interest
  to the owner of the loan or other third party and makes any other
  payments with respect to the amounts received from the borrower as
  may be required under the terms of the servicing loan document or
  servicing contract.
               (7)  "Residential real estate" means real property
  located in this state on which a dwelling designed for occupancy for
  one to four families is constructed or intended to be constructed.
         Sec. 158.003.  PURPOSE; RULES. (a)  The purpose of this
  chapter is to provide regulatory authority to ensure that
  residential mortgage loan servicers registered under this chapter
  comply with federal and state laws, rules, and regulations.
         (b)  The finance commission may adopt and enforce rules
  necessary for the purposes of or to ensure compliance with this
  chapter.
         (c)  The finance commission shall consult with the
  commissioner when proposing and adopting rules under this chapter.
  [Sections 158.004-158.050 reserved for expansion]
  SUBCHAPTER B. REGISTRATION OF RESIDENTIAL MORTGAGE LOAN SERVICERS
         Sec. 158.051.  REGISTRATION REQUIRED. A person may not act
  as a residential mortgage loan servicer, directly or indirectly,
  for a residential mortgage loan secured by a lien on residential
  real estate in this state unless the person is registered under this
  chapter or is exempt under Section 158.052.
         Sec.158.052.EXEMPTIONS; APPLICABILITY. (a)This chapter
  does not require registration by:
               (1)  a federal or state depository institution, or a
  subsidiary or affiliate of a federal or state depository
  institution;
               (2)  a person registered under Chapter 157;
               (3)  a person licensed under Chapter 342 or regulated
  under Chapter 343, if the person does not act as a residential
  mortgage loan servicer servicing first-lien secured loans; or
               (4)  a person making a residential mortgage loan with
  the person's own funds, or to secure all or a portion of the
  purchase price of real property sold by that person.
         (b)  This chapter applies only to a residential mortgage loan
  servicer that services at least one residential mortgage loan.
         (c)  Nothing in this chapter permits a person who is not
  otherwise exempt from this chapter to act as a residential mortgage
  loan originator, as defined by Section 180.002, without obtaining a
  license under the applicable provisions of law.
         Sec. 158.053.  APPLICATION FOR REGISTRATION; FEE. (a)  To
  register under this chapter, a residential mortgage loan servicer
  shall file with the commissioner an application for registration
  that must:
               (1)  be in writing;
               (2)  be under oath;
               (3)  be in the form prescribed by the commissioner; and
               (4)  contain:
                     (A)  the name and the address of the principal
  place of business of the applicant; and
                     (B)  the name, title, and address of the person
  authorized by the applicant to respond to complaints.
         (b)  At the time of making application, the applicant shall
  pay to the commissioner a registration fee in an amount not to
  exceed $500 as determined by the finance commission.
         (c)  An applicant is not required to pay a registration fee
  under Subsection (b) if the applicant:
               (1)  collects delinquent consumer debts owed on
  residential mortgage loans;
               (2)  does not own the residential mortgage loans for
  which the applicant acts as a residential mortgage loan servicer;
  and
               (3)  is a third-party debt collector that has filed a
  bond in compliance with Chapter 392.
         Sec. 158.054.  UPDATE OF REGISTRATION. A registrant shall
  notify the commissioner of a change in any of the information
  provided in the registration application not later than the 30th
  day after the date the information changes.
         Sec. 158.055.  BOND. (a)  Before approval of the
  registration, an applicant for registration under this chapter
  shall file with the commissioner, and shall keep in force while the
  registration remains in effect, a surety bond meeting the
  requirements of this section or, if a surety bond is not available
  to the applicant from a surety company authorized to do business in
  this state, other collateral of like kind as determined by the
  commissioner.
         (b)  The bond must be:
               (1)  in an amount not to exceed $200,000, except as
  provided by Subsection (c); and
               (2)  payable to the commissioner.
         (c)  This subsection applies only to an applicant who
  services only residential mortgage loans secured by unimproved
  residential real estate or services only residential mortgage loans
  secured by foreclosed property with a dwelling, or both. If sales
  of the property described by this subsection do not exceed $1
  million annually, the bond for an applicant described by this
  section must be in an amount not to exceed $25,000.
         (d)  If a registrant fails to comply with a final order of the
  commissioner, the commissioner may make a claim on the bond to
  recover and pay a consumer the amount to which the consumer was
  entitled under the commissioner's order.
         (e)  When an action is commenced on a registrant's bond, the
  commissioner may require the filing of a new acceptable bond.  
  Immediately on recovery on any action on the bond, the registrant
  shall file a new bond.
         (f)  The bond procedures established by this section are
  created to specifically exclude the participation of registrants in
  the recovery fund established under Chapter 156.
         (g)  The finance commission may adopt rules establishing the
  terms and conditions of the surety bond and the qualifications of
  the surety.
         (h)  A registrant is not required to file a bond under this
  chapter if the registrant:
               (1)  collects delinquent consumer debts owed on
  residential mortgage loans;
               (2)  does not own the residential mortgage loans for
  which the registrant acts as a residential mortgage loan servicer;
  and
               (3)  is a third-party debt collector that has filed a
  bond in compliance with Chapter 392.
         Sec. 158.056.  APPROVAL OF REGISTRATION. The commissioner
  shall approve an application for registration under this chapter on
  the applicant's payment of the required fees and the commissioner's
  approval of the surety bond.
         Sec. 158.057.  NOTICE OF CHANGE OF REGISTRANT'S CONDITION.
  (a)  A registrant shall notify the commissioner in writing not
  later than the 10th day after:
               (1)  the filing for bankruptcy or reorganization of the
  registrant;
               (2)  the filing of a criminal indictment related in any
  manner to the registrant's activities; or
               (3)  the receipt of notification of the issuance of a
  final order to cease and desist, a final order of the suspension or
  revocation of a license or registration, or another final formal or
  informal regulatory action taken against the registrant in this or
  another state.
         (b)  The notification required by Subsection (a)(3) must
  include the reasons for a final regulatory action described by that
  subdivision.
         Sec. 158.058.  RENEWAL OF REGISTRATION. (a)  On or before
  December 31 of each year, a registrant shall renew its registration
  for the next calendar year and shall pay to the commissioner a
  renewal fee in an amount not to exceed $500 as determined by the
  finance commission.  To renew a registration, a registrant must
  continue to meet all standards for registration provided by this
  chapter.
         (b)  If a registrant fails to file a renewal and pay the
  renewal fee on or before December 31 of a calendar year, the
  registrant's registration is considered expired at that time and
  the registrant:
               (1)  must reapply for registration as provided by
  Section 158.053; and
               (2)  may not conduct business as a residential mortgage
  loan servicer until the registration is approved.
         (c)  The commissioner may refuse to renew a registration if
  the registrant:
               (1)  has failed to pay any fees or penalties imposed
  under this chapter;
               (2)  has failed to provide the surety bond required
  under this chapter; or
               (3)  is not in compliance with any final order of the
  commissioner.
         Sec. 158.059.  REVOCATION OF REGISTRATION. The commissioner
  may, after notice and hearing, revoke a registration under this
  chapter if:
               (1)  the registrant fails or refuses to comply with the
  commissioner's written request for a response to a complaint;
               (2)  the commissioner determines that the registrant
  has engaged in an intentional course of conduct to violate federal
  or state law or has engaged in an intentional course of conduct that
  constitutes fraudulent, deceptive, or dishonest dealings; or
               (3)  the registrant is not in compliance with any final
  order of the commissioner.
         Sec. 158.060.  APPEAL OF CERTAIN COMMISSIONER ACTIONS. The
  denial, nonrenewal, or revocation by the commissioner of a
  registration under this chapter and the appeal of that action are
  governed by Chapter 2001, Government Code.
  [Sections 158.061-158.100 reserved for expansion]
  SUBCHAPTER C. INVESTIGATIONS, COMPLAINTS, AND ACTIONS AGAINST
  REGISTRANT
         Sec. 158.101.  DISCLOSURE STATEMENT.  A registrant shall
  provide to the borrower of each residential mortgage loan the
  following notice not later than the 30th day after the registrant
  commences servicing the loan:
         "COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE 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)."
         Sec. 158.102.  INVESTIGATION OF COMPLAINTS AGAINST
  REGISTRANT; SURCHARGE. (a)  On receipt of a signed written
  complaint concerning a registrant by the Department of Savings and
  Mortgage Lending, the commissioner or the commissioner's designee:
               (1)  shall notify the representative designated by the
  registrant in the registration application in writing of the
  complaint and provide a copy of the complaint to the
  representative;
               (2)  may conduct an investigation with authority to
  access, receive, and use in the investigation any books, accounts,
  records, files, documents, information, or other evidence; and
               (3)  may request that the registrant provide
  documentary and other evidence considered by the commissioner
  necessary to effectively evaluate the complaint, including
  correspondence, loan documents, and disclosures.
         (b)  A registrant shall promptly provide any evidence
  requested by the commissioner.
         (c)  Information obtained by the commissioner during an
  investigation is confidential unless disclosure of the information
  is permitted or required by other law or court order. The
  commissioner may share information gathered during an
  investigation with any state or federal agency.
         (d)  In addition to the registration fee, the finance
  commission by rule may impose a complaint investigation fee on a
  registrant based on the costs incurred by the Department of Savings
  and Mortgage Lending resulting from the investigation of complaints
  against the registrant.
         Sec. 158.103.  ACTION ON COMPLAINT. (a)  If, after
  conducting an investigation, the commissioner determines that the
  registrant has violated this chapter or another applicable law, the
  commissioner may do one or more of the following:
               (1)  issue an order to the registrant to resolve the
  complaint by paying to the consumer the damages to which the
  consumer would be entitled under law; or
               (2)  order the registrant to cease and desist from the
  actions found to be in violation of law.
         (b)  A registrant may appeal an order issued under this
  section. The appeal is a contested case governed by Chapter 2001,
  Government Code.
         Sec. 158.104.  MULTI-STATE EXAMINATION AUTHORITY. To ensure
  that residential mortgage loan servicers to whom this chapter
  applies operate in this state in compliance with this chapter and
  with other law in accordance with this chapter, the commissioner or
  the commissioner's designee may participate in multi-state
  mortgage examinations as scheduled by the Conference of State Bank
  Supervisors Multi-State Mortgage Committee in accordance with the
  Conference of State Bank Supervisors protocol for such
  examinations.
         Sec. 158.105.  CEASE AND DESIST ORDER. (a)  If the
  commissioner has reasonable cause to believe that a person who is
  not registered or exempt under this chapter has engaged, or is about
  to engage, in an act or practice for which registration is required
  under this chapter, the commissioner may issue without notice and
  hearing an order to cease and desist from continuing a particular
  action or an order to take affirmative action, or both, to enforce
  compliance with this chapter.
         (b)  An order issued under Subsection (a) must contain a
  reasonably detailed statement of the facts on which the order is
  issued.
         (c)  If, not later than the 30th day after the date an order
  is issued under this section, the person against whom the order is
  made requests a hearing, the commissioner shall set and give notice
  of a hearing before the commissioner or a hearings officer.  The
  hearing shall be governed by Chapter 2001, Government Code.
         (d)  If a hearing is not requested under Subsection (c) not
  later than the 30th day after the date the order is issued, the
  order is considered final and not appealable.
         (e)  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 $2,500 for each
  day of the 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 subsection.
         Sec. 158.106.  RESTITUTION. The commissioner may order a
  residential mortgage loan servicer to pay to a complainant any
  compensation received by the servicer in a violation cited by the
  commissioner in a final order.
         SECTION 2.  Subdivision (4), Section 157.002, Finance Code,
  is amended to read as follows:
               (4)  "Mortgage banker" means a person who:
                     (A)  accepts an application for a residential
  mortgage loan, [or] makes a residential mortgage loan, or services
  residential mortgage loans; and
                     (B)  is an approved or authorized:
                           (i)  mortgagee with direct endorsement
  underwriting authority granted by the United States Department of
  Housing and Urban Development;
                           (ii)  seller or servicer of the Federal
  National Mortgage Association or the Federal Home Loan Mortgage
  Corporation; or
                           (iii)  issuer for the Government National
  Mortgage Association.
         SECTION 3.  Section 157.003, Finance Code, is amended by
  adding Subsection (f) to read as follows:
         (f)  A mortgage banker that services residential mortgage
  loans must indicate in its registration that it acts as a
  residential mortgage loan servicer.
         SECTION 4.  Section 157.007, Finance Code, is amended to
  read as follows:
         Sec. 157.007.  DISCLOSURE STATEMENT. (a)  A mortgage banker
  shall include the following notice to a residential mortgage loan
  applicant with an application for a residential mortgage loan:
         "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)."
         (b)  A mortgage banker that indicates in its registration
  that it acts as a residential mortgage loan servicer shall provide
  to the borrower of each residential mortgage loan it services the
  following notice not later than the 30th day after the date the
  mortgage banker commences servicing the loan:
         "COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE 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 5.  Chapter 157, Finance Code, is amended by adding
  Section 157.0211 to read as follows:
         Sec. 157.0211.  MULTI-STATE EXAMINATION AUTHORITY OF
  RESIDENTIAL MORTGAGE LOAN SERVICER. To ensure that mortgage
  bankers that act as residential mortgage loan servicers operate in
  this state in compliance with this chapter and with other law in
  accordance with this chapter, the commissioner or the
  commissioner's designee may participate in multi-state mortgage
  examinations as scheduled by the Conference of State Bank
  Supervisors Multi-State Mortgage Committee in accordance with the
  Conference of State Bank Supervisors protocol for such
  examinations.
         SECTION 6.  This Act takes effect September 1, 2011.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 17 passed the Senate on
  March 29, 2011, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 25, 2011, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 17 passed the House, with
  amendment, on May 25, 2011, by the following vote: Yeas 143,
  Nays 1, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor
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