Bill Text: TX SB1859 | 2021-2022 | 87th Legislature | Introduced


Bill Title: Relating to regulating the servicing of certain student loans, requiring the occupational licensing of certain student loan servicers, and the designation of a student loan ombudsman within the Texas Department of Banking; authorizing fees; authorizing civil and administrative penalties.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2021-03-26 - Referred to Business & Commerce [SB1859 Detail]

Download: Texas-2021-SB1859-Introduced.html
  87R1563 MM-F
 
  By: Powell S.B. No. 1859
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to regulating the servicing of certain student loans,
  requiring the occupational licensing of certain student loan
  servicers, and the designation of a student loan ombudsman within
  the Texas Department of Banking; authorizing fees; authorizing
  civil and administrative penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 52.335(d), Education Code, is amended to
  read as follows:
         (d)  The disclosure required under this section must:
               (1)  identify the types of education loans included in
  the institution's estimates; and
               (2)  include:
                     (A)  a statement that the disclosure is not a
  complete and official record of the student's education loan debt;
                     (B)  an explanation regarding why the disclosure
  may not be complete or accurate, including an explanation that for a
  transfer student, the institution's estimates regarding state
  loans reflect only state loans incurred by the student for
  attendance at the institution; [and]
                     (C)  a statement that the institution's estimates
  are general in nature and are not intended as a guarantee or
  promise; and
                     (D)  the contact information for the student loan
  ombudsman designated under Section 161.051, Finance Code.
         SECTION 2.  Subtitle E, Title 3, Finance Code, is amended by
  adding Chapter 161 to read as follows:
  CHAPTER 161. STUDENT LOAN SERVICERS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 161.001.  DEFINITIONS. In this chapter:
               (1)  "Banking commissioner" means the banking
  commissioner of Texas or a person designated by the banking
  commissioner and acting under the banking commissioner's direction
  and authority.
               (2)  "Consumer reporting agency" has the meaning
  assigned by Section 20.01(5), Business & Commerce Code.
               (3)  "Department" means the Texas Department of
  Banking.
               (4)  "Finance commission" means the Finance Commission
  of Texas.
               (5)  "Nationwide Multistate Licensing System and
  Registry" or "registry" has the meaning assigned by Section
  151.2031.
               (5)  "Ombudsman" means the student loan ombudsman
  designated under Section 161.051.
               (7)  "Servicing" means: 
                     (A)  receiving scheduled periodic payments from a
  student loan borrower or notification of those payments;
                     (B)  applying student loan payments to the
  borrower's account under the terms of:
                           (i)  the loan; or
                           (ii)  the contract governing the servicing
  of the loan; 
                     (C)  maintaining, on the loan holder's behalf,
  account records for a student loan during a period when no loan
  payment is required; 
                     (D)  communicating with the student loan borrower
  regarding the loan, on the loan holder's behalf; and
                     (E)  interacting with a student loan borrower to
  facilitate the servicing of the student loan, as described by
  Paragraphs (A)-(D), including performing activities to prevent the
  loan's default and the default of any obligations arising from the
  loan.
               (8)  "Student loan" means a loan that is extended to a
  student loan borrower solely to finance postsecondary education
  expenses. The term does not include open-end credit or a loan
  secured by real property.
               (9)  "Student loan borrower" or "borrower" means:
                     (A)  a student who has obtained or agreed to pay a
  student loan;
                     (B)  a former student with a student loan; or
                     (C)  a person who has obtained or agreed to pay a
  student loan for the benefit of a student, regardless of whether the
  student is currently enrolled at a postsecondary educational
  institution.
               (10)  "Student loan servicer" means an entity
  responsible for servicing a student loan.
         Sec. 161.002.  RULES. The finance commission shall adopt
  rules necessary to administer, implement, and enforce this chapter.
  SUBCHAPTER B. STUDENT LOAN OMBUDSMAN
         Sec. 161.051.  STUDENT LOAN OMBUDSMAN. (a) The banking
  commissioner shall designate a qualified employee of the department
  as student loan ombudsman to provide assistance to student loan
  borrowers in this state and to other persons as provided by this
  subchapter. Subject to the availability of funds, the department
  may hire additional staff as necessary to assist the ombudsman in
  carrying out the ombudsman's duties and performing the activities
  specified by this subchapter.
         (b)  The ombudsman and the banking commissioner shall confer
  at least annually regarding:
               (1)  student loan servicer complaints;
               (2)  the proper referral process for student loan
  servicer complaints; and
               (3)  the reporting requirement of Section 161.054.
         Sec. 161.052.  DUTIES OF OMBUDSMAN. The ombudsman shall: 
               (1)  receive, review, and attempt to resolve complaints
  from student loan borrowers, including the attempted resolution of
  complaints in collaboration with institutions of higher education,
  student loan servicers, and any other participants in the student
  loan lending process;
               (2)  refer to the banking commissioner any complaint
  received concerning a student loan servicer;
               (3)  compile and analyze data on complaints made by
  student loan borrowers;
               (4)  assist student loan borrowers in understanding the
  borrower's rights and responsibilities under the terms of a student
  loan or related contract;
               (5)  provide information to the public, state agencies,
  the legislature, and other interested persons regarding the
  problems and concerns of student loan borrowers and make
  recommendations to the banking commissioner for resolving those
  problems and concerns;
               (6)  analyze and monitor the development and
  implementation of federal and state law and policy relating to
  student loans and recommend any necessary changes to the banking
  commissioner;
               (7)  review the complete student loan history of a
  student loan borrower who has provided written consent for the
  review;
               (8)  disseminate information concerning the
  availability of the ombudsman to assist the following with respect
  to student loan servicing matters or concerns:
                     (A)  student loan borrowers and potential student
  loan borrowers;
                     (B)  institutions of higher education;
                     (C)  student loan servicers; and
                     (D)  other participants in student loan lending in
  this state; and 
               (9)  take other actions as necessary to fulfill the
  duties of the ombudsman as provided by this subchapter.
         Sec. 161.053.  EDUCATION COURSE FOR STUDENT LOAN BORROWERS.  
  Not later than October 1, 2022, the ombudsman, in consultation with
  the Texas Higher Education Coordinating Board, shall establish and
  maintain a student loan borrower education course. The course must
  include educational presentations and materials regarding student
  loans, including information regarding:
               (1)  lending terms;
               (2)  loan documentation requirements;
               (3)  monthly payment obligations;
               (4)  income-driven repayment options;
               (5)  loan forgiveness programs; and 
               (6)  disclosure requirements. 
         Sec. 161.054.  ANNUAL REPORT. Not later than December 31 of
  each year, the ombudsman shall submit an annual report to the
  banking commissioner and the commissioner of the Texas Higher
  Education Coordinating Board. The report must:
               (1)  address the implementation of this subchapter; 
               (2)  address the effectiveness of the ombudsman
  position in providing the types of assistance described by this
  subchapter; and 
               (3)  contain recommendations for department action to
  improve the regulation of student loan servicers under this
  chapter.
  SUBCHAPTER C. STUDENT LOAN SERVICER LICENSE
         Sec. 161.101.  STUDENT LOAN SERVICER LICENSE REQUIRED. (a)
  Except as provided by Subsection (b), a person may not act, directly
  or indirectly, as a student loan servicer in this state unless the
  person is licensed under this subchapter.
         (b)  The following persons are exempt from licensure under
  this subchapter:
               (1)  a financial institution as defined by Section
  201.101;
               (2)  a wholly owned subsidiary of a bank or credit
  union; and
               (3)  an operating subsidiary in which each owner of the
  subsidiary is wholly owned by the same bank or credit union.
         Sec. 161.102.  APPLICATION AND ACCOMPANYING FEE. (a) An
  application for a student loan servicer license must be:
               (1)  in writing;
               (2)  under oath; and
               (3)  on the form prescribed by the banking
  commissioner.
         (b)  Except as provided by Section 161.106, an applicant for
  a student loan servicer license must:
               (1)  submit a completed application together with the
  payment of applicable fees through the Nationwide Multistate
  Licensing System and Registry; and
               (2)  provide a recent financial statement and any other
  information required by the banking commissioner.
         (c)  An application for a student loan servicer license must
  be accompanied by:
               (1)  a nonrefundable license fee of $5,000 or other
  amount determined by the banking commissioner; and
               (2)  a nonrefundable investigation fee in an amount
  determined by the banking commissioner.
         Sec. 161.103.  CRIMINAL AND OTHER BACKGROUND CHECKS. (a) An
  applicant for a student loan servicer license shall provide, in the
  form and manner prescribed by the banking commissioner and
  acceptable to the Nationwide Multistate Licensing System and
  Registry, information concerning the applicant's identity,
  including:
               (1)  fingerprints for submission to the Federal Bureau
  of Investigation and any governmental agency or entity authorized
  to receive the information to conduct a state and national criminal
  background check; and
               (2)  personal history and experience information in a
  form prescribed by the Nationwide Multistate Licensing System and
  Registry, including the submission of authorization for the
  Nationwide Multistate Licensing System and Registry and the
  commissioner to obtain:
                     (A)  an independent credit report obtained from a
  consumer reporting agency; and
                     (B)  information related to any administrative,
  civil, or criminal findings by a governmental jurisdiction.
         (b)  For purposes of this section and to reduce the points of
  contact that the Federal Bureau of Investigation may have to
  maintain for purposes of Subsection (a)(1), the banking
  commissioner may use the Nationwide Multistate Licensing System and
  Registry as a channeling agent for requesting information from and
  distributing information to the United States Department of
  Justice, any governmental agency, or any other source at the
  banking commissioner's direction.
         (c)  For purposes of this section and to reduce the points of
  contact that the banking commissioner may have to maintain for
  purposes of Subsection (a) or (b), the commissioner may use the
  Nationwide Multistate Licensing System and Registry as a channeling
  agent for requesting information from and distributing information
  to and from any source as directed by the banking commissioner.
         Sec. 161.104.  ABANDONMENT OF APPLICATION. (a) The banking
  commissioner may consider an application for a license abandoned if
  the applicant fails to respond to a request for information
  required under this subchapter. The commissioner shall notify the
  applicant, in writing, that if the applicant fails to submit the
  requested information not later than the 60th day after the date of
  the request, the application is considered abandoned.
         (b)  The banking commissioner is not required to refund an
  application filing fee paid before the date an application is
  considered abandoned under this section.
         (c)  Abandonment of an application under this section does
  not preclude the applicant from submitting a new application for a
  license under Section 161.102.
         Sec. 161.105.  ISSUANCE OF LICENSE. (a)  On submission of
  an application for an initial license and the payment of the license
  fee and investigation fee under Section 161.102, the banking
  commissioner shall investigate the financial condition and
  responsibility, financial and business experience, character, and
  general fitness of the applicant.
         (b)  The banking commissioner shall issue a license if:
               (1)  the commissioner finds that: 
                     (A)  the applicant's financial condition is
  sound; 
                     (B)  the applicant meets the prescribed
  qualifications; and
                     (C)  the applicant's business will be conducted
  fairly and lawfully, according to state and federal law, and in a
  manner commanding the confidence and trust of the community; 
               (2)  the commissioner has no knowledge that:
                     (A)  the applicant or a person on the applicant's
  behalf knowingly has made any incorrect statement of a material
  fact in the application, or in a report or statement made under this
  chapter; and
                     (B)  the applicant or a person on the applicant's
  behalf knowingly has omitted a material fact necessary to give the
  banking commissioner any information required by the commissioner;
  and
               (3)  the applicant has satisfied all other requirements
  for licensure.
         (c)  Not more than one place of business may be maintained
  under the same license, but the banking commissioner may issue more
  than one license to the same license holder on compliance with the
  provisions of this chapter as to each new license.
         Sec. 161.106.  AUTOMATIC ISSUANCE OF LIMITED LICENSE FOR
  CERTAIN SERVICERS. (a) The banking commissioner shall
  automatically issue, in accordance with this section, a limited
  license to an applicant who:
               (1)  is servicing a student loan in this state under a
  contract with the United States Department of Education under 20
  U.S.C. Section 1087f; and
               (2)  meets the requirements of this section.
         (b)  An applicant for a license under this section:
               (1)  is exempt from the application procedures
  established under Section 161.102, other than the requirement of
  Section 161.102(c);
               (2)  is exempt from the requirements of Subchapter D if
  the applicant is only servicing federal student loans in this
  state; and
               (3)  is subject to and must comply with Subchapter D,
  if the person is also servicing nonfederal student loans in this
  state.
         (c)  The finance commission by rule shall prescribe the
  procedures to document eligibility for the issuance of a license
  under this section.
         (d)  Not later than the seventh day after the date on which a
  license holder issued a limited license under this section receives
  notice of the expiration, revocation, or termination of a contract
  awarded to the license holder by the United States secretary of
  education under 20 U.S.C. Section 1087f, the license holder shall
  send written notice of that fact to the banking commissioner. To
  continue to service student loans in this state, the license holder
  must satisfy all requirements for licensure under this subchapter
  not later than the 30th day after the date the license holder
  received notice of the contract's expiration, revocation, or
  termination, unless the license holder also holds a license under
  this subchapter to service nonfederal student loans in this state.
  If the license holder fails to satisfy the licensure requirements
  before the expiration of the period prescribed by this subsection,
  the commissioner shall immediately suspend the limited license
  issued to the holder under this section.
         (e)  If the servicing of a student loan in this state is not
  conducted by a person under a contract awarded by the United States
  secretary of education under 20 U.S.C. Section 1087f, this section
  does not prevent the banking commissioner from issuing an order to
  temporarily or permanently prohibit the person from acting as a
  student loan servicer.
         (f)  Unless otherwise prohibited by federal law, if the
  servicing of a student loan is conducted by a person under a
  contract awarded by the United States secretary of education under
  20 U.S.C. Section 1087f, this section does not prevent the banking
  commissioner from issuing a cease and desist order or injunction
  against the student loan servicer to cease activities in violation
  of this chapter.
         Sec. 161.107.  TERM OF LICENSE.   A license issued under
  Section 161.105 expires at the close of business on December 31 of
  the year of issuance, unless the license is renewed, surrendered,
  suspended, or revoked under this subchapter or Subchapter D.
         Sec. 161.108.  LICENSE RENEWAL. (a) The banking
  commissioner may renew a student loan servicer license on or before
  the license's expiration date if the student loan servicer submits
  an application containing all required documents and accompanying
  fees as provided by Section 161.102.
         (b)  Any renewal application submitted after December 1 must
  be accompanied by a late fee of $100 per day.
         (c)  The banking commissioner may not renew a license until
  the commissioner receives the license fee, investigation fee, and
  any applicable late fees and the applicable fees described by
  Section 161.102(b)(1) are paid to the registry. If an application
  for a renewal license is submitted on or before the date the license
  expires, the license sought to be renewed continues in full force
  and effect until the banking commissioner issues the renewal
  license or until the commissioner notifies the license holder in
  writing of the commissioner's refusal to issue the renewal license
  together with the grounds on which that refusal is based. The
  banking commissioner may refuse to issue a renewal license on any
  ground on which the commissioner might refuse to issue an initial
  license.
         Sec. 161.109.  CHANGE IN INFORMATION PROVIDED IN
  APPLICATION.  An applicant or license holder shall notify the
  banking commissioner, in writing, of any change in the information
  provided in the applicant's initial application for a license or
  the applicant's most recent renewal application for the license, as
  applicable, not later than the 10th business day after the date of
  the occurrence of the event that results in the information
  becoming inaccurate.
         Sec. 161.110.  SURRENDER OF LICENSE. (a) Not later than the
  15th day after the date a license holder ceases to engage in the
  business of student loan servicing in this state for any reason, the
  license holder shall provide written notice of surrender to the
  banking commissioner and shall surrender to the commissioner the
  license holder's license for each location in which the license
  holder has ceased to engage in business. The written notice of
  surrender must identify the location where the records of the
  license holder will be stored and the name, address, and telephone
  number of an individual authorized to provide access to the
  records.
         (b)  The surrender of a license does not reduce or eliminate
  the license holder's civil or criminal liability arising from an
  act or omission occurring before the surrender of the license,
  including any administrative action taken by the banking
  commissioner to:
               (1)  revoke or suspend a license;
               (2)  assess an administrative penalty; or
               (3)  exercise any other authority provided to the
  commissioner.
         Sec. 161.111.  NAME AND LOCATION ON LICENSE. A license
  issued under Section 161.105 must state:
               (1)  the name of the license holder; and
               (2)  the address of the office from which the servicing
  of the student loans is to be conducted by the license holder.
         Sec. 161.112.  CHANGE OF LOCATION. Not later than the 31st
  day before the date of the change, a license holder must notify the
  department in writing of the license holder's intent to change the
  location of the license holder's place of business.
         Sec. 161.113.  TRANSFER OR ASSIGNMENT OF LICENSE. A license
  under this subchapter is not transferable or assignable.
  SUBCHAPTER D. LICENSE REVOCATION AND SUSPENSION AND OTHER ACTIONS
  AGAINST LICENSE HOLDERS
         Sec. 161.151.  INSPECTIONS; INVESTIGATIONS. (a) The
  banking commissioner may conduct inspections of a student loan
  servicer licensed under this chapter as the commissioner determines
  necessary to determine whether the student loan servicer is
  complying with this chapter and applicable rules. The inspections
  may include inspection of the books, records, documents,
  operations, and facilities of the student loan servicer and access
  to any documents required under rules adopted under this chapter.
  The commissioner may share evidence of criminal activity gathered
  during an inspection or investigation with any state or federal law
  enforcement agency.
         (b)  On the signed written complaint of a person, the banking
  commissioner shall investigate the actions and records of a student
  loan servicer 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 the student loan
  servicer in writing of the complaint and that the commissioner
  intends to investigate the matter.
         (c)  For reasonable cause, the banking commissioner at any
  time may investigate a student loan servicer licensed under this
  chapter to determine whether the student loan servicer is complying
  with this chapter and applicable rules.
         (d)  The banking commissioner may conduct an undercover or
  covert investigation only if the commissioner, after due
  consideration of the circumstances, determines that the
  investigation is necessary to prevent immediate harm and to carry
  out the purposes of this chapter.
         (e)  The finance commission by rule shall provide guidelines
  to govern an inspection or investigation, including rules to:
               (1)  determine the information and records to which the
  banking commissioner may demand access during an inspection or an
  investigation; and
               (2)  establish what constitutes reasonable cause for an
  investigation.
         (f)  Information obtained by the banking commissioner during
  an inspection or investigation is confidential unless disclosure of
  the information is permitted or required by other law.
         (g)  The banking commissioner may share information gathered
  during an inspection or investigation with any state or federal
  agency.
         (h)  The banking commissioner may require reimbursement of
  expenses for each examiner for on-site examination or investigation
  of a license holder if records are located out of state or if the
  review is considered necessary beyond the routine examination
  process. The finance commission by rule shall set the maximum
  amount for the reimbursement of expenses authorized under this
  subsection.
         Sec. 161.152.  ISSUANCE AND ENFORCEMENT OF SUBPOENA. (a)
  During an investigation, the banking commissioner may issue a
  subpoena that is addressed to a peace officer of this state or other
  person authorized by law to serve citation or perfect service. The
  subpoena may require a person to give a deposition, produce
  documents, or both.
         (b)  If a person disobeys a subpoena or if a person appearing
  in a deposition in connection with the investigation refuses to
  testify, the banking commissioner may petition a district court in
  Travis County to issue an order requiring the person to obey the
  subpoena, testify, or produce documents relating to the matter.
  The court shall promptly set an application to enforce a subpoena
  issued under Subsection (a) for hearing and shall cause notice of
  the application and the hearing to be served upon the person to whom
  the subpoena is directed.
         Sec. 161.153.  SUSPENSION, REVOCATION, OR REFUSAL TO RENEW
  LICENSE. (a) The banking commissioner may suspend, revoke, or
  refuse to renew a license issued under Section 161.105, or may take
  any other action, if the commissioner finds that:
               (1)  the license holder has violated this chapter or a
  rule adopted under this chapter; or
               (2)  a fact or condition exists that, if the fact or
  condition had existed at the time of the original application for
  the license, clearly would have warranted a denial of the license.
         (b)  The banking commissioner may not abate a license fee if
  the license is surrendered, revoked, or suspended before the
  expiration of the period for which the license was issued.
         Sec. 161.154.  CIVIL PENALTY; INJUNCTIVE RELIEF. (a) A
  person who violates this chapter is liable to this state for a civil
  penalty in an amount not to exceed:
               (1)  $10,000 for the first violation; and 
               (2)  $20,000 for the second violation and each
  subsequent violation.
         (b)  Whenever it appears to the banking commissioner that a
  person has violated, is violating, or is about to violate this
  chapter or a rule adopted under this chapter, or that a license
  holder, or an owner, director, officer, member, partner,
  shareholder, trustee, employee, or agent of a license holder, has
  committed fraud, engaged in an unauthorized activity, or made a
  misrepresentation, the attorney general, on behalf of the banking
  commissioner, may bring a civil action to:
               (1)  enjoin the violation or potential violation;
               (2)  recover a civil penalty under this section; or
               (3)  enjoin the violation or potential violation,
  recover a civil penalty, or both.
         (c)  The attorney general is entitled to recover reasonable
  expenses incurred in obtaining injunctive relief, recovering civil
  penalties, or both, under this section, including reasonable
  attorney's fees and court costs.
         Sec. 161.155.  SURETY BOND. (a)  A license holder shall
  file with the banking commissioner a surety bond obtained from a
  surety company authorized to do business in this state.
         (b)  The bond must be:
               (1)  in an amount of at least $30,000, as determined by
  the finance commission; and
               (2)  in favor of:
                     (A)  this state for the benefit of a person
  damaged by a violation of this chapter; and
                     (B)  a person damaged by a violation of this
  chapter.
         (c)  When an action is brought on a license holder's bond,
  the banking commissioner may require the filing of a new bond.
  Immediately on recovery on any action on the bond, the license
  holder shall file a new bond.
  SUBCHAPTER E. REPORTING AND OTHER REQUIREMENTS; PENALTIES
         Sec. 161.201.  FAILURE TO COMPLY WITH FEDERAL LAW; VIOLATION
  OF CHAPTER. A violation of the Truth in Lending Act (15 U.S.C.
  Section 1601 et seq.) or any other federal law or regulation
  relating to the servicing of a student loan is considered a
  violation of this chapter, and a basis on which the banking
  commissioner may take enforcement action under Section 161.153 or
  161.154. 
         Sec. 161.202.  REPORTS; ADMINISTRATIVE PENALTY FOR FAILURE
  TO FILE. (a) Not later than December 1 of each year, a license
  holder shall file a sworn report with the banking commissioner that
  contains any information the commissioner may require concerning
  the business conducted by the license holder in this state during
  the preceding calendar year. The report must be made in the form
  and manner prescribed by the banking commissioner.
         (b)  A license holder shall submit to the Nationwide
  Multistate Licensing System and Registry:
               (1)  a student loan servicer call report of condition,
  in the form and manner and as frequently as required by the
  registry, that must include any other information required by the
  registry; and 
               (2)  any other report to, or through, the registry
  under an arrangement for reporting and sharing information as
  required by law.
         (c)  A license holder violates this chapter if the license
  holder negligently makes a false statement or knowingly makes an
  omission of material fact in connection with a report or
  information filed with:
               (1)  the banking commissioner;
               (2)  the Nationwide Multistate Licensing System and
  Registry; or
               (3)  a federal or state agency through the Nationwide
  Multistate Licensing System and Registry.
         (d)  A license holder that fails to comply with Subsection
  (a) or (b) is subject to:
               (1)  an administrative penalty in an amount not to
  exceed $100 for each day of noncompliance; and
               (2)  the revocation or suspension of the license
  holder's license under Section 161.153.
         (e)  In determining the amount of the administrative penalty
  under Subsection (d)(1), the banking commissioner must consider:
               (1)  the seriousness of the violation, including the
  nature, circumstances, extent, and gravity of the violation;
               (2)  the person's history of previous violations;
               (3)  the amount necessary to deter a future violation;
  and
               (4)  any other matter that justice may require.
         (f)  The banking commissioner may collect the penalty in the
  same manner that a money judgment is enforced in district court.
         Sec. 161.203.  ANNUAL FEE. A license holder shall pay to the
  banking commissioner an annual fee in an amount set by rule of the
  finance commission. The fee must be in an amount sufficient to
  cover the annual costs of implementing and enforcing this chapter.
  SUBCHAPTER F. CONDUCT OF STUDENT LOAN SERVICES BUSINESS;
  PROHIBITED ACTS
         Sec. 161.251.  STUDENT LOAN SERVICER TO CONDUCT BUSINESS
  UNDER NAME AND LOCATION ON LICENSE. (a) A license holder may not
  conduct business under this chapter under a name other than the name
  stated on the license.
         (b)  A license holder may not conduct business under this
  chapter at a location other than the address stated on the license. 
         Sec. 161.252.  MAINTENANCE AND AVAILABILITY OF STUDENT LOAN
  RECORDS. (a) To the extent allowed under federal law and unless a
  different retention period is prescribed by federal law, a licensed
  student loan servicer and a person exempt from licensure under
  Section 161.101(b) shall maintain adequate records of each student
  loan transaction, as prescribed by the department, for at least two
  years after the earlier of:
               (1)  the date of the final student loan payment; or
               (2)  if the student loan is assigned, the date of
  assignment.
         (b)  Not later than the fifth business day after the date the
  banking commissioner requests to examine a record of a student loan
  transaction, the student loan servicer shall:
               (1)  make the record available to the commissioner for
  inspection; or
               (2)  send the commissioner a copy of the requested
  record by:
                     (A)  registered or certified mail, return receipt
  requested; or 
                     (B)  an express delivery carrier that provides a
  proof of delivery receipt. 
         (c)  The banking commissioner may grant a license holder an
  extension of time to comply with a record request under Subsection
  (b). 
         Sec. 161.253.  RESPONSE TO ACCOUNT INQUIRY; APPLICATION OF
  CERTAIN PAYMENTS. (a)  Except as otherwise provided under federal
  law, a student loan servicer, on receipt of a written account
  inquiry from a borrower or the borrower's representative, shall: 
               (1)  acknowledge receipt of the inquiry within 10
  business days; 
               (2)  provide information in response to the inquiry,
  and, if applicable:
                     (A)  the action to be taken to correct the
  account; or
                     (B)  an explanation of the position taken by the
  loan servicer that the borrower's account is correct;
               (3)  inquire about how to apply any overpayment made by
  the borrower to the loan account;
               (4)  apply partial payments made by the borrower in a
  manner that minimizes late fees and negative credit reporting; and
               (5)  evaluate the borrower for eligibility for an
  income-driven repayment program that may be available before
  placing the borrower in forbearance or default.
         (b)  A student loan servicer must provide information in
  response to a written account inquiry described by Subsection
  (a)(2) not later than the 30th business day after the date of
  receipt of the inquiry.
         (c)  An instruction from the borrower or the borrower's
  representative on how to apply an overpayment to a student loan
  under Subsection (a)(3) remains in effect during the term of the
  loan until the borrower or the borrower's representative provides
  different instructions. For purposes of this section,
  "overpayment," with respect to a student loan, means payment in an
  amount that is more than the monthly amount due.
         (d)  If there are multiple loans on a borrower's account with
  an equal stage of delinquency, a student loan servicer shall
  satisfy the requirements of Subsection (a)(4) by applying partial
  payments to satisfy as many individual loan payments as possible on
  a borrower's account. For purposes of this section, "partial
  payment," with respect to an account that contains multiple
  individual student loans, means payment in an amount that is less
  than the amount necessary to satisfy the outstanding payments due
  on all of the individual student loans in the borrower's account.
         Sec. 161.254.  SALE OR OTHER TRANSFER OF LOAN SERVICING. (a)
  If a sale, assignment, or other transfer of the servicing of a
  student loan results in a change in the identity of the student loan
  servicer to which a student loan borrower is required to send loan
  payments or direct any communications concerning the loan, the
  student loan servicer must: 
               (1)  require, as a condition of the sale, assignment,
  or other transfer, that the new student loan servicer honor and
  preserve the availability of all benefits originally represented as
  being available to the borrower during the term of the loan,
  including any benefits for which the borrower has not yet
  qualified;
               (2)  transfer to the new student loan servicer all
  information regarding:
                     (A)  the borrower; and
                     (B)  the borrower's student loan and loan account,
  including:
                           (i)  the repayment status of the borrower;
  and
                           (ii)  any benefits associated with the loan; 
               (3)  complete the transfer of information required
  under Subdivision (2) not later than the 45th calendar day after the
  date of the sale, assignment, or other transfer of the servicing of
  the loan; and
               (4)  complete the sale, assignment, or other transfer
  of the servicing of the loan not later than the seventh calendar day
  before the date on which the next loan payment becomes due.
         (b)  If a student loan servicer obtains the right to service
  a student loan, the loan servicer shall adopt policies and
  procedures to verify that the loan servicer has received the
  information specified in Subsection (a)(2).
         Sec. 161.255.  PROHIBITED ACTIONS. A student loan servicer
  may not: 
               (1)  directly or indirectly employ any scheme, device,
  or artifice to defraud or mislead student loan borrowers; 
               (2)  engage in any unfair or deceptive practice toward
  any person or misrepresent or omit any material information in
  connection with the servicing of a student loan, including
  misrepresenting:
                     (A)  the amount, nature, or terms of any fee or
  payment due or claimed to be due on the loan;
                     (B)  the terms of the loan agreement; or
                     (C)  the borrower's obligations under the loan; 
               (3)  obtain property by fraud or misrepresentation; 
               (4)  misapply loan payments to the outstanding student
  loan balance;
               (5)  provide inaccurate information to a consumer
  reporting agency;
               (6)  fail to report, at least annually, both the
  favorable and unfavorable payment history of the student loan
  borrower to a nationally recognized consumer reporting agency if
  the student loan servicer regularly reports payment history
  information to consumer reporting agencies;
               (7)  refuse to communicate with an authorized
  representative of the student loan borrower who provides a written
  authorization signed by the borrower, provided the student loan
  servicer adopts reasonable procedures to verify that the
  representative is in fact authorized to act on the borrower's
  behalf;
               (8)  make any false statement or knowingly and wilfully
  make any omission of a material fact in connection with:
                     (A)  information or a report filed with a
  governmental agency; or
                     (B)  an investigation conducted by the banking
  commissioner or another governmental agency;
               (9)  fail to respond within 15 business days to
  communications from the department, or within a shorter, reasonable
  period as may be requested by the department; or
               (10)  fail to respond within 15 business days to a
  consumer complaint submitted to the student loan servicer by the
  department, except that, if necessary, the student loan servicer
  may request an extension of time, not to exceed 45 business days, to
  respond to the complaint, if the request is accompanied by an
  explanation on why granting an extension of time is reasonable and
  necessary.
  SUBCHAPTER G. STUDENT LOAN BORROWER REMEDIES
         Sec. 161.301.  ACTIONS AND COUNTERCLAIMS BY BORROWER. (a) A
  student loan borrower who suffers an ascertainable loss of money as
  a result of an action taken, omission made, or practice employed by
  a student loan servicer in violation of this chapter or a rule
  adopted under this chapter may bring an action or assert a
  counterclaim in court against the student loan servicer. 
         (b)  In an action brought under this section, the court, in
  addition to awarding any other appropriate legal or equitable
  relief, may award an amount not to exceed three times the actual
  damages sustained by the student loan borrower. The court may also
  award reasonable attorney's fees, filing fees, and reasonable costs
  of suit. 
         Sec. 161.302.  REMEDIES NOT EXCLUSIVE. The remedies
  provided by this chapter are not exclusive. A student loan borrower
  is not required to exhaust administrative remedies established
  under this chapter or any other applicable law before proceeding
  under this chapter.
         SECTION 3.  As soon as practicable after the effective date
  of this Act, the Finance Commission of Texas shall adopt rules as
  necessary to implement Chapter 161, Finance Code, as added by this
  Act.
         SECTION 4.  The initial report required by Section 161.054,
  Finance Code, as added by this Act, must be submitted not later than
  the first anniversary of the date the first student loan ombudsman
  is designated to serve in that capacity.
         SECTION 5.  Notwithstanding Chapter 161, Finance Code, as
  added by this Act, a student loan servicer is not required to hold a
  license under that chapter to act as a student loan servicer in this
  state before June 1, 2022.
         SECTION 6.  (a) Except as provided by Subsection (b) of this
  section, this Act takes effect September 1, 2021.
         (b)  The following provisions take effect June 1, 2022:
               (1)  Sections 161.101, 161.106, 161.251, and 161.252,
  Finance Code, as added by this Act; and
               (2)  Subchapters D and E, Finance Code, as added by this
  Act.
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