85R6360 GRM-D
 
  By: Rodríguez, Watson, Zaffirini S.B. No. 1993
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the licensing and other regulation of wrap lenders.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 156.002, Finance Code, is amended by
  adding Subdivision (16) to read as follows:
               (16)  "Wrap mortgage loan" has the meaning assigned by
  Section 180.002.
         SECTION 2.  Section 156.202(a-1), Finance Code, is amended
  to read as follows:
         (a-1)  The following entities are exempt from this chapter:
               (1)  a nonprofit organization:
                     (A)  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; or
                     (B)  that has designation as a Section 501(c)(3)
  organization by the Internal Revenue Service and originates
  residential mortgage loans for borrowers who, through a self-help
  program, have provided at least 200 labor hours or 65 percent of the
  labor to construct the dwelling securing the loan;
               (2)  a mortgage banker registered under Chapter 157;
               (3)  any owner of residential real estate who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans, none of which is a wrap mortgage loan, 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
               (4)  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.
         SECTION 3.  Section 157.002, Finance Code, is amended by
  adding Subdivision (7) to read as follows:
               (7)  "Wrap mortgage loan" has the meaning assigned by
  Section 180.002.
         SECTION 4.  Sections 157.0121(b) and (c), Finance Code, are
  amended to read as follows:
         (b)  The following individuals 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)  any owner of residential real estate who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans, none of which is a wrap mortgage loan, 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
               (6)  an individual who is exempt as provided by Section
  180.003(b).
         (c)  Employees of the following entities, when acting for the
  benefit of those entities, are exempt from the licensing and other
  requirements of this chapter applicable to residential mortgage
  loan originators:
               (1)  a nonprofit organization:
                     (A)  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; or
                     (B)  that has designation as a Section 501(c)(3)
  organization by the Internal Revenue Service and originates
  residential mortgage loans for borrowers who, through a self-help
  program, have provided at least 200 labor hours or 65 percent of the
  labor to construct the dwelling securing the loan;
               (2)  any owner of residential real estate who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans, none of which is a wrap mortgage loan, 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
               (3)  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.
         SECTION 5.  Section 158.002, Finance Code, is amended by
  adding Subdivisions (8) and (9) to read as follows:
               (8)  "Wrap lender" has the meaning assigned by Section
  180.002.
               (9)  "Wrap mortgage loan" has the meaning assigned by
  Section 180.002.
         SECTION 6.  Section 158.052, Finance Code, is amended by
  amending Subsection (a) and adding Subsection (d) to read as
  follows:
         (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)  except as provided by Subsection (d), 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.
         (d)  This chapter applies to a wrap lender who services a
  wrap mortgage loan.
         SECTION 7.  Section 180.002, Finance Code, is amended by
  adding Subdivisions (24), (25), and (26) to read as follows:
               (24)  "Wrap borrower" means a person obligated to pay a
  wrap mortgage loan.
               (25)  "Wrap lender" means a person who makes a wrap
  mortgage loan.
               (26)  "Wrap mortgage loan" means a residential mortgage
  loan:
                     (A)  made to finance the purchase of residential
  real estate that will continue to be subject to an unreleased lien
  that:
                           (i)  attached to the residential real estate
  before the loan was made; and
                           (ii)  secures a debt incurred by a person
  other than the wrap borrower that was not paid off at the time the
  loan was made; and
                     (B)  obligating the wrap borrower to the wrap
  lender for payment of a debt the principal amount of which includes:
                           (i)  the outstanding balance of the debt
  described by Paragraph (A)(ii); and
                           (ii)  any remaining amount of the purchase
  price financed by the wrap lender.
         SECTION 8.  Section 180.003(a), Finance Code, is amended to
  read as follows:
         (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 offers or negotiates terms of a
  residential mortgage loan secured by a dwelling that serves as the
  individual's residence;
               (5)  an owner of residential real estate who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans, none of which is a wrap mortgage loan, 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
               (6)  an owner of a dwelling who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans, none of which is a wrap mortgage loan, 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.
         SECTION 9.  This Act takes effect September 1, 2017.