H.B. No. 2138
  relating to regulation of property tax lenders; providing a
         SECTION 1.  Subtitle B, Title 4, Finance Code, is amended by
  adding Chapter 351 to read as follows:
         Sec. 351.001.  SHORT TITLE. This chapter may be cited as the
  Property Tax Lender License Act.
         Sec. 351.002.  DEFINITIONS. In this chapter:
               (1)  "Property tax lender" means a person that engages
  in activity requiring a license under Section 351.051. The term
  does not include:
                     (A)  a person who is sponsored by a licensed
  property tax lender to assist with or perform the acts of a property
  tax lender; or
                     (B)  a person who performs only clerical functions
  such as delivering a loan application to a property tax lender,
  gathering or requesting information related to a property tax loan
  application on behalf of the prospective borrower or property tax
  lender, word processing, sending correspondence, or assembling
               (2)  "Property tax loan" means an advance of money:
                     (A)  in connection with a transfer of lien under
  Section 32.06, Tax Code, or a contract under Section 32.065, Tax
                     (B)  in connection with which the person making
  the transfer arranges for the payment, with a property owner's
  written consent, of property taxes and related closing costs on
  behalf of the property owner in accordance with Section 32.06, Tax
  Code; and
                     (C)  that is secured by a special lien against
  property transferred from a taxing unit to the property tax lender
  and which may be further secured by the lien or security interest
  created by a deed of trust, security deed, or other security
         Sec. 351.003.  SECONDARY MARKET TRANSACTIONS. This chapter
  does not prohibit a property tax lender from receiving compensation
  from a party other than the property tax loan applicant for the
  sale, transfer, assignment, or release of rights on the closing of a
  property tax loan transaction.
  chapter may not be construed to prevent affiliated or controlled
  business arrangements or loan origination services by or between a
  property tax lender and other professionals.
         Sec. 351.005.  APPLICATION OF TAX CODE. This chapter does
  not affect the application of Section 32.06 or 32.065, Tax Code.
         Sec. 351.006.  ENFORCEMENT. In addition to any other
  applicable enforcement provisions, Subchapters E, F, and G, Chapter
  14, apply to a violation of this chapter or Section 32.06 or 32.065,
  Tax Code, in connection with property tax loans.
         Sec. 351.007.  RULES.  The finance commission may adopt
  rules to ensure compliance with this chapter and Sections 32.06 and
  32.065, Tax Code.
  [Sections 351.008-351.050 reserved for expansion]
         Sec. 351.051.  LICENSE REQUIRED. (a) A person must hold a
  license issued under this chapter to:
               (1)  engage in the business of making, transacting, or
  negotiating property tax loans; or
               (2)  contract for, charge, or receive, directly or
  indirectly, in connection with a property tax loan subject to this
  chapter, a charge, including interest, compensation,
  consideration, or another expense, authorized under this chapter
  that in the aggregate exceeds the charges authorized under other
         (b)  A person may not use any device, subterfuge, or pretense
  to evade the application of this section.
         (c)  This chapter does not apply to:
               (1)  any of the following entities or an employee of any
  of the following entities, if 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; or
                     (B)  a state or federal credit union, or a
  subsidiary, affiliate, or credit union service organization of a
  state or federal credit union; or
               (2)  an individual who:
                     (A)  makes a property tax 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;
                     (B)  makes five or fewer property tax loans in any
  consecutive 12-month period from the individual's own funds.
         (d)  A property tax lender licensed under this chapter is not
  required to be licensed under Chapter 156 or any other provision of
  this code.
  PROPERTY TAX LENDER. (a)  The commissioner may issue more than one
  license to a property tax lender on compliance with this chapter for
  each license.
         (b)  A person who is required to hold a license under this
  chapter must hold a separate license for each office at which
  property tax loans are made, negotiated, serviced, held, or
  collected under this chapter.
         (c)  A license is not required under this chapter for a place
  of business:
               (1)  devoted to accounting or other recordkeeping; and
               (2)  at which property tax loans are not made,
  negotiated, serviced, held, or collected under this chapter.
  (a)  A property tax lender is not limited to making property tax
  loans to residents of the community in which the office for which
  the license or other authority is granted is located.
         (b)  A property tax lender may make, negotiate, arrange, and
  collect property tax loans by mail from a licensed office.
         Sec. 351.054.  NOTICE TO TAXING UNIT. (a)  A transferee of a
  tax lien must include with the sworn document filed with the
  collector of a taxing unit under Section 32.06(a-1), Tax Code, the
  information required by this section.
         (b)  If the transferee is licensed under this chapter, the
  transferee shall include with the filing the licensee's license
  number assigned by the commissioner.
         (c)  If the transferee is exempt from this chapter under
  Section 351.051(c)(1), the transferee shall include with the filing
  an affidavit stating the entity's type of organization that
  qualifies it for the exemption, any charter number assigned by the
  governmental authority that issued the entity's charter, and the
  address of the entity's main office.
         (d)  If the transferee is exempt from this chapter under
  Section 351.051(c)(2), the transferee shall include a certificate
  issued by the commissioner indicating the entity's exemption. The
  commissioner shall establish procedures for issuance of a
  certificate under this subsection, application requirements, and
  requirements regarding information that must be submitted with an
  [Sections 351.055-351.100 reserved for expansion]
         Sec. 351.101.  APPLICATION REQUIREMENTS. (a) The
  application for a license under this chapter must:
               (1)  be under oath;
               (2)  give the approximate location from which business
  is to be conducted;
               (3)  identify the business's principal parties in
  interest; and
               (4)  contain other relevant information that the
  commissioner requires for the findings required under Section
         (b)  On the filing of one or more license applications, the
  applicant shall pay to the commissioner an investigation fee not to
  exceed $200.
         (c)  On the filing of each license application, the applicant
  shall pay to the commissioner for the license's year of issuance a
  license fee in an amount determined as provided by Section 14.107.
         Sec. 351.102.  BOND. (a) If the commissioner requires, an
  applicant for a license under this chapter shall file with the
  application a bond that is:
               (1)  in an amount not to exceed the total of:
                     (A)  $50,000 for the first license; and
                     (B)  $10,000 for each additional license;
               (2)  satisfactory to the commissioner; and
               (3)  issued by a surety company qualified to do
  business as a surety in this state.
         (b)  The bond must be in favor of this state for the use of
  this state and the use of a person who has a cause of action under
  this chapter against the license holder.
         (c)  The bond must be conditioned on:
               (1)  the license holder's faithful performance under
  this chapter and rules adopted under this chapter; and
               (2)  the payment of all amounts that become due to the
  state or another person under this chapter during the calendar year
  for which the bond is given.
         (d)  The aggregate liability of a surety to all persons
  damaged by the license holder's violation of this chapter may not
  exceed the amount of the bond.
         Sec. 351.103.  INVESTIGATION OF APPLICATION. On the filing
  of an application and, if required, a bond, and on payment of the
  required fees, the commissioner shall conduct an investigation to
  determine whether to issue the license.
         Sec. 351.104.  APPROVAL OR DENIAL OF APPLICATION. (a) The
  commissioner shall approve the application and issue to the
  applicant a license to make property tax loans under this chapter if
  the commissioner finds that:
               (1)  the financial responsibility, experience,
  character, and general fitness of the applicant are sufficient to:
                     (A)  command the confidence of the public; and
                     (B)  warrant the belief that the business will be
  operated lawfully and fairly, within the purposes of this chapter;
               (2)  the applicant has net assets of at least $25,000
  available for the operation of the business.
         (b)  If the commissioner does not find that the eligibility
  requirements of Subsection (a) are met, the commissioner shall
  notify the applicant.
         (c)  If an applicant requests a hearing on the application
  not later than the 30th day after the date of notification under
  Subsection (b), the applicant is entitled to a hearing not later
  than the 60th day after the date of the request.
         (d)  The commissioner shall approve or deny the application
  not later than the 60th day after the date of the filing of a
  completed application with payment of the required fees, or if a
  hearing is held, after the date of the completion of the hearing on
  the application. The commissioner and the applicant may agree to a
  later date in writing.
  If the commissioner denies the application, the commissioner shall
  retain the investigation fee and shall return to the applicant the
  license fee submitted with the application.
  [Sections 351.106-351.150 reserved for expansion]
         Sec. 351.151.  NAME AND PLACE ON LICENSE. (a) A license must
               (1)  the name of the license holder; and
               (2)  the address of the office from which the business
  is to be conducted.
         (b)  A license holder may not conduct business under this
  chapter under a name or at a place of business in this state other
  than the name or office stated on the license.
         Sec. 351.152.  LICENSE DISPLAY. A license holder shall
  display a license at the place of business provided on the license.
         Sec. 351.153.  MINIMUM ASSETS FOR LICENSE. A license holder
  shall maintain for each office for which a license is held net
  assets of at least $25,000 that are used or readily available for
  use in conducting the business of that office.
         Sec. 351.154.  ANNUAL LICENSE FEE. Not later than December
  1, a license holder shall pay to the commissioner for each license
  held an annual fee for the year beginning the next January 1, in an
  amount determined as provided by Section 14.107.
  ANNUAL FEE. If the annual fee for a license is not paid before the
  16th day after the date on which the written notice of delinquency
  of payment has been given to the license holder, the license expires
  on the later of:
               (1)  that day; or
               (2)  December 31 of the last year for which an annual
  fee was paid.
         Sec. 351.156.  LICENSE SUSPENSION OR REVOCATION. After
  notice and a hearing the commissioner may suspend or revoke a
  license if the commissioner finds that:
               (1)  the license holder failed to pay the annual
  license fee, an examination fee, an investigation fee, or another
  charge imposed by the commissioner under this chapter;
               (2)  the license holder, knowingly or without the
  exercise of due care, violated this chapter or Section 32.06 or
  32.065, Tax Code, or a rule adopted or an order issued under this
  chapter or Section 32.06 or 32.065, Tax Code;  or
               (3)  a fact or condition exists that, if it had existed
  or had been known to exist at the time of the original application
  for the license, clearly would have justified the commissioner's
  denial of the application.
         Sec. 351.157.  CORPORATE CHARTER FORFEITURE. (a) A license
  holder who violates this chapter is subject to revocation of the
  holder's license and, if the license holder is a corporation,
  forfeiture of its charter.
         (b)  When the attorney general is notified of a violation of
  this chapter and revocation of a license, the attorney general
  shall file suit in a district court in Travis County, if the license
  holder is a corporation, for forfeiture of the license holder's
  PUBLIC RECORDS. The decision of the commissioner on the suspension
  or revocation of a license and the evidence considered by the
  commissioner in making the decision shall be filed in the public
  records of the commissioner.
  OF NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a
  suspended license or issue a new license on application to a person
  whose license has been revoked if at the time of the reinstatement
  or issuance no fact or condition exists that clearly would have
  justified the commissioner's denial of an original application for
  the license.
         Sec. 351.160.  SURRENDER OF LICENSE. A license holder may
  surrender a license issued under this chapter by delivering to the
               (1)  the license; and
               (2)  a written notice of the license's surrender.
  SURRENDER. (a)  The suspension, revocation, or surrender of a
  license issued under this chapter does not affect the obligation of
  a contract between the license holder and a debtor entered into
  before the revocation, suspension, or surrender.
         (b)  Surrender of a license does not affect the license
  holder's civil or criminal liability for an act committed before
         Sec. 351.162.  MOVING AN OFFICE. (a)  A license holder shall
  give written notice to the commissioner before the 30th day
  preceding the date the license holder moves an office from the
  location provided on the license.
         (b)  The commissioner shall amend a license holder's license
         Sec. 351.163.  TRANSFER OR ASSIGNMENT OF LICENSE. A license
  may be transferred or assigned only with the approval of the
         Sec. 351.164.  REPORTING REQUIREMENT.  (a)  Each year, a
  license holder shall file with the commissioner a report that
  contains relevant information concerning its transactions
  conducted under this chapter.
         (b)  A report under this section must be:
               (1)  under oath; and
               (2)  in the form prescribed by the commissioner.
         (c)  A report under this section is confidential.
         (d)  Annually the commissioner shall prepare and publish a
  consolidated analysis and recapitulation of reports filed under
  this section.
         SECTION 2.  Sections 349.502(a) and (c), Finance Code, are
  amended to read as follows:
         (a)  A person commits an offense if the person engages in a
  business that is subject to Chapter 342, [or] 346, or 351 without
  holding the license or other authorization required under that
         (c)  Each loan made without the authority required by Chapter
  342, [or] 346, or 351 is a separate offense.
         SECTION 3.  Section 32.06(a-1), Tax Code, is amended to read
  as follows:
         (a-1)  A person may authorize another person to pay the
  delinquent taxes imposed by a taxing unit on the person's real
  property by filing with the collector for the unit:
               (1)  a sworn document stating:
                     (A) [(1)]  the authorization;
                     (B) [(2)]  the name and street address of the
  transferee authorized to pay the taxes of the property owner; and
                     (C) [(3)]  a description of the property by street
  address, if applicable, and legal description; and
               (2)  the information required by Section 351.054,
  Finance Code.
         SECTION 4.  Section 32.065(d), Tax Code, is amended to read
  as follows:
         (d)  Chapters 342 and 346, Finance Code, and the provisions
  of Chapter 343, Finance Code, other than Sections 343.203 and
  343.205, do not apply to a transaction covered by this section.
  [The transferee of a tax lien under this section is not required to
  obtain a license under Title 4, Finance Code.]
         SECTION 5.  A person is not required to be licensed under or
  comply with Chapter 351, Finance Code, as added by this Act, before
  March 1, 2008.
         SECTION 6.  This Act takes effect September 1, 2007.
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
         I certify that H.B. No. 2138 was passed by the House on April
  26, 2007, by the following vote:  Yeas 128, Nays 0, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2138 on May 24, 2007, by the following vote:  Yeas 146, Nays 0,
  1 present, not voting.
  Chief Clerk of the House   
         I certify that H.B. No. 2138 was passed by the Senate, with
  amendments, on May 22, 2007, by the following vote:  Yeas 31, Nays
  Secretary of the Senate   
  APPROVED: __________________