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  H.B. No. 2783
 
 
 
 
AN ACT
  relating to the regulation of certain persons involved in mortgage
  lending.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 156.002(10), Finance Code, is amended to
  read as follows:
               (10)  "Mortgage loan" means a debt against real estate
  secured by a [first-lien] security interest against one-to-four
  family residential real estate created by a deed of trust, security
  deed, or other security instrument.
         SECTION 2.  Section 156.201(b), Finance Code, is amended to
  read as follows:
         (b)  An individual may not act or attempt to act as a loan
  officer unless the individual at the time is:
               (1)  licensed under this chapter and [;
               [(2)]  sponsored by a licensed mortgage broker and
  acting for the mortgage broker; or
               (2) [(3)]  exempt under Section 156.202.
         SECTION 3.  Subchapter C, Chapter 156, Finance Code, is
  amended by adding Section 156.2011 to read as follows:
         Sec. 156.2011.  PROVISIONAL LOAN OFFICER LICENSE. (a) An
  applicant for a loan officer license may be issued a provisional
  loan officer license as provided by this section only if the
  applicant:
               (1)  during the 20 months immediately preceding the
  application, has at least 18 months of experience as a loan officer
  employed by a person exempt from this chapter under Section
  156.202; and
               (2)  meets the qualifications for a loan officer
  license, other than the educational and examination requirements.
         (b)  The commissioner shall use best efforts to issue the
  provisional loan officer license on or before the later of:
               (1)  the 10th business day after the date of receipt of
  a completed application; or
               (2)  the second business day after the date of receipt
  of the criminal background information required under Section
  156.206 demonstrating that the applicant has no pending criminal
  charges and has not been convicted of a criminal offense.
         (c)  For purposes of Subsection (b)(2), a person is
  considered convicted as provided by Section 156.204(d).
         (d)  A provisional loan officer license is valid for 90 days
  after the date the license is issued, except as provided by
  Subsection (e).
         (e)  The commissioner may revoke a provisional loan officer
  license if the commissioner discovers that the applicant has made a
  misrepresentation relating to the applicant's qualifications for a
  loan officer license, has violated this chapter, or does not meet
  the qualifications for a provisional loan officer license. The
  revocation of a provisional loan officer license is not subject to
  appeal.
         (f)  The finance commission by rule may impose a fee not to
  exceed $100 for an expedited issuance of a provisional loan officer
  license. The fee is nonrefundable and is in addition to the fee for
  the application for a regular loan officer license.
         SECTION 4.  Section 156.202, Finance Code, is amended to
  read as follows:
         Sec. 156.202.  EXEMPTIONS.  This chapter does not apply to:
               (1)  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 [makes a]
  mortgage loans [loan] to purchasers [a purchaser] of the property
  for all or part of the purchase price of the real estate against
  which the mortgage is secured; or
               (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.
         SECTION 5.  Section 156.203(c), Finance Code, is amended to
  read as follows:
         (c)  An application for a loan officer license must be
  accompanied by:
               (1)  an application fee in an amount determined by the
  commissioner not to exceed $275 [$175]; and
               (2)  a recovery fund fee as provided by Section
  156.502.
         SECTION 6.  Sections 156.204(a), (b), (c), and (e), Finance
  Code, are amended to read as follows:
         (a)  To be eligible to be licensed as a mortgage broker as an
  individual, the individual [a person] must:
               (1)  be [an individual who is] at least 18 years of age;
               (2)  be a citizen of the United States or a lawfully
  admitted alien;
               (3)  maintain a physical office in this state and
  designate that office in the application;
               (4)  provide the commissioner with satisfactory
  evidence that the applicant satisfies one of the following:
                     (A)  the person has received a bachelor's degree
  in an area relating to finance, banking, or business administration
  from an accredited college or university and has 18 months of
  experience in the mortgage or lending field as evidenced by
  documentary proof of full-time employment as a mortgage broker or
  licensed loan officer with a mortgage broker or a person exempt
  under Section 156.202;
                     (B)  the person is licensed in this state as:
                           (i)  an active real estate broker under
  Chapter 1101, Occupations Code;
                           (ii)  an active attorney; or
                           (iii)  a local recording agent or insurance
  solicitor or agent for a legal reserve life insurance company under
  Chapter 21, Insurance Code, or holds an equivalent license under
  Chapter 21, Insurance Code; or
                     (C)  the person has three years of experience in
  the mortgage lending field as evidenced by documentary proof of
  full-time employment as a licensed loan officer with a mortgage
  broker or a person exempt under Section 156.202;
               (5)  provide the commissioner with satisfactory
  evidence of:
                     (A)  having passed an examination, offered by a
  testing service or company approved by the finance commission, that
  demonstrates knowledge of:
                           (i)  the mortgage industry; and
                           (ii)  the role and responsibilities of a
  mortgage broker; and
                     (B)  compliance with the financial requirements
  of this chapter;
               (6)  not have been convicted of a criminal offense that
  the commissioner determines directly relates to the occupation of a
  mortgage broker as provided by Chapter 53, Occupations Code;
               (7)  satisfy the commissioner as to the individual's
  good moral character, including the individual's honesty,
  trustworthiness, and integrity; [and]
               (8)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued to the
  individual by the commissioner; and
               (9)  provide the commissioner with satisfactory
  evidence that:
                     (A)  if the person has not been previously
  licensed as a mortgage broker or a loan officer under this
  subchapter, the person has completed 90 classroom hours of
  education courses approved by the commissioner under this section;
  or
                     (B)  if the person has not been previously
  licensed as a mortgage broker under this subchapter but has been
  licensed as a loan officer under this subchapter, the person has
  successfully completed an additional 30 classroom hours of
  education courses approved by the commissioner under this section.
         (b)  A corporation, limited liability company, or limited
  partnership may not act as a mortgage broker unless the entity
  obtains a mortgage broker license. To be eligible for a mortgage
  broker license the entity must designate an individual licensed as
  a mortgage broker as its designated representative and pay an
  application fee in an amount to be determined by the commissioner
  not to exceed $175. The designated representative must be:
               (1)  if the entity is a corporation, an officer of the
  corporation;
               (2)  if the entity is a limited liability company, a
  manager of the limited liability company; or
               (3)  if the entity is a limited partnership:
                     (A)  an individual who is a general partner;
                     (B)  an officer of a general partner that is a
  corporation; or
                     (C)  a manager of a general partner that is a
  limited liability company.  [A mortgage broker may conduct business
  under a corporate structure, partnership, or any other business
  form or as an independent contractor for a corporation,
  partnership, or any other business entity. Before conducting
  mortgage broker activities under, through, or for a corporation,
  partnership, or other business entity, a mortgage broker must
  notify the commissioner, in writing, of any corporate name,
  partnership name, assumed name, or any other name under, through,
  or for which the mortgage broker conducts activities for which a
  license is required under this chapter. The corporation,
  partnership, or other business entity under, through, or for which
  the mortgage broker conducts business is not required to be
  separately licensed as a mortgage broker provided that all
  individuals who perform mortgage broker activities are licensed as
  mortgage brokers or loan officers. The commissioner shall require
  proof of compliance with this subsection at the time the mortgage
  broker applies for and renews a license.]
         (c)  To be eligible to be licensed as a loan officer a person
  must:
               (1)  be an individual who is at least 18 years of age;
               (2)  be a citizen of the United States or a lawfully
  admitted alien;
               (3)  designate in the application the name of the
  mortgage broker sponsoring the loan officer;
               (4)  provide the commissioner with satisfactory
  evidence that the applicant satisfies one of the following:
                     (A)  the person meets one of the requirements
  described by Subsection (a)(4) and has [;
                     [(B)  the person has] successfully completed 60
  classroom [30] hours of education courses approved by the
  commissioner under this section;
                     (B) [(C)]  the person has 18 months of experience
  as a loan officer as evidenced by documentary proof of full-time
  employment as a loan officer with [a mortgage broker or] a person
  exempt under Section 156.202 and has successfully completed 30
  classroom hours of education courses approved by the commissioner
  under this section; or
                     (C) [(D)]  for applications received prior to
  January 1, 2000, the mortgage broker that will sponsor the
  applicant provides a certification under oath that the applicant
  has been provided necessary and appropriate education and training
  regarding all applicable state and federal law and regulations
  relating to mortgage loans;
               (5)  not have been convicted of a criminal offense that
  the commissioner determines directly relates to the occupation of a
  loan officer as provided by Chapter 53, Occupations Code;
               (6)  satisfy the commissioner as to the individual's
  good moral character, including the individual's honesty,
  trustworthiness, and integrity;
               (7)  provide the commissioner with satisfactory
  evidence of having passed an examination, offered by a testing
  service or company approved by the finance commission, that
  demonstrates knowledge of:
                     (A)  the mortgage industry; and
                     (B)  the role and responsibilities of a loan
  officer; and
               (8)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued to the
  individual by the commissioner.
         (e)  The education courses required for a mortgage broker or
  loan officer license under Subsection (a)(9) or (c)(4) [(c)(4)(B)]
  must cover ethics, the Real Estate Settlement Procedures Act of
  1974 (12 U.S.C. Section 2601 et seq.), the Truth in Lending Act (15
  U.S.C. Section 1601 et seq.), the Equal Credit Opportunity Act (15
  U.S.C. Section 1691 et seq.), and the provisions of this chapter.
         SECTION 7.  Section 156.208(i), Finance Code, as added by
  Chapter 1018, Acts of the 79th Legislature, Regular Session, 2005,
  is relettered as Subsection (j), Section 156.208, Finance Code, and
  amended to read as follows:
         (j) [(i)]  The commissioner may deny the renewal of a
  mortgage broker license or a loan officer license if:
               (1)  the 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; [or]
               (2)  the mortgage broker or loan officer is in default
  in the payment of any administrative penalty, fee, charge, or other
  indebtedness owed under this title; or
               (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.
         SECTION 8.  Section 156.211, Finance Code, is amended by
  adding Subsections (b-1), (b-2), and (b-3) to read as follows:
         (b-1)  Not later than the 10th day before a mortgage broker
  begins doing business under an assumed name, the mortgage broker
  shall file with the commissioner a copy of an assumed name
  certificate for each assumed name under which the mortgage broker
  intends to conduct business and pay a $25 registration fee for each
  assumed name. A loan officer may not conduct business under any
  assumed name that is not the registered assumed name of the
  sponsoring 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 business entity licensed under this chapter shall
  notify the commissioner of any change of its designated
  representative. The commissioner may charge a fee of $25 for each
  change of a designated representative.
         SECTION 9.  Subchapter C, Chapter 156, Finance Code, is
  amended by adding Section 156.214 to read as follows:
         Sec. 156.214.  APPROVAL OF COURSES.  (a)  The finance
  commission may adopt rules establishing:
               (1)  minimum standards for courses, approved course
  providers, and approved course instructors; and
               (2)  a fee not to exceed $200 for the review and
  approval of each course not provided and approved by a duly
  organized trade association the purpose of which is primarily to
  represent residential mortgage originators.
         (b)  An approval is for up to two years.
         SECTION 10.  Section 156.303, Finance Code, is amended by
  amending Subsection (a) and adding Subsection (j) to read as
  follows:
         (a)  The commissioner may order disciplinary action against
  a licensed mortgage broker or a licensed loan officer when the
  commissioner, after a hearing, has determined that the person:
               (1)  obtained a license, including a renewal of a
  license, under this chapter through a false or fraudulent
  representation or made a material misrepresentation in an
  application for a license or for the renewal of a license under this
  chapter;
               (2)  published or caused to be published an
  advertisement related to the business of a mortgage broker or 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 mortgage broker or
  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 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 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 mortgage loan
  before all of the services that the person agreed to perform for the
  mortgage applicant are completed, and the proceeds of the 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 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
  or exempt under this chapter for acts for which a license 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 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 mortgage broker or loan officer,
  as applicable;
               (11)  established an association, by employment or
  otherwise, with a person not licensed or exempt under this chapter
  who was expected or required to act as a mortgage broker or 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 mortgage broker or
  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 mortgage loan transaction conducted by the 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 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; [or]
               (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.
         (j)  On notice and opportunity for hearing, the commissioner
  may suspend a person's license under this chapter if an indictment
  or information is filed or returned alleging that the person
  committed a criminal offense involving fraud, theft, or dishonesty.  
  The suspension continues until the criminal case is dismissed or
  the person is acquitted.
         SECTION 11.  The heading of Section 341.103, Finance Code,
  is amended to read as follows:
         Sec. 341.103.  REGULATION OF SAVINGS INSTITUTIONS AND
  LICENSED MORTGAGE BROKERS AND LOAN OFFICERS [ASSOCIATIONS].
         SECTION 12.  Section 341.103(a), Finance Code, is amended to
  read as follows:
         (a)  The savings and mortgage lending [loan] commissioner
  shall enforce this subtitle relating to the regulation of:
               (1)  state savings associations operating under this
  subtitle;
               (2)  state savings banks operating under this subtitle;
  and
               (3)  persons licensed under Chapter 156.
         SECTION 13.  Section 342.051, Finance Code, is amended by
  adding Subsection (f) to read as follows:
         (f)  A mortgage broker licensed under Chapter 156 is not
  required to obtain a license under this chapter to make, negotiate,
  or transact a mortgage loan, as defined by Chapter 156.
         SECTION 14.  The changes in law made by Section 156.2011,
  Finance Code, as added by this Act, and Section 156.204, Finance
  Code, as amended by this Act, apply only to a loan officer or
  mortgage broker license for which any part of an application is
  submitted on or after September 1, 2007.
         SECTION 15.  A corporation, limited liability company, or
  limited partnership is not required to obtain a mortgage broker
  license, as required by Section 156.204(b), Finance Code, as
  amended by this Act, to act as a mortgage broker before January 1,
  2008.
         SECTION 16.  This Act takes effect September 1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2783 was passed by the House on May 4,
  2007, by the following vote:  Yeas 138, Nays 0, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2783 on May 25, 2007, by the following vote:  Yeas 133, Nays 0,
  2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 2783 was passed by the Senate, with
  amendments, on May 22, 2007, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor