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  S.B. No. 1124
 
 
 
 
AN ACT
  relating to licensing and regulation of certain persons involved in
  residential mortgage lending pursuant to the Texas Secure and Fair
  Enforcement for Mortgage Licensing Act of 2009; providing
  penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 11.306, Finance Code, is amended to read
  as follows:
         Sec. 11.306.  RESIDENTIAL MORTGAGE LOAN ORIGINATION
  [MORTGAGE BROKER] RULES.  The finance commission may adopt
  residential mortgage loan origination [mortgage broker] rules as
  provided by Chapter 156.
         SECTION 2.  Chapter 13, Finance Code, is amended by adding
  Section 13.016 to read as follows:
         Sec. 13.016.  RECOVERY FUND. (a)  The savings and mortgage
  lending commissioner shall establish, administer, and maintain one
  recovery fund for the purposes of Chapters 156 and 157. The
  recovery fund shall be administered and maintained under Subchapter
  F, Chapter 156.
         (b)  The savings and mortgage lending commissioner's
  authority under this section includes the authority to:
               (1)  set fee amounts under Chapters 156 and 157 for
  deposit in the recovery fund; and
               (2)  enforce disciplinary action as provided by
  Chapters 156 and 157 for a person's failure to comply with the
  applicable provisions of those chapters relating to the recovery
  fund and with applicable rules adopted under those chapters.
         SECTION 3.  The heading to Chapter 156, Finance Code, is
  amended to read as follows:
  CHAPTER 156.  RESIDENTIAL MORTGAGE LOAN COMPANIES AND RESIDENTIAL
  MORTGAGE LOAN ORIGINATORS [MORTGAGE BROKERS]
         SECTION 4.  Section 156.001, Finance Code, is amended to
  read as follows:
         Sec. 156.001.  SHORT TITLE. This chapter may be cited as the
  Residential Mortgage Loan Company and Residential Mortgage Loan
  Originator Licensing and Registration [Mortgage Broker License]
  Act.
         SECTION 5.  Section 156.002, Finance Code, is amended by
  amending Subdivisions (1), (2), (7), and (8) and adding
  Subdivisions (1-a), (1-b), (1-c), (4-a), (6-a), (8-a), (10-a),
  (10-b), (10-c), (12), (13), (14), and (15) to read as follows:
               (1)  "Auxiliary mortgage loan activity company" means a
  political subdivision of this state or the federal government doing
  business for consumers in this state, or an organization that
  qualifies for an exemption from state franchise and sales and use
  tax as a 501(c)(3) organization, that is involved in affordable
  home ownership lending programs.
               (1-a)  "Commissioner" means the savings and mortgage
  lending commissioner.
               (1-b)  "Credit union subsidiary organization" has the
  meaning assigned by Section 180.002.
               (1-c)  "Department" means the Department of Savings and
  Mortgage Lending.
               (2)  "Disciplinary action" means an order by the
  commissioner that requires one or more of the following:
                     (A)  suspension or revocation of a license or
  registration under this chapter;
                     (B)  probation of a suspension or revocation of a
  license or registration under this chapter on terms and conditions
  that the commissioner determines appropriate;
                     (C)  a reprimand of a person licensed or
  registered under this chapter; or
                     (D)  an administrative penalty imposed on a person
  licensed or registered under this chapter under Section 156.302.
               (4-a)  "Independent contractor loan processor or
  underwriter company" means a corporation, company, partnership, or
  sole proprietorship that receives compensation for an individual
  performing clerical or support duties as an independent contractor
  loan processor or underwriter at the direction of a licensed
  residential mortgage loan originator.
               (6-a)  "Loan processor or underwriter" has the meaning
  assigned by Section 180.002.
               (7)  "Mortgage applicant" means:
                     (A)  an applicant for a residential mortgage loan;
  or
                     (B)  a person who is solicited to [use or who uses
  a mortgage broker to] obtain a residential mortgage loan.
               (8)  "Mortgage banker" has the meaning assigned by
  Section 157.002 [means a person who is:
                     [(A)     approved or authorized by the United States
  Department of Housing and Urban Development as a mortgagee with
  direct endorsement underwriting authority;
                     [(B)     an approved seller or servicer of the
  Federal National Mortgage Association;
                     [(C)     an approved seller or servicer of the
  Federal Home Loan Mortgage Association; or
                     [(D)     an approved issuer for the Governmental
  National Mortgage Association].
               (8-a)  "Mortgage company" means a corporation,
  company, partnership, or sole proprietorship that engages in the
  business of residential mortgage loan origination on residential
  real estate located in this state.
               (10-a)  "Nationwide Mortgage Licensing System and
  Registry" has the meaning assigned by Section 180.002.
               (10-b)  "Qualifying individual" means an individual
  who is licensed under this chapter as a residential mortgage loan
  originator and is designated by a residential mortgage loan company
  as the company's representative for purposes of the Nationwide
  Mortgage Licensing System and Registry.
               (10-c)  "Recovery fund" means the fund established and
  maintained by the commissioner under Subchapter F and Section
  13.016.
               (12)  "Residential mortgage loan" has the meaning
  assigned by Section 180.002.
               (13)  "Residential mortgage loan company" means a
  person, other than an individual, that engages in the business of
  residential mortgage loan origination on residential real estate
  located in this state. The term includes a credit union subsidiary
  organization, auxiliary mortgage loan activity company, mortgage
  company, independent contractor loan processor or underwriter
  company, and financial services company.
               (14)  "Residential mortgage loan originator" has the
  meaning assigned by Section 180.002.
               (15)  "Residential real estate" has the meaning
  assigned by Section 180.002.
         SECTION 6.  Section 156.003, Finance Code, is amended to
  read as follows:
         Sec. 156.003.  SECONDARY MARKET TRANSACTIONS. This chapter
  does not prohibit a residential mortgage loan originator [mortgage
  broker] from receiving compensation from a party other than the
  mortgage applicant for the sale, transfer, assignment, or release
  of rights on the closing of a mortgage transaction.
         SECTION 7.  Section 156.004, Finance Code, is amended to
  read as follows:
         Sec. 156.004.  DISCLOSURE TO APPLICANT. (a)  At the time an
  applicant submits an application to a residential mortgage loan
  originator [mortgage broker], the residential mortgage loan
  originator [mortgage broker] shall provide to the applicant a
  disclosure that specifies:
               (1)  the nature of the relationship between the
  applicant and the residential mortgage loan originator;
               (2)  [broker,] the duties the residential mortgage loan
  originator [broker] has to the applicant;[,] and
               (3)  how the residential mortgage loan originator
  [mortgage broker] will be compensated.
         (b)  The finance commission, by rule, shall adopt
  [promulgate] a standard disclosure form to be used by the
  residential mortgage loan originator [mortgage broker].
         SECTION 8.  Section 156.005, Finance Code, is amended to
  read as follows:
         Sec. 156.005.  AFFILIATED BUSINESS ARRANGEMENTS. Unless
  prohibited by federal or state law, this chapter may not be
  construed to prevent affiliated or controlled business
  arrangements or loan origination services by or between residential
  mortgage loan originators [mortgage brokers] and other
  professionals if the residential mortgage loan originator
  [mortgage broker] complies with all applicable federal and state
  laws permitting those arrangements or services.
         SECTION 9.  Subsections (b) and (b-1), Section 156.102,
  Finance Code, are amended to read as follows:
         (b)  The finance commission may adopt rules to prohibit
  false, misleading, or deceptive practices by residential mortgage
  loan originators [mortgage brokers and loan officers] but may not
  adopt any other rules restricting competitive bidding or
  advertising by residential mortgage loan originators [mortgage
  brokers or loan officers]. When adopting rules under this
  subsection, the finance commission may not restrict:
               (1)  the use of any medium for an advertisement;
               (2)  the personal appearance of or voice of a person in
  an advertisement;
               (3)  the size or duration of an advertisement; or
               (4)  a residential mortgage loan originator's [mortgage
  broker's or loan officer's] advertisement under a trade name.
         (b-1)  The finance commission on the commissioner's
  recommendation may adopt rules to promote a fair and orderly
  administration of the recovery fund consistent with the purposes of
  Subchapter F.
         SECTION 10.  Subsections (b-1) and (h), Section 156.104,
  Finance Code, are amended to read as follows:
         (b-1)  The members of the committee must include six[:
               [(1)  three] individuals licensed by the department as
  residential mortgage loan originators [under this chapter], two
  [one] of whom must hold an active real estate broker or salesperson
  license issued under Chapter 1101, Occupations Code[; and
               [(2)     three individuals licensed as residential
  mortgage loan originators under Chapter 157, one of whom must hold
  an active real estate broker or salesperson license issued under
  Chapter 1101, Occupations Code].
         (h)  In addition to other powers and duties delegated to the
  advisory committee [it] by the commissioner, the advisory committee
  shall advise the commissioner with respect to:
               (1)  the proposal and adoption of rules relating to:
                     (A)  the licensing of residential mortgage loan
  originators or residential mortgage loan companies [mortgage
  brokers and loan officers];
                     (B)  the education and experience requirements
  for licensing residential mortgage loan originators [mortgage
  brokers and loan officers]; and
                     (C)  the conduct and ethics of residential
  mortgage loan originators [mortgage brokers and loan officers];
               (2)  the form of or format for any applications or other
  documents under this chapter; and
               (3)  the interpretation, implementation, and
  enforcement of this chapter.
         SECTION 11.  Section 156.105, Finance Code, is amended to
  read as follows:
         Sec. 156.105.  STANDARD FORMS.  (a)   The finance
  commission, by rule, shall adopt one or more standard forms for use
  by a residential mortgage loan originator [mortgage broker or loan
  officer] in representing that an applicant for a residential
  mortgage loan is preapproved or has prequalified for the loan.
         (b)  The finance commission shall adopt rules requiring a
  residential mortgage loan originator [mortgage broker or loan
  officer] licensed under this chapter to use the forms adopted by the
  finance commission under Subsection (a).
         SECTION 12.  The heading to Subchapter C, Chapter 156,
  Finance Code, is amended to read as follows:
  SUBCHAPTER C.  RESIDENTIAL MORTGAGE LOAN COMPANY AND RESIDENTIAL
  MORTGAGE LOAN ORIGINATOR LICENSES AND REGISTRATION [MORTGAGE
  BROKER LICENSE AND LOAN OFFICER LICENSE]
         SECTION 13.  Section 156.201, Finance Code, is amended to
  read as follows:
         Sec. 156.201.  LICENSES REQUIRED. (a)  A person may not act
  in the capacity of, engage in the business of, or advertise or hold
  that person out as engaging in or conducting the business of a
  residential mortgage loan company [mortgage broker] in this state
  unless the person holds an active residential mortgage loan company
  [mortgage broker] license, is registered under Section 156.214, or
  is exempt under Section 156.202.
         (b)  Except as provided by Subsection (b-1), an [An]
  individual may not act or attempt to act as a residential mortgage
  loan originator [loan officer] unless the individual at the time
  is:
               (1)  licensed under this chapter and  sponsored by a
  licensed residential mortgage loan company [mortgage broker] and is
  acting for the residential mortgage loan company [mortgage broker];
  or
               (2)  exempt under Section 156.202.
         (b-1)  Unless exempt under Section 180.003(b), an exclusive
  agent of a registered financial services company may not act or
  attempt to act as a residential mortgage loan originator unless the
  exclusive agent at the time is licensed under this chapter and
  sponsored by a registered financial services company and is acting
  for the company.
         (b-2)  A residential mortgage loan originator must be
  sponsored by at least one residential mortgage loan company.
         (c)  Each residential mortgage loan company and the
  company's qualifying individual [mortgage broker] licensed under
  this chapter is responsible to the commissioner and members of the
  public for any act or conduct performed by the residential mortgage
  loan originator [mortgage broker or a loan officer] sponsored by or
  acting for the residential mortgage loan company [mortgage broker]
  in connection with:
               (1)  the origination of a residential mortgage loan; or
               (2)  a transaction that is related to the origination
  of a residential mortgage loan in which the qualifying individual
  [mortgage broker] knew or should have known of the transaction.
         SECTION 14.  Section 156.202, Finance Code, is amended by
  amending Subsection (a) and adding Subsections (a-1), (a-2), and
  (c) to read as follows:
         (a)  In this section, "depository institution," "dwelling,"
  "federal banking agency," and "immediate family member" have the
  meanings assigned by Section 180.002.
         (a-1)  The following individuals or entities, and employees
  of those entities when acting for the benefit of those entities, 
  [persons] 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)  a nonprofit organization 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;
               (6)  a mortgage banker registered under Chapter 157;
               (7)  any owner of residential real estate who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans to purchasers of the property for all or part of the
  purchase price of the residential real estate against which the
  mortgage is secured;
               (8)  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; and
               (9)  an individual who is exempt as provided by Section
  180.003(b) [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 mortgage loans
  to purchasers of the property for all or part of the purchase price
  of the real estate against which the mortgage is secured;
               [(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; or
               [(5)     an individual who is an exclusive agent of a
  registered financial services company under a written agreement
  prohibiting the individual from soliciting, processing,
  negotiating, or placing a mortgage loan with a person other than the
  registered financial services company or an affiliate of that
  company].
         (a-2)  A person is not required to obtain a license or
  registration under this chapter to originate a loan subject to
  Chapter 342 or a loan governed by Section 50(a)(6), Article XVI,
  Texas Constitution, if the person:
               (1)  is enrolled in the Nationwide Mortgage Licensing
  System and Registry;
               (2)  is licensed under Chapter 342; and
               (3)  makes consumer loans subject to:
                     (A)  Subchapter G, Chapter 342; and
                     (B)  Subchapter E or F, Chapter 342.
         (c)  The finance commission may grant an exemption from the
  residential mortgage loan originator licensing requirements of
  this chapter to a municipality, county, community development
  corporation, or public or private grant administrator to the extent
  the entity is administering the Texas HOME Investment Partnerships
  program if the commission determines that granting the exemption is
  not inconsistent with the intentions of the federal Secure and Fair
  Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
  110-289).
         SECTION 15.  Section 156.203, Finance Code, is amended by
  amending Subsections (a), (b), and (c) and adding Subsections (a-1)
  and (a-2) to read as follows:
         (a)  For purposes of this section, an application for a
  residential mortgage loan company license means an application for:
               (1)  a mortgage company license;
               (2)  a credit union subsidiary organization license;
               (3)  an auxiliary mortgage loan activity company
  license; or
               (4)  an independent contractor loan processor or
  underwriter company license.
         (a-1)  An application for a residential mortgage loan
  company license and a residential mortgage loan originator
  [mortgage broker or loan officer] license must be:
               (1)  in writing;
               (2)  under oath; and
               (3)  on the form prescribed by the commissioner.
         (a-2)  An application for a financial services company
  registration under Section 156.214 must be:
               (1)  in writing;
               (2)  under oath; and
               (3)  on the form prescribed by the commissioner.
         (b)  An application for a residential mortgage loan company
  [mortgage broker] license must be accompanied by[:
               [(1)]  an application fee in an amount determined by
  the commissioner not to exceed $375[; and
               [(2)     a recovery fund fee as provided by Section
  156.502].
         (c)  An application for a residential mortgage loan
  originator [loan officer] license must be accompanied by:
               (1)  an application fee in an amount determined by the
  commissioner not to exceed $375 [$275]; and
               (2)  a recovery fund fee as provided by Section
  156.502.
         SECTION 16.  Subchapter C, Chapter 156, Finance Code, is
  amended by adding Sections 156.2041, 156.2042, 156.2043, 156.2044,
  156.2045, and 156.2046 to read as follows:
         Sec. 156.2041.  QUALIFICATIONS AND REQUIREMENTS FOR
  LICENSES: MORTGAGE COMPANY AND RESIDENTIAL MORTGAGE LOAN
  ORIGINATORS.  (a)  To be issued a mortgage company license, an
  applicant must:
               (1)  submit a completed application together with the
  payment of applicable fees through the Nationwide Mortgage
  Licensing System and Registry;
               (2)  designate control persons for the mortgage company
  through the Nationwide Mortgage Licensing System and Registry;
               (3)  designate an individual licensed as a residential
  mortgage loan originator under this chapter as the company's
  qualifying individual;
               (4)  submit a completed branch application through the
  Nationwide Mortgage Licensing System and Registry for each branch
  office that engages in residential mortgage loan activity on
  residential real estate located in this state;
               (5)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant;
               (6)  have the company name or assumed name properly
  filed with either the secretary of state or with the appropriate
  county clerk's office;
               (7)  maintain a physical office in this state; and
               (8)  provide financial statements and any other
  information required by the commissioner.
         (b)  To be issued a license to act as a mortgage company
  residential mortgage loan originator, an individual must submit a
  completed application through the Nationwide Mortgage Licensing
  System and Registry together with the payment of applicable fees
  and must establish to the satisfaction of the commissioner that the
  applicant:
               (1)  has not had a residential mortgage loan originator
  license revoked in any governmental jurisdiction;
               (2)  is not in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant;
               (3)  has not been convicted of, or pled guilty or no
  contest to, a felony in a domestic, foreign, or military court
  during the seven-year period preceding the date of the application;
               (4)  at any time preceding the date of the application,
  has not been convicted of, or pled guilty or no contest to, a felony
  in a domestic, foreign, or military court involving fraud,
  dishonesty, breach of trust, or money laundering;
               (5)  demonstrates the financial responsibility, good
  moral character, and general fitness necessary to operate in an
  honest, trustworthy, fair, and efficient manner as a residential
  mortgage loan originator under this chapter;
               (6)  has successfully completed at least 20 hours of
  prelicensing education courses approved by the Nationwide Mortgage
  Licensing System and Registry;
               (7)  has passed both the state and national components
  of a written test that meets the requirements of Section 180.057;
               (8)  has paid a recovery fund fee as required by Section
  156.502(a); and
               (9)  is a citizen of the United States or a lawfully
  admitted alien.
         Sec. 156.2042.  QUALIFICATIONS AND REQUIREMENTS FOR
  LICENSES:  CREDIT UNION SUBSIDIARY ORGANIZATION AND RESIDENTIAL
  MORTGAGE LOAN ORIGINATORS.  (a)  To be issued a credit union
  subsidiary organization license, an applicant must:
               (1)  submit a completed application together with the
  payment of applicable fees through the Nationwide Mortgage
  Licensing System and Registry;
               (2)  designate control persons for the organization
  through the Nationwide Mortgage Licensing System and Registry;
               (3)  designate an individual licensed as a residential
  mortgage loan originator under this chapter as the company's
  qualifying individual;
               (4)  submit a completed branch application through the
  Nationwide Mortgage Licensing System and Registry for each branch
  office that engages in residential mortgage loan activity on
  residential real estate located in this state; and
               (5)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant.
         (b)  To be issued a license to act as a credit union
  subsidiary organization residential mortgage loan originator, an
  individual must submit a completed application through the
  Nationwide Mortgage Licensing System and Registry together with the
  payment of applicable fees and must establish to the satisfaction
  of the commissioner that the applicant:
               (1)  has not had a residential mortgage loan originator
  license revoked in any governmental jurisdiction;
               (2)  is not in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant;
               (3)  has not been convicted of, or pled guilty or no
  contest to, a felony in a domestic, foreign, or military court
  during the seven-year period preceding the date of the application;
               (4)  at any time preceding the date of the application,
  has not been convicted of, or pled guilty or no contest to, a felony
  in a domestic, foreign, or military court involving fraud,
  dishonesty, breach of trust, or money laundering;
               (5)  demonstrates the financial responsibility, good
  moral character, and general fitness necessary to operate in an
  honest, trustworthy, fair, and efficient manner as a residential
  mortgage loan originator under this chapter;
               (6)  has successfully completed at least 20 hours of
  prelicensing education courses approved by the Nationwide Mortgage
  Licensing System and Registry;
               (7)  has passed both the state and national components
  of a written test that meets the requirements of Section 180.057;
               (8)  has paid a recovery fund fee as required by Section
  156.502(a); and
               (9)  is a citizen of the United States or a lawfully
  admitted alien.
         Sec. 156.2043.  QUALIFICATIONS AND REQUIREMENTS FOR
  LICENSES:  AUXILIARY MORTGAGE LOAN ACTIVITY COMPANY AND RESIDENTIAL
  MORTGAGE LOAN ORIGINATORS.  (a)  To be issued an auxiliary mortgage
  loan activity company license, an applicant must:
               (1)  submit a completed application together with the
  payment of applicable fees through the Nationwide Mortgage
  Licensing System and Registry;
               (2)  designate control persons for the company through
  the Nationwide Mortgage Licensing System and Registry;
               (3)  designate an individual licensed as a residential
  mortgage loan originator under this chapter as the company's
  qualifying individual; and
               (4)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant.
         (b)  To be issued a license to act as an auxiliary mortgage
  loan activity residential mortgage loan originator, an individual
  must submit a completed application through the Nationwide Mortgage
  Licensing System and Registry together with the payment of
  applicable fees and must establish to the satisfaction of the
  commissioner that the applicant:
               (1)  has not had a residential mortgage loan originator
  license revoked in any governmental jurisdiction;
               (2)  is not in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant;
               (3)  has not been convicted of, or pled guilty or no
  contest to, a felony in a domestic, foreign, or military court
  during the seven-year period preceding the date of the application;
               (4)  at any time preceding the date of the application,
  has not been convicted of, or pled guilty or no contest to, a felony
  in a domestic, foreign, or military court involving fraud,
  dishonesty, breach of trust, or money laundering;
               (5)  demonstrates the financial responsibility, good
  moral character, and general fitness necessary to operate in an
  honest, trustworthy, fair, and efficient manner as a residential
  mortgage loan originator under this chapter;
               (6)  has successfully completed at least 20 hours of
  prelicensing education courses approved by the Nationwide Mortgage
  Licensing System and Registry;
               (7)  has passed both the state and national components
  of a written test that meets the requirements of Section 180.057;
               (8)  has paid a recovery fund fee as required by Section
  156.502(a); and
               (9)  is a citizen of the United States or a lawfully
  admitted alien.
         Sec. 156.2044.  QUALIFICATIONS AND REQUIREMENTS FOR
  LICENSES:  INDEPENDENT CONTRACTOR LOAN PROCESSOR OR UNDERWRITER
  COMPANY AND INDIVIDUAL LOAN PROCESSORS OR UNDERWRITERS.  (a)  To be
  issued an independent contractor loan processor or underwriter
  company license under this chapter, an applicant must:
               (1)  submit a completed application together with the
  payment of applicable fees through the Nationwide Mortgage
  Licensing System and Registry;
               (2)  designate control persons for the company through
  the Nationwide Mortgage Licensing System and Registry;
               (3)  designate an individual licensed as a residential
  mortgage loan originator under this chapter as the company's
  qualifying individual; and
               (4)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant.
         (b)  An independent contractor loan processor or underwriter
  company is not authorized to originate residential mortgage loans
  with a license issued under Subsection (a).
         (c)  To be issued a license to act as an independent
  contractor loan processor or underwriter, an individual must submit
  a completed application through the Nationwide Mortgage Licensing
  System and Registry together with the payment of applicable fees
  and must establish to the satisfaction of the commissioner that the
  applicant:
               (1)  has not had a residential mortgage loan originator
  license revoked in any governmental jurisdiction;
               (2)  is not in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant;
               (3)  has not been convicted of, or pled guilty or no
  contest to, a felony in a domestic, foreign, or military court
  during the seven-year period preceding the date of the application;
               (4)  at any time preceding the date of the application,
  has not been convicted of, or pled guilty or no contest to, a felony
  in a domestic, foreign, or military court involving fraud,
  dishonesty, breach of trust, or money laundering;
               (5)  demonstrates the financial responsibility, good
  moral character, and general fitness necessary to operate in an
  honest, trustworthy, fair, and efficient manner as a residential
  mortgage loan originator under this chapter;
               (6)  has successfully completed at least 20 hours of
  prelicensing education courses approved by the Nationwide Mortgage
  Licensing System and Registry;
               (7)  has passed both the state and national components
  of a written test that meets the requirements of Section 180.057;
               (8)  has paid a recovery fund fee as required by Section
  156.502(a); and
               (9)  is a citizen of the United States or a lawfully
  admitted alien.
         Sec. 156.2045.  QUALIFICATIONS AND REQUIREMENTS FOR
  REGISTRATION AND LICENSE:  FINANCIAL SERVICES COMPANY AND EXCLUSIVE
  AGENTS.  (a)  To be issued a financial services company
  registration under Section 156.214(c), an applicant must:
               (1)  obtain preapproval from the commissioner that the
  company meets the eligibility requirements for registration as a
  financial services company under Section 156.214(b);
               (2)  submit a completed application through the
  Nationwide Mortgage Licensing System and Registry together with
  applicable fees required by Section 156.214(b)(4);
               (3)  provide evidence to the commissioner that the
  company has obtained surety bond coverage in an amount equal to $1
  million;
               (4)  designate an officer of the company to be
  responsible for the activities of the company's exclusive agents;
  and
               (5)  not be in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued by the
  commissioner to the applicant.
         (b)  To be issued a license to act as a financial services
  company exclusive agent, an individual must submit a completed
  application through the Nationwide Mortgage Licensing System and
  Registry and must establish to the satisfaction of the commissioner
  that the applicant:
               (1)  has not had a residential mortgage loan originator
  license revoked in any governmental jurisdiction;
               (2)  is not in violation of this chapter, a rule adopted
  under this chapter, or any order previously issued to the applicant
  by the commissioner;
               (3)  has not been convicted of, or pled guilty or no
  contest to, a felony in a domestic, foreign, or military court
  during the seven-year period preceding the date of the application;
               (4)  at any time preceding the date of the application,
  has not been convicted of, or pled guilty or no contest to, a felony
  in a domestic, foreign, or military court involving fraud,
  dishonesty, breach of trust, or money laundering;
               (5)  demonstrates the financial responsibility, good
  moral character, and general fitness necessary to operate in an
  honest, trustworthy, fair, and efficient manner as a residential
  mortgage loan originator under this chapter;
               (6)  has successfully completed at least 20 hours of
  prelicensing education courses approved by the Nationwide Mortgage
  Licensing System and Registry;
               (7)  has passed both the state and national components
  of a written test that meets the requirements of Section 180.057;
  and
               (8)  is a citizen of the United States or a lawfully
  admitted alien.
         Sec. 156.2046.  CONVICTION OF OFFENSE. For the purposes of
  Section 156.2041, 156.2042, 156.2043, 156.2044, or 156.2045, a
  person is considered to have been convicted of a criminal offense
  if:
               (1)  a sentence is imposed on the person;
               (2)  the person received probation or community
  supervision, including deferred adjudication or community service;
  or
               (3)  the court deferred final disposition of the
  person's case.
         SECTION 17.  Section 156.205, Finance Code, is amended to
  read as follows:
         Sec. 156.205.  FINANCIAL REQUIREMENTS. (a)  Except as
  provided by Subsection (b), financial  [Financial] requirements
  for holding a residential mortgage loan originator [mortgage broker
  or loan officer] license shall be met through participation in the
  recovery fund.
         (b)  An exclusive agent of a financial services company meets
  the agent's financial requirements for holding a residential
  mortgage loan originator license by obtaining surety bond coverage
  in an amount equal to $1 million.
         SECTION 18.  The heading to Section 156.206, Finance Code,
  is amended to read as follows:
         Sec. 156.206.  CRIMINAL AND OTHER BACKGROUND CHECKS [CHECK].
         SECTION 19.  Subsections (a), (b), and (c), Section 156.206,
  Finance Code, are amended to read as follows:
         (a)  On receipt of an application for a residential mortgage
  loan originator [mortgage broker license or a loan officer]
  license, the commissioner shall, at a minimum, conduct a criminal
  background and credit history check of the applicant.
         (b)  The commissioner shall conduct criminal background and
  credit history checks in accordance with Section 180.054, and, in
  connection with each application for a residential mortgage loan
  originator license or other individual license, the commissioner
  may conduct a criminal background check through the Department of
  Public Safety [obtain criminal history record information on an
  applicant that is maintained by the Department of Public Safety and
  shall obtain criminal history record information from the Federal
  Bureau of Investigation on each applicant. Each applicant must
  submit with the application fingerprint and other information
  necessary to implement this section. The commissioner may submit
  the fingerprint and other information to the Federal Bureau of
  Investigation, and the Department of Public Safety is designated to
  be the recipient of the criminal history record information.   The
  commissioner may also obtain criminal history record information
  from any court or any local, state, or national governmental
  agency].
         (c)  The commissioner shall keep confidential any [criminal]
  background information obtained under this section [subsection]
  and may not release or disclose the information unless:
               (1)  the information is a public record at the time the
  commissioner obtains the information; or
               (2)  the commissioner releases the information:
                     (A)  under order from a court;
                     (B)  with the permission of the applicant;
                     (C)  to a person through whom the applicant is
  conducting or will conduct business; or
                     (D)  to a governmental agency.
         SECTION 20.  The heading to Section 156.207, Finance Code,
  is amended to read as follows:
         Sec. 156.207.  ISSUANCE OF LICENSE [CERTIFICATE];
  PROVISIONAL LICENSE.
         SECTION 21.  Subsections (a) and (b), Section 156.207,
  Finance Code, are amended to read as follows:
         (a)  The commissioner shall issue a license [certificate] to
  an applicant for a residential mortgage loan company [mortgage
  broker] license if the commissioner finds that the applicant meets
  all requirements and conditions for the license.
         (b)  When an applicant for a residential mortgage loan
  originator [loan officer] license has met all requirements and
  conditions for the license, the commissioner shall issue a license
  [certificate] to the individual [mortgage broker sponsoring the
  loan officer].
         SECTION 22.  Section 156.208, Finance Code, is amended by
  amending Subsections (a-1), (b-1), (c), and (j) and adding
  Subsection (b-2) to read as follows:
         (a-1)  A residential mortgage loan company [mortgage broker]
  license issued under this chapter is valid through December 31 of
  the year of issuance [for a term of not more than two years] and may
  be renewed on or before its expiration date if the residential
  mortgage loan company [mortgage broker]:
               (1)  pays to the commissioner a renewal fee in an amount
  determined by the commissioner not to exceed $375 [and a recovery
  fund fee provided by Section 156.502]; and
               (2)  has not shown a pattern or practice of abusive
  mortgage activity and has no civil judgments or liens that, in the
  commissioner's opinion, directly impact the ability of the
  residential mortgage loan company to conduct business while
  safeguarding and protecting the public interest [has not been
  convicted of a criminal offense the commissioner determines is
  directly related to the occupation of a mortgage broker as provided
  by Chapter 53, Occupations Code; and
               [(3)     provides the commissioner with satisfactory
  evidence that the mortgage broker has attended, during the term of
  the current license, continuing education courses in accordance
  with the applicable requirements of Chapter 180].
         (b-1)  Except as provided by Subsection (b-2), a residential
  mortgage loan originator [A loan officer] license issued under this
  chapter is valid through December 31 of the year of issuance [for a
  term of not more than two years] and may be renewed on or before its
  expiration date if the residential mortgage loan originator [loan
  officer]:
               (1)  pays to the commissioner a renewal fee in an amount
  determined by the commissioner not to exceed $375 [$275] and a
  recovery fund fee provided by Section 156.502;
               (2)  continues to meet the minimum requirements for
  license issuance [has not been convicted of a criminal offense the
  commissioner determines is directly related to the occupation of a
  loan officer as provided by Chapter 53, Occupations Code]; and
               (3)  provides the commissioner with satisfactory
  evidence that the residential mortgage loan originator [loan
  officer] has attended, during the term of the current license,
  continuing education courses in accordance with the applicable
  requirements of Chapter 180.
         (b-2)  A license issued under this chapter to a registered
  financial services company's exclusive agent is valid through
  December 31 of the year of issuance and may be renewed on or before
  the expiration date if the exclusive agent complies with the
  requirements of Subsections (b-1)(2) and (3).
         (c)  The commissioner may require residential mortgage loan
  originators [mortgage brokers or loan officers] to submit requests
  for renewal on a form prescribed by the commissioner.
         (j)  The commissioner may deny the renewal of a residential
  mortgage loan originator [mortgage broker license or a loan
  officer] license if:
               (1)  the residential mortgage loan originator
  [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;
               (2)  the residential mortgage loan originator
  [mortgage broker or loan officer] is in default in the payment of
  any administrative penalty, fee, charge, or other indebtedness owed
  under this title;
               (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; or
               (4)  the residential mortgage loan originator
  [mortgage broker or loan officer] is in default on a student loan
  administered by the Texas Guaranteed Student Loan Corporation,
  pursuant to Section 57.491, Education Code.
         SECTION 23.  The heading to Section 156.2081, Finance Code,
  is amended to read as follows:
         Sec. 156.2081.  REINSTATEMENT [RENEWAL] AFTER EXPIRATION[;
  NOTICE].
         SECTION 24.  Subsections (b) and (c), Section 156.2081,
  Finance Code, are amended to read as follows:
         (b)  A person who is otherwise eligible to renew a license,
  but has not done so before January 1, may renew the license before
  March 1 by paying the commissioner a reinstatement fee in an amount
  equal to 150 percent of the [whose license has been expired for 90
  days or less but who is otherwise eligible to renew a license may
  renew the license by paying to the commissioner a renewal fee that
  is equal to 1-1/2 times the normally] required renewal fee.
         (c)  A person whose residential mortgage loan originator
  license has not been renewed before March 1 [has been expired for 91
  days or more] may not renew the license.  The person may obtain a
  new license by complying with the requirements and procedures for
  obtaining an original license.
         SECTION 25.  Section 156.210, Finance Code, is amended to
  read as follows:
         Sec. 156.210.  CONDITIONAL [PROBATIONARY] LICENSE. The
  commissioner may issue a conditional [probationary] license. The
  finance commission by rule shall adopt reasonable terms and
  conditions for a conditional [probationary] license.
         SECTION 26.  Subsections (a), (b), (b-1), (b-2), and (b-3),
  Section 156.211, Finance Code, are amended to read as follows:
         (a)  Before the 10th day preceding the effective date of an
  address change, a residential mortgage loan company [mortgage
  broker] shall notify the commissioner in writing of the new address
  accompanied by a change of address fee of $25.  [A new license
  certificate must be obtained before the mortgage broker may conduct
  business at the new location.]
         (b)  [A loan officer may act only for the mortgage broker
  sponsoring the loan officer. A loan officer may be sponsored by
  only one mortgage broker at a time.] When the sponsorship of a
  residential mortgage loan originator [loan officer] is terminated,
  the residential mortgage loan originator [loan officer] and the
  residential mortgage loan company [mortgage broker] shall
  immediately notify the commissioner [and the mortgage broker shall
  return the loan officer license to the commissioner]. The
  residential mortgage loan originator's [loan officer's] license
  then becomes inactive. The residential mortgage loan originator
  [loan officer] license may be activated if, before the license
  expires, a residential mortgage loan company [mortgage broker]
  files a request, accompanied by a $25 fee, notifying the
  commissioner that the residential mortgage loan company [mortgage
  broker] will sponsor the residential mortgage loan originator [loan
  officer] and will assume responsibility for the actions of the
  residential mortgage loan originator [loan officer].
         (b-1)  Not later than the 10th day before a residential
  mortgage loan company [mortgage broker] begins doing business under
  an assumed name, the residential mortgage loan company [mortgage
  broker] shall file with the commissioner a copy of an assumed name
  certificate for each assumed name under which the residential
  mortgage loan company [mortgage broker] intends to conduct business
  and pay a $25 registration fee for each assumed name.  A residential
  mortgage loan originator [loan officer] may not conduct business
  under any assumed name that is not the registered assumed name of
  the sponsoring residential mortgage loan company [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 residential mortgage loan company [business entity]
  licensed under this chapter that changes the company's qualifying
  individual shall notify the commissioner not later than the 10th
  business day after the date of the change [of any change of its
  designated representative].  The commissioner may charge a fee of
  $25 for each change of a designated representative.
         SECTION 27.  Section 156.212, Finance Code, is amended to
  read as follows:
         Sec. 156.212.  MAINTENANCE AND LOCATION OF OFFICES.
  (a)  Each residential mortgage loan company [mortgage broker]
  licensed under this chapter shall maintain a physical office in
  this state.
         (a-1)  If a residential mortgage loan company's main office
  is outside this state, the requirement of Subsection (a) is
  satisfied if the company has a branch office located in this state 
  [The address of the office shall be designated on the license
  certificate].
         (b)  If a residential mortgage loan company maintains an
  office separate and distinct from the company's main office,
  whether located in this state or not, that conducts mortgage
  business with consumers of this state or regarding residential real
  estate in this state, the company [mortgage broker maintains more
  than one place of business in this state, the mortgage broker] shall
  apply for, pay a fee of $50 for, and obtain an additional license
  [certificate] to be known as a branch office license for each
  additional office to be maintained by the company [mortgage
  broker].
         SECTION 28.  Section 156.213, Finance Code, as added by
  Chapter 337 (H.B. 1636), Acts of the 77th Legislature, Regular
  Session, 2001, is amended to read as follows:
         Sec. 156.213.  MORTGAGE CALL [ANNUAL] REPORT. (a)  Each
  licensed residential mortgage loan company or licensed residential
  mortgage loan originator, as required by the commissioner,
  [mortgage broker] shall file a mortgage call [an annual] report
  with the commissioner or the commissioner's authorized designee on
  a form prescribed by the commissioner or authorized designee
  [Savings and Loan Department]. The report [must include]:
               (1)  is a statement of condition of the residential
  mortgage loan company and the company's operations, or a statement
  of condition of the residential mortgage loan originators sponsored
  by the company, as applicable, including financial statements and
  production activity volumes;
               (2)  must include any other information required by the
  commissioner; and
               (3)  must be filed as frequently as required by the
  commissioner [data on loan originations in this state for the
  mortgage broker;
               [(2)     information on each loan officer sponsored by the
  mortgage broker; and
               [(3)     any other information required by finance
  commission rule].
         (b)  Information contained in the mortgage call report
  related to residential mortgage loan origination volume or other
  trade [Trade] information, including information used to determine
  statistical entries in the report related to loan origination
  volume, is confidential and may not be disclosed by the
  commissioner, the commissioner's authorized designee, or any other
  employee of the department [Savings and Loan Department].
         SECTION 29.  Subsections (a) through (d), Section 156.214,
  Finance Code, are amended to read as follows:
         (a)  A registered financial services company may perform the
  services of another residential mortgage loan company [a mortgage
  broker] as if the company were licensed as a residential mortgage
  loan company [mortgage broker] under this chapter, through
  individuals who are the exclusive agents of the registered
  financial services company.
         (b)  To be eligible to register as a registered financial
  services company, a person must:
               (1)  be a depository institution exempt from this
  chapter under Section 156.202(a-1)(8)(A) [156.202(1)(A) or (B)]
  and chartered and regulated by the Office of Thrift Supervision or
  the Office of the Comptroller of the Currency, or be a subsidiary of
  the institution;
               (2)  provide the commissioner with satisfactory
  evidence of an undertaking of accountability in a form acceptable
  to the commissioner, supported by a surety bond equal to $1 million
  to cover the person's responsibility for residential mortgage loan
  company [mortgage broker] activities of each exclusive agent;
               (3)  provide a business plan satisfactory to the
  commissioner that sets forth the person's plan to provide education
  to its exclusive agents, handle consumer complaints relating to its
  exclusive agents, and supervise the residential mortgage loan
  origination activities of its exclusive agents;
               (4)  pay an annual registration fee in an amount
  determined as follows:
                     (A)  if the registered financial services company
  has 2,000 or fewer exclusive agents acting in this state, an amount
  equal to the lesser of:
                           (i)  one-half of the license fee for a
  residential mortgage loan originator [loan officer] under Section
  156.203(c)(1), multiplied by the number of exclusive agents under
  contract to act for the person in this state; or
                           (ii)  $200,000;
                     (B)  if the registered financial services company
  has at least 2,001 but not more than 2,500 exclusive agents acting
  in this state, $225,000;
                     (C)  if the registered financial services company
  has at least 2,501 but not more than 3,000 exclusive agents acting
  in this state, $250,000;
                     (D)  if the registered financial services company
  has at least 3,001 but not more than 5,000 exclusive agents acting
  in this state, $300,000; or
                     (E)  if the registered financial services company
  has at least 5,001 exclusive agents acting in this state, $350,000;
  and
               (5)  designate an officer of the person to be
  responsible for the activities of the exclusive agents.
         (c)  If the commissioner determines that a person has met the
  requirements of Subsection (b) and Section 156.2045(a), the
  commissioner shall issue a registration to the person.  The
  registration is valid for one year, expires on December 31 of each
  year, and must [may] be renewed annually [on or before its
  expiration date].  A person must [may] renew an expired
  registration in the [same] manner determined by the commissioner
  [as a person may renew an expired license under Section
  156.2081(b)].
         (d)  A registered financial services company is subject to
  Subchapters D and E as if the company were licensed as a residential
  mortgage loan company [mortgage broker].
         SECTION 30.  Subsections (b) and (h), Section 156.301,
  Finance Code, are amended to read as follows:
         (b)  On the signed written complaint of a person, the
  commissioner shall investigate the actions and records of a person
  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 a residential mortgage
  loan company [mortgage broker or loan officer] in writing of the
  complaint and that the commissioner intends to investigate the
  matter.
         (h)  The commissioner may require reimbursement in an amount
  not to exceed $325 for each examiner a day for on-site examination
  or investigation of a residential mortgage loan company [mortgage
  broker] if records are located out of state or if the review is
  considered necessary beyond the routine examination process.
         SECTION 31.  Subsection (b), Section 156.302, Finance Code,
  is amended to read as follows:
         (b)  The amount of the penalty may not exceed $25,000 for
  [$2,500, and] each [day a] violation [continues or occurs is a
  separate violation for the purpose of imposing a penalty]. The
  amount shall be based on:
               (1)  the seriousness of the violation, including the
  nature, circumstances, extent, and gravity of the violation;
               (2)  the economic harm to property caused by the
  violation;
               (3)  the history of previous violations;
               (4) [(3)]  the amount necessary to deter a future
  violation;
               (5) [(4)]  efforts to correct the violation; and
               (6) [(5)]  any other matter that justice may require.
         SECTION 32.  Subsections (a), (a-1), (g), and (i), Section
  156.303, Finance Code, are amended to read as follows:
         (a)  The commissioner may order disciplinary action against
  a licensed or registered residential mortgage loan company
  [mortgage broker] or a licensed residential mortgage loan
  originator [loan officer] when the commissioner, after notice and
  opportunity for hearing, has determined that the person:
               (1)  obtained a license or registration, including a
  renewal of a license or registration, under this chapter through a
  false or fraudulent representation or made a material
  misrepresentation in an application for a license or registration 
  or for the renewal of a license or registration under this chapter;
               (2)  published or caused to be published an
  advertisement related to the business of a residential mortgage
  loan company [mortgage broker] or residential mortgage loan
  originator [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 residential mortgage
  loan company [mortgage broker] or residential mortgage loan
  originator [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 or
  registration 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 residential 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 residential
  mortgage loan before all of the services that the person agreed to
  perform for the mortgage applicant are completed, and the proceeds
  of the residential 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 of the check and any applicable fees 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,
  registered, or exempt under this chapter for acts for which a
  license or registration 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 residential
  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 residential mortgage loan company
  [mortgage broker] or residential mortgage loan originator [loan
  officer], as applicable;
               (11)  established an association, by employment or
  otherwise, with a person not licensed, registered, or exempt under
  this chapter who was expected or required to act as a residential
  mortgage loan company [mortgage broker] or residential mortgage
  loan originator [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 residential
  mortgage loan company [mortgage broker] or residential mortgage
  loan originator [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 residential mortgage loan transaction conducted by the
  residential mortgage loan originator [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 residential mortgage loan origination
  [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;
               (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.
         (a-1)  The commissioner may also order disciplinary action
  after notice and opportunity for hearing against a licensed or
  registered residential mortgage loan company [mortgage broker] or a
  licensed residential mortgage loan originator [loan officer] if the
  commissioner becomes aware during the term of the license 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 issued.
         (g)  If a person fails to pay an administrative penalty that
  has become final or fails to comply with an order of the
  commissioner that has become final, in addition to any other remedy
  provided under law the commissioner, on not less than 10 days'
  notice to the person, may without a prior hearing suspend the
  person's residential mortgage loan company [mortgage broker]
  license or registration or residential mortgage loan originator
  [loan officer] license.  The suspension shall continue until the
  person has complied with the order or paid the administrative
  penalty.  During the period of suspension, the person may not
  originate a residential mortgage loan and all compensation received
  by the person during the period of suspension is subject to
  forfeiture as provided by Section 156.406(b).
         (i)  An order revoking the license or registration of a
  residential mortgage loan company [mortgage broker] or the license
  of a residential mortgage loan originator [loan officer] may
  provide that the person is prohibited, without obtaining prior
  written consent of the commissioner, from:
               (1)  engaging in the business of originating or making
  residential mortgage loans;
               (2)  being an employee, officer, director, manager,
  shareholder, member, agent, contractor, or processor of a
  residential mortgage loan company [mortgage broker] or residential
  mortgage loan originator [loan officer]; or
               (3)  otherwise affiliating with a person for the
  purpose of engaging in the business of originating or making
  residential mortgage loans.
         SECTION 33.  Section 156.304, Finance Code, is amended to
  read as follows:
         Sec. 156.304.  FEE ASSESSMENT AND DISCLOSURE. (a)  Before
  the completion of all services to be performed, a residential
  mortgage loan originator [mortgage broker] may charge and receive,
  unless prohibited by law, the following fees for services in
  assisting a mortgage applicant to obtain a residential mortgage
  loan:
               (1)  a fee to obtain a credit report;
               (2)  a fee for the appraisal of the real estate;
               (3)  a fee for processing a residential mortgage loan
  application;
               (4)  a fee for taking a residential mortgage loan
  application;
               (5)  a fee for automated underwriting;
               (6)  a fee for a courier service;
               (7)  a fee to issue a loan commitment; or
               (8)  subject to Subsection (b), a fee for locking in an
  interest rate.
         (b)  A residential mortgage loan originator [mortgage broker
  or loan officer] may not charge or receive a fee for locking in an
  interest rate unless there is a written agreement signed by the
  mortgage applicant and residential mortgage loan originator
  [mortgage broker] that contains a statement of whether the fee to
  lock in the interest rate is refundable and, if so, the terms and
  conditions necessary to obtain the refund.
         SECTION 34.  Section 156.305, Finance Code, is amended to
  read as follows:
         Sec. 156.305.  RESTITUTION. The commissioner may order a
  person to make restitution for any amount received by that person in
  violation of this chapter.  A residential mortgage loan company
  [mortgage broker] may be required to make restitution for any
  amount received by a sponsored residential mortgage loan originator
  [loan officer] in violation of this chapter.
         SECTION 35.  Section 156.401, Finance Code, is amended by
  adding Subsection (e) to read as follows:
         (e)  The commissioner may, in the commissioner's discretion,
  rescind or vacate any previously issued revocation order.
         SECTION 36.  Section 156.405, Finance Code, is amended to
  read as follows:
         Sec. 156.405.  COMPLETION OF RESIDENTIAL MORTGAGE LOAN
  ORIGINATOR [MORTGAGE BROKER] SERVICES. (a)  On disbursement of
  mortgage proceeds to or on behalf of the mortgage applicant, the
  residential mortgage loan originator [mortgage broker and loan
  officer] who assisted the mortgage applicant in obtaining the
  residential mortgage loan is [are] considered to have completed the
  performance of the residential mortgage loan originator's
  [mortgage broker's and loan officer's] services for the mortgage
  applicant and owes [owe] no additional duties or obligations to the
  mortgage applicant with respect to the residential mortgage loan.
         (b)  This section does not limit or preclude the liability of
  a residential mortgage loan originator [mortgage broker or loan
  officer] for:
               (1)  failing to comply with this chapter or a rule
  adopted under this chapter;
               (2)  failing to comply with a provision of or duty
  arising under an agreement with a mortgage applicant or lender
  under this chapter; or
               (3)  violating any other state or federal law.
         SECTION 37.  Subsections (a), (b), and (d), Section 156.406,
  Finance Code, are amended to read as follows:
         (a)  A person who is not exempt under this chapter and who
  acts as a residential mortgage loan originator [mortgage broker or
  loan officer] without first obtaining a license required under this
  chapter commits an offense. An offense under this subsection is a
  Class B misdemeanor. A second or subsequent conviction for an
  offense under this subsection shall be punished as a Class A
  misdemeanor.
         (b)  A person who received money, or the equivalent of money,
  as a fee or profit because of or in consequence of the person acting
  as a residential mortgage loan originator [mortgage broker or loan
  officer] without an active license or being exempt under this
  chapter is liable for damages in an amount that is not less than the
  amount of the fee or profit received and not to exceed three times
  the amount of the fee or profit received, as may be determined by
  the court. An aggrieved person may recover damages under this
  subsection in a court.
         (d)  If a hearing has not been requested under Subsection (c)
  not later than the 30th day after the date the order is made, the
  order is considered final and not appealable. The commissioner,
  after giving notice, may impose against a person who violates a
  cease and desist order, an administrative penalty in an amount not
  to exceed $1,000 for each day of a violation. In addition to any
  other remedy provided by law, the commissioner may institute in
  district court a suit for injunctive relief and to collect the
  administrative penalty. A bond is not required of the commissioner
  with respect to injunctive relief granted under this section. A
  penalty collected under this subsection shall be deposited in the
  recovery fund.
         SECTION 38.  Section 156.501, Finance Code, is amended to
  read as follows:
         Sec. 156.501.  [MORTGAGE BROKER] RECOVERY FUND.  (a)  The
  commissioner shall establish, administer, and maintain a [mortgage
  broker] recovery fund as provided by Section 13.016 and this
  subchapter.  The amounts received by the commissioner for deposit
  in the fund shall be held by the commissioner in trust for carrying
  out the purposes of the fund.  
         (b)  Subject to this subsection, the recovery fund shall be
  used to reimburse residential mortgage loan applicants for actual
  damages incurred because of acts committed by a residential
  mortgage loan originator [mortgage broker or loan officer] who was
  licensed under this chapter or under Chapter 157 when the act was
  committed.  The use of the fund is limited to reimbursement for
  out-of-pocket losses caused by an act by:
               (1)  a residential mortgage loan originator licensed
  under this chapter [a mortgage broker or loan officer] that
  constitutes a violation of Section 156.303(a)(2), (3), (5), (6),
  (8), (9), (10), (11), (12), (13), or (16) or 156.304; or
               (2)  a residential mortgage loan originator licensed
  under Chapter 157 that constitutes a violation of Section
  157.024(a)(2), (3), (5), (7), (8), (9), (10), (13), or (16).  
         (b-1)  Payments from the recovery fund may not be made to a
  lender who makes a residential mortgage loan originated by the
  residential mortgage loan originator [mortgage broker or loan
  officer] or who acquires a residential mortgage loan originated by
  the residential mortgage loan originator [mortgage broker or loan
  officer].
         (c)  Amounts in the recovery fund may be invested and
  reinvested in the same manner as funds of the [Texas State]
  Employees Retirement System of Texas, and the interest from these
  investments shall be deposited to the credit of the fund. An
  investment may not be made under this subsection if the investment
  will impair the necessary liquidity required to satisfy judgment
  payments awarded under this subchapter.
         (d)  The recovery fund may be used at the discretion of the
  commissioner to reimburse expenses incurred to secure and destroy
  residential mortgage loan documents that have been abandoned by a
  current or former individual or entity under the regulatory
  authority of the department.
         (e)  Payments from the recovery fund shall be reduced by the
  amount of any recovery from the residential mortgage loan
  originator [mortgage broker or loan officer] or from any surety,
  insurer, or other person or entity making restitution to the
  applicant on behalf of the residential mortgage loan originator
  [mortgage broker or loan officer].
         (f)  The commissioner, as manager of the recovery fund, is
  entitled to reimbursement for reasonable and necessary costs and
  expenses incurred in the management of the fund, including costs
  and expenses incurred with regard to applications filed under
  Section 156.504.
         SECTION 39.  Section 156.502, Finance Code, is amended to
  read as follows:
         Sec. 156.502.  FUNDING. (a)  On an application for an
  original license or for renewal of a license issued under this
  chapter, the applicant, in addition to paying the original
  application fee or renewal fee, shall pay a fee in an amount
  determined by the commissioner, not to exceed $20.  The fee shall
  be deposited in the recovery fund.
         (b)  If the balance remaining in the recovery fund at the end
  of a calendar year is more than $3.5 million, the amount of money in
  excess of that amount shall be available to the commissioner to
  offset the expenses of participating in and sharing information
  with the Nationwide Mortgage Licensing System and Registry in
  accordance with Chapter 180.
         SECTION 40.  Section 156.503, Finance Code, is amended to
  read as follows:
         Sec. 156.503.  STATUTE OF LIMITATIONS. (a)  An application
  for the recovery of actual damages from the recovery fund under
  Section 156.504 may not be filed after the second anniversary of the
  date of the alleged act or omission causing the actual damages or
  the date the act or omission should reasonably have been
  discovered.
         (b)  This section does not apply to a subrogation claim
  brought by the commissioner for recovery of money paid out of the
  recovery fund.
         SECTION 41.  Subsections (a), (b), and (d), Section 156.504,
  Finance Code, are amended to read as follows:
         (a)  To recover from the recovery fund, a residential
  mortgage loan applicant must file a written sworn application with
  the commissioner in the form prescribed by the commissioner,
  subject to Section 156.503.  A person who knowingly makes a false
  statement in connection with applying for money out of the fund may
  be subject to criminal prosecution under Section 37.10, Penal Code.
         (b)  The residential mortgage loan applicant is required to
  show:
               (1)  that the applicant's claim is based on facts
  allowing recovery under Section 156.501; and
               (2)  that the applicant:   
                     (A)  is not a spouse of the licensed residential
  mortgage loan originator [mortgage broker or loan officer];
                     (B)  is not a child, parent, grandchild,
  grandparent, or sibling, including relationships by adoption, of
  the licensed residential mortgage loan originator [mortgage broker
  or loan officer];
                     (C)  is not a person sharing living quarters with
  the licensed residential mortgage loan originator [mortgage broker
  or loan officer] or a current or former employer, employee, or
  associate of the licensed residential mortgage loan originator
  [mortgage broker or loan officer];
                     (D)  is not a person who has aided, abetted, or
  participated other than as a victim with the licensed residential
  mortgage loan originator [mortgage broker or loan officer] in any
  activity that is illegal under Section 156.303(a)(2), (3), (5),
  (6), (8), (9), (10), (11), (12), (13), or (16), [or] Section
  156.304, or Section 157.024(a)(2), (3), (5), (7), (8), (9), (10),
  (13), or (16), or is not the personal representative of a licensed
  residential mortgage loan originator [mortgage broker or loan
  officer]; and
                     (E)  is not licensed as a residential mortgage
  loan originator [mortgage broker or loan officer] under this
  chapter who is seeking to recover any compensation in the
  transaction or transactions for which the application for payment
  is made.
         (d)  If the preliminary determination under Subsection
  (c)(2) is not otherwise resolved by agreement and is not disputed by
  written notice to the commissioner before the 31st day after the
  notification date, the preliminary determination automatically
  becomes final and the commissioner shall make payment from the
  recovery fund, subject to the limits of Section 156.505.
         SECTION 42.  Section 156.505, Finance Code, is amended to
  read as follows:
         Sec. 156.505.  RECOVERY LIMITS. (a)  A person entitled to
  receive payment out of the recovery fund is entitled to receive
  reimbursement of actual, out-of-pocket damages as provided by this
  section.
         (b)  A payment from the recovery fund may be made as provided
  by Section 156.504 and this section.  A payment for claims:
               (1)  arising out of the same transaction, including
  interest, is limited in the aggregate to $25,000, regardless of the
  number of claimants; and
               (2)  against a single person licensed as a residential
  mortgage loan originator [mortgage broker or loan officer] under
  this chapter or Chapter 157 arising out of separate transactions,
  including interest, is limited in the aggregate to $50,000 until
  the fund has been reimbursed for all amounts paid.
         (c)  In the event there are concurrent claims under
  Subsections (b)(1) and (2) that exceed the amounts available under
  the recovery fund, the commissioner shall prorate recovery based on
  the amount of damage suffered by each claimant.
         SECTION 43.  Section 156.506, Finance Code, is amended to
  read as follows:
         Sec. 156.506.  REVOCATION OR SUSPENSION OF LICENSE FOR
  PAYMENT FROM RECOVERY FUND. (a)  The commissioner may revoke or
  suspend a license issued under this chapter on proof that the
  commissioner has made a payment from the recovery fund of any amount
  toward satisfaction of a claim against a residential mortgage loan
  originator [mortgage broker or loan officer] under this chapter.
         (a-1)  The commissioner may seek to collect from a
  residential mortgage loan originator [mortgage broker or loan
  officer] the amount paid from the recovery fund on behalf of the
  residential mortgage loan originator [mortgage broker or loan
  officer] and any costs associated with investigating and processing
  the claim against the fund or with collection of reimbursement for
  payments from the recovery fund, plus interest at the current legal
  rate until the amount has been repaid in full.  Any amount,
  including interest, recovered by the commissioner shall be
  deposited to the credit of the fund.
         (b)  The commissioner may probate an order revoking or
  suspending a license under this section.
         (c)  A person on whose behalf payment was made from the
  recovery fund is not eligible to receive a new license or have a
  suspension lifted under this chapter until the person has repaid in
  full, plus interest at the current legal rate, the amount paid from
  the fund on the person's behalf and any costs associated with
  investigating and processing the claim against the fund or with
  collection of reimbursement for payments from the fund.
         (d)  This section does not limit the authority of the
  commissioner to take disciplinary action against a residential
  mortgage loan originator [mortgage broker or loan officer] for a
  violation of this chapter or the rules adopted by the finance
  commission under this chapter. The repayment in full to the
  recovery fund of all obligations of a residential mortgage loan
  originator [mortgage broker or loan officer] does not nullify or
  modify the effect of any other disciplinary proceeding brought
  under this chapter.
         SECTION 44.  Sections 156.507 and 156.508, Finance Code, are
  amended to read as follows:
         Sec. 156.507.  SUBROGATION. When the commissioner has paid
  an applicant an amount from the recovery fund under Section
  156.504, the commissioner is subrogated to all of the rights of the
  applicant to the extent of the amount paid.  The applicant shall
  assign all of the applicant's right, title, and interest in any
  subsequent judgment against the license holder, up to the amount
  paid by the commissioner.  Any amount, including interest,
  recovered by the commissioner on the assignment shall be deposited
  to the credit of the fund.
         Sec. 156.508.  FAILURE TO COMPLY WITH SUBCHAPTER OR RULE
  ADOPTED BY THE FINANCE COMMISSION. The failure of an applicant
  under Section 156.504 to comply with a provision of this subchapter
  relating to the recovery fund or with a rule adopted by the finance
  commission relating to the fund constitutes a waiver of any rights
  under this subchapter.
         SECTION 45.  Section 157.002, Finance Code, is amended by
  adding Subdivisions (4-a) and (4-b) and amending Subdivision (5) to
  read as follows:
               (4-a)  "Nationwide Mortgage Licensing System and
  Registry" has the meaning assigned by Section 180.002.
               (4-b)  "Recovery fund" means the fund established and
  maintained by the commissioner under Subchapter F, Chapter 156, and
  Section 13.016.
               (5)  "Residential mortgage loan" has the meaning
  assigned by Section 180.002 [means a debt secured by a lien on
  residential real property designed principally for occupancy by one
  to four families that is created by a deed of trust, security deed,
  or other security instrument].
         SECTION 46.  Section 157.003, Finance Code, is amended by
  amending Subsections (b) and (e) and adding Subsections (f) and (g)
  to read as follows:
         (b)  To register under this chapter, a mortgage banker shall:
               (1)  enroll with the Nationwide Mortgage Licensing
  System and Registry;
               (2)  be in good standing with the secretary of state;
               (3)  have a valid federal employer identification
  number;
               (4)  meet the qualification requirements for a mortgage
  banker; and
               (5)  provide to the commissioner a list of any offices
  that are separate and distinct from the primary office identified
  on the mortgage banker registration and that conduct residential
  mortgage loan business relating to this state, regardless of
  whether the offices are located in this state [file with the
  commissioner a statement that contains:
               [(1)  the name and address of the mortgage banker;
               [(2)     the name, address, and telephone number of the
  representative of the mortgage banker to be contacted regarding a
  written complaint;
               [(3)     a list of the locations in this state at which the
  person conducts the business of a mortgage banker; and
               [(4)     a list of employees of the mortgage banker who are
  residential mortgage loan originators].
         (e)  The registration of a mortgage banker is valid on
  approval of the commissioner and may be denied if the commissioner
  determines the mortgage banker does not meet the requirements of
  Subsection (b). If registration is denied, the mortgage banker may
  appeal the determination in the same manner as an applicant for a
  residential mortgage loan originator license may appeal a denial of
  issuance of a license under Section 157.017.
         (f)  A mortgage banker registration is valid through
  December 31 of the year in which the registration is approved.
         (g)  The registration may be [until] withdrawn or revoked.  
  [Periodic renewal of the registration is not required.]
         SECTION 47.  Section 157.005, Finance Code, is amended to
  read as follows:
         Sec. 157.005.  UPDATE OF REGISTRATION [STATEMENT]. A
  mortgage banker shall update information contained in the
  registration [statement] not later than the 30th day after the date
  the information changes.
         SECTION 48.  Section 157.006, Finance Code, is amended to
  read as follows:
         Sec. 157.006.  REGISTRATION AND ADMINISTRATION FEE. The
  commissioner may charge a mortgage banker a reasonable fee to cover
  the costs of [filing] the registration [statement] and of
  administering this chapter. The fee may not exceed $500 a year.
         SECTION 49.  Chapter 157, Finance Code, is amended by adding
  Sections 157.0061 and 157.0062 to read as follows:
         Sec. 157.0061.  RENEWAL OF REGISTRATION.  (a)  The
  registration of a mortgage banker expires on December 31 of the year
  in which the registration is approved and must be renewed annually.
         (b)  To renew a registration, a mortgage banker must comply
  with the requirements of Section 157.003 and pay a renewal fee in an
  amount not to exceed $500.
         Sec. 157.0062.  REINSTATEMENT AFTER EXPIRATION OF
  REGISTRATION. (a)  A mortgage banker whose registration has
  expired may not engage in an activity for which registration is
  required under this chapter until the registration is renewed.
         (b)  A mortgage banker who is otherwise eligible to renew a
  registration, but has not done so before January 1, may renew the
  registration before March 1 by paying the commissioner a
  reinstatement fee in an amount not to exceed $500.
         (c)  A mortgage banker whose registration has not been
  renewed before March 1 may not renew the registration. The mortgage
  banker may obtain a new registration by complying with the
  requirements and procedures for obtaining an original
  registration.
         SECTION 50.  Section 157.007, Finance Code, is amended to
  read as follows:
         Sec. 157.007.  DISCLOSURE STATEMENT.  A mortgage banker that
  is a residential mortgage loan originator shall include a [the
  following] notice to a residential mortgage loan applicant with an
  application for a residential mortgage loan.  The finance
  commission by rule shall adopt a standard disclosure form to be used
  by the mortgage banker.  The form must:
               (1)  include the name, address, and toll-free telephone
  number for the Department of Savings and Mortgage Lending;
               (2)  contain information on how to file a complaint or
  recovery fund claim; and
               (3)  prescribe a method for proof of delivery to the
  consumer.[:
         ["COMPLAINTS REGARDING MORTGAGE BANKERS SHOULD BE SENT TO THE
  DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,
  ______________________________ (street address of the Department
  of Savings and Mortgage Lending).     A TOLL-FREE CONSUMER HOTLINE IS
  AVAILABLE AT _______________ (telephone number of the Department of
  Savings and Mortgage Lending's toll-free consumer hotline)."]
         SECTION 51.  Section 157.012, Finance Code, as added by
  Chapters 1104 (H.B. 10) and 1147 (H.B. 2779), Acts of the 81st
  Legislature, Regular Session, 2009, is reenacted and amended to
  read as follows:
         Sec. 157.012.  LICENSE REQUIRED FOR CERTAIN EMPLOYEES OF
  MORTGAGE BANKERS. (a)  [In this section, "Nationwide Mortgage
  Licensing System and Registry" and "residential mortgage loan
  originator" have the meanings assigned by Section 180.002.
         [(b)]  An employee of a mortgage banker may not act in the
  capacity of a residential mortgage loan originator unless the
  employee:
               (1)  is licensed under this chapter, sponsored by a
  registered mortgage banker, and enrolled with the Nationwide
  Mortgage Licensing System and Registry as required by Section
  180.052; and
               (2)  complies with other applicable requirements of
  Chapter 180 and rules adopted by the finance commission under that
  chapter.
         (b) [(c)]  The finance commission may adopt rules under this
  chapter as required to carry out the intentions of the federal
  Secure and Fair Enforcement for Mortgage Licensing Act of 2008
  (Pub. L. No. 110-289).
         (c) [(d)]  To be eligible to be licensed as a residential
  mortgage loan originator, an employee of a mortgage banker, in
  addition to the requirements of Subsection (a) [(b)], must:
               (1)  satisfy the commissioner as to the employee's good
  moral character, including the employee's honesty,
  trustworthiness, and integrity;
               (2)  not be in violation of this chapter, Chapter 180,
  or any rules [a rule] adopted under this chapter or Chapter 180;
  [and]
               (3)  provide the commissioner with satisfactory
  evidence that the employee meets the qualifications provided by
  Chapter 180; and
               (4)  be a citizen of the United States or a lawfully
  admitted alien.
         (d)  A mortgage banker employee who is not a residential
  mortgage loan originator is not required to enroll with the
  Nationwide Mortgage Licensing System and Registry or be licensed
  under this chapter.
         SECTION 52.  Subsection (b), Section 157.013, Finance Code,
  is amended to read as follows:
         (b)  An application for a residential mortgage loan
  originator license must be accompanied by an application fee in an
  amount determined by the commissioner, not to exceed $500, and by a
  recovery fund fee in an amount determined by the commissioner, not
  to exceed $20.
         SECTION 53.  The heading to Section 157.016, Finance Code,
  is amended to read as follows:
         Sec. 157.016.  REINSTATEMENT [RENEWAL] AFTER EXPIRATION OF
  LICENSE; NOTICE.
         SECTION 54.  Section 157.019, Finance Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  A mortgage banker employee who is a residential mortgage
  loan originator shall notify the commissioner or authorized
  designee in writing of a change of sponsorship.  The notice must be
  accompanied by a fee of $25.
         SECTION 55.  Section 157.020, Finance Code, is amended to
  read as follows:
         Sec. 157.020.  MORTGAGE [ANNUAL] CALL REPORT. (a)  Each
  mortgage banker shall file a mortgage [an annual] call report with
  the commissioner or the commissioner's authorized designee on a
  form prescribed by the commissioner or authorized designee. The
  report must be filed as frequently as required by the Nationwide
  Mortgage Licensing System and Registry.  The report is a statement
  of condition of the mortgage banker and the mortgage banker's
  operations, including financial statements and production activity
  volumes, and any other similar information required by the
  Nationwide Mortgage Licensing System and Registry.
         (b)  The information contained in the mortgage call report
  related to residential mortgage loan origination volume or other
  trade information is confidential and may not be disclosed by the
  commissioner, the commissioner's [or] authorized designee, or any
  other employee of the Department of Savings and Mortgage Lending.
         SECTION 56.  Chapter 157, Finance Code, is amended by adding
  Section 157.0201 to read as follows:
         Sec. 157.0201.  RECOVERY FUND. The recovery fund
  established, administered, and maintained under Section 13.016 and
  Subchapter F, Chapter 156, shall be used as provided by Subchapter
  F, Chapter 156, to reimburse residential mortgage loan applicants
  for actual damages incurred because of acts committed by
  residential mortgage loan originators licensed under this chapter
  when the act was committed.
         SECTION 57.  Subsections (a) and (b), Section 157.023,
  Finance Code, are amended to read as follows:
         (a)  The commissioner, after notice and opportunity for a
  hearing, may impose an administrative penalty on an individual who
  is [a person] licensed or required to be licensed under this chapter
  as a residential mortgage loan originator and [under this chapter]
  who violates this chapter or a rule or order adopted under this
  chapter.
         (b)  The amount of the penalty may not exceed $25,000 for
  each violation [$2,500, and each day a violation continues or
  occurs is a separate violation for the purpose of imposing a
  penalty].  The amount shall be based on:
               (1)  the seriousness of the violation, including the
  nature, circumstances, extent, and gravity of the violation;
               (2)  the economic harm to property caused by the
  violation;
               (3)  the history of previous violations;
               (4) [(3)]  the amount necessary to deter a future
  violation;
               (5) [(4)]  efforts to correct the violation; and
               (6) [(5)]  any other matter that justice may require.
         SECTION 58.  Section 157.024, Finance Code, is amended by
  amending Subsection (j) and adding Subsection (l) to read as
  follows:
         (j)  An order revoking the license of a residential mortgage
  loan originator may provide that the person is prohibited, without
  previously obtaining written consent of the commissioner, from:
               (1)  engaging in the business of originating or making
  residential mortgage loans, as defined by Section 180.002;
               (2)  otherwise affiliating with a person for the
  purpose of engaging in the business of originating or making
  residential mortgage loans, as defined by Section 180.002; and
               (3)  being an employee, officer, director, manager,
  shareholder, member, agent, contractor, or processor of a mortgage
  banker, residential mortgage loan company [mortgage broker], or
  residential mortgage loan originator for a residential mortgage
  loan company [mortgage broker loan officer].
         (l)  The commissioner may, in the commissioner's discretion,
  rescind or vacate any previously issued order.
         SECTION 59.  Chapter 157, Finance Code, is amended by adding
  Section 157.0241 to read as follows:
         Sec. 157.0241.  REVOCATION OR SUSPENSION OF LICENSE FOR
  PAYMENT FROM RECOVERY FUND. (a)  The commissioner may revoke or
  suspend a license issued under this chapter on proof that the
  commissioner has made a payment from the recovery fund of any amount
  toward satisfaction of a claim against a residential mortgage loan
  originator licensed under this chapter.
         (b)  The commissioner may seek to collect from a residential
  mortgage loan originator the amount paid from the recovery fund on
  behalf of the residential mortgage loan originator and any costs
  associated with investigating and processing the claim against the
  recovery fund or with collection of reimbursement for payments from
  the recovery fund, plus interest at the current legal rate until the
  amount has been repaid in full.  Any amount, including interest,
  recovered by the commissioner shall be deposited to the credit of
  the recovery fund.
         (c)  The commissioner may probate an order revoking or
  suspending a license under this section.
         (d)  A person on whose behalf payment was made from the
  recovery fund is not eligible to receive a new license or have a
  suspension lifted under this chapter until the person has repaid in
  full, plus interest at the current legal rate, the amount paid from
  the recovery fund on the person's behalf and any costs associated
  with investigating and processing the claim against the recovery
  fund or with collection of reimbursement for payments from the
  recovery fund.
         (e)  This section does not limit the authority of the
  commissioner to take disciplinary action against a residential
  mortgage loan originator for a violation of this chapter or the
  rules adopted by the finance commission under this chapter.  The
  repayment in full to the recovery fund of all obligations of a
  residential mortgage loan originator does not nullify or modify the
  effect of any other disciplinary proceeding brought under this
  chapter.
         SECTION 60.  Subdivision (19), Section 180.002, Finance
  Code, is amended to read as follows:
               (19)  "Residential mortgage loan originator":
                     (A)  means an individual who for compensation or
  gain or in the expectation of compensation or gain:
                           (i)  takes a residential mortgage loan
  application; or
                           (ii)  offers or negotiates the terms of a
  residential mortgage loan; and
                     (B)  does not include:
                           (i)  an individual who performs solely
  administrative or clerical tasks on behalf of an individual
  licensed as a residential mortgage loan originator or exempt from
  licensure under Section 180.003, except as otherwise provided by
  Section 180.051;
                           (ii)  an individual who performs only real
  estate brokerage activities and is licensed or registered by the
  state as a real estate broker or salesperson, unless the individual
  is compensated by:
                                 (a)  a lender[, mortgage broker,] or
  other residential mortgage loan originator; or
                                 (b)  an agent of a lender[, mortgage
  broker,] or other residential mortgage loan originator;
                           (iii)  an individual licensed under Chapter
  1201, Occupations Code, unless the individual is directly
  compensated for arranging financing for activities regulated under
  that chapter by:
                                 (a)  a lender[, mortgage broker,] or
  other residential mortgage loan originator; or
                                 (b)  an agent of a lender[, mortgage
  broker,] or other residential mortgage loan originator;
                           (iv)  an individual who receives the same
  benefits from a financed transaction as the individual would
  receive if the transaction were a cash transaction; or
                           (v)  an individual who is involved solely in
  providing extensions of credit relating to timeshare plans, as
  defined by 11 U.S.C. Section 101(53D).
         SECTION 61.  Section 180.003, Finance Code, is amended to
  read as follows:
         Sec. 180.003.  EXEMPTION. (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:
                     [(A)     is an exclusive agent of a registered
  financial services company;
                     [(B)     is exempt from regulation under Chapter 156
  as provided by Section 156.202(5); and
                     [(C)     is individually enrolled as a registered
  mortgage loan originator with the Nationwide Mortgage Licensing
  System and Registry;
               [(5)]  an individual who offers or negotiates terms of
  a residential mortgage loan secured by a dwelling that serves as the
  individual's residence; [and]
               (5) [(6)]  a nonprofit organization 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;
               (6)  an owner of residential real estate who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans 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
               (7)  an owner of a dwelling who in any
  12-consecutive-month period makes no more than five residential
  mortgage loans 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.
         (b)  An individual is exempt from this chapter, other than
  Section 180.171, if the individual:
               (1)  in any 12-consecutive-month period originates
  five or fewer closed residential mortgage loans exclusively for a
  single federally chartered depository institution and the loans are
  closed within that period;
               (2)  is contractually prohibited from soliciting,
  processing, negotiating, or placing a residential mortgage loan
  with a person other than the depository institution described by
  Subdivision (1); and
               (3)  is sponsored by a life insurance company, or an
  affiliate of the company, authorized to engage in business in this
  state.
         (c)  The finance commission may grant an exemption from the
  licensing requirements of this chapter to a municipality, county,
  community development corporation, or public or private grant
  administrator to the extent the entity is administering the Texas
  HOME Investment Partnerships program if the commission determines
  that granting the exemption is not inconsistent with the intentions
  of the federal Secure and Fair Enforcement for Mortgage Licensing
  Act of 2008 (Pub. L. No. 110-289).
         SECTION 62.  Section 180.056, Finance Code, is amended by
  adding Subsection (h) to read as follows:
         (h)  An individual who fails to maintain a residential
  mortgage loan originator license for at least five consecutive
  years must retake the prelicensing education requirements
  prescribed by the S.A.F.E. Mortgage Licensing Act.
         SECTION 63.  Chapter 180, Finance Code, is amended by adding
  Subchapter D-1 to read as follows:
  SUBCHAPTER D-1.  REQUIREMENT FOR INDIVIDUALS ORIGINATING
  RESIDENTIAL MORTGAGE LOANS EXCLUSIVELY FOR CERTAIN DEPOSITORY
  INSTITUTION
         Sec. 180.171.  ENROLLMENT WITH DEPARTMENT OF SAVINGS AND
  MORTGAGE LENDING.  (a)  This section applies only to an individual
  who:
               (1)  in any 12-consecutive-month period originates
  five or fewer residential mortgage loans exclusively for a single
  federally chartered depository institution and the loans are closed
  within that period;
               (2)  is contractually prohibited from soliciting,
  processing, negotiating, or placing a residential mortgage loan
  with a person other than the depository institution described by
  Subdivision (1); and
               (3)  is sponsored by a life insurance company, or an
  affiliate of the company, authorized to engage in business in this
  state.
         (b)  Before conducting business in this state with respect to
  a residential mortgage loan, an individual to whom this section
  applies must enroll as a financial exclusive agent with the
  Department of Savings and Mortgage Lending until the time any
  registration with the Nationwide Mortgage Licensing System and
  Registry is required for the individual by federal law or
  regulation and a suitable category is created for that registration
  with that nationwide registry.
         (c)  An enrollment under this section must be renewed
  annually.
         (d)  An individual required under this section to enroll as a
  financial exclusive agent shall pay to the savings and mortgage
  lending commissioner an annual fee in an amount not to exceed $40 as
  prescribed by the commissioner.
         SECTION 64.  Section 342.051, Finance Code, is amended by
  adding Subsection (c-1) to read as follows:
         (c-1)  A person who is licensed or registered under Chapter
  156 or 157 is not required to obtain a license under this section to
  make, negotiate, or transact a residential mortgage loan, as
  defined by Section 180.002.
         SECTION 65.  (a)  The following provisions of the Finance
  Code are repealed:
               (1)  Subdivisions (4), (5), (6), (9), and (10), Section
  156.002;
               (2)  Section 156.2011;
               (3)  Subsection (a), Section 156.2015;
               (4)  Subsection (b), Section 156.202;
               (5)  Section 156.204;
               (6)  Section 156.2071;
               (7)  Subsections (f), (g), (h), and (i), Section
  156.208;
               (8)  Subsections (d) and (e), Section 156.2081;
               (9)  Subsections (e), (f), and (g), Section 156.214;
               (10)  Section 156.215;
               (11)  Subsections (b-1), (c), and (d), Section 157.003;
               (12)  Subsection (b), Section 157.009;
               (13)  Subsection (d), Section 157.016;
               (14)  Section 157.018; and
               (15)  Subsection (f), Section 342.051.
         (b)  Section 156.213, Finance Code, as added by Chapter 407
  (H.B. 1493), Acts of the 77th Legislature, Regular Session, 2001,
  is repealed.
         SECTION 66.  The provisions of this Act or the applications
  of those provisions are severable as provided by Subsection (c),
  Section 311.032, Government Code. If the secretary of the United
  States Department of Housing and Urban Development or the director
  of the federal Bureau of Consumer Financial Protection by final
  administrative decision determines that any provision of this Act
  or application of this Act to any person or circumstance is
  considered to be inconsistent with or in conflict with the federal
  Secure and Fair Enforcement for Mortgage Licensing Act of 2008
  (Pub. L. No. 110-289), or any rules or regulations adopted under
  that federal Act, that provision of this Act shall be held invalid;
  however, the remainder of this Act or the application of the
  provision to other persons or circumstances is not affected.
         SECTION 67.  To the extent of any conflict, this Act prevails
  over another Act of the 82nd Legislature, Regular Session, 2011,
  relating to nonsubstantive additions to and corrections in enacted
  codes.
         SECTION 68.  (a)  Except as provided by Subsection (b) of
  this section, this Act takes effect September 1, 2011.
         (b)  Section 180.171, Finance Code, as added by this Act,
  takes effect November 1, 2011.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1124 passed the Senate on
  March 31, 2011, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendments on May 25, 2011, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1124 passed the House, with
  amendments, on May 23, 2011, by the following vote: Yeas 146,
  Nays 0, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor