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House Bill 2774 |
House Author: Truitt |
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Effective: See below |
Senate Sponsor: Wentworth |
House Bill 2774 amends the Finance Code to add provisions relating to the self-directed and semi-independent status of state financial regulatory agencies and to revise provisions relating to the licensing and regulation of certain persons involved in residential mortgage lending. House Bill 2774 establishes that state financial regulatory agencies--the Texas Department of Banking (DOB), Office of Consumer Credit Commissioner (OCCC), Department of Savings and Mortgage Lending (DSML), and Credit Union Department (CUD)--are self‑directed and semi-independent agencies. The bill establishes that the Finance Commission of Texas is the policy-making body for DOB, DSML, and OCCC, and the Credit Union Commission is the policy-making body for CUD. The bill provides that only those policy‑making bodies are authorized to adopt the annual budget for each financial regulatory agency under their control, each agency is responsible for its costs of operation, and an agency is prohibited from causing the general revenue fund to incur any cost. The bill authorizes an agency to set amounts of fees, penalties, charges, and revenues necessary to carry out its purpose, requires that such funds be deposited in an account in the Texas Treasury Safekeeping Trust Company, and requires the comptroller of public accounts to contract with the agency for the maintenance of the deposit accounts. The bill removes the agencies from the legislative budgeting process.
House Bill 2774 requires the state auditor to enter into a contract and schedule with each agency to conduct audits and requires the agency to reimburse the state auditor for all costs incurred in performing the audits and to provide to the governor a copy of any audit performed. The bill sets forth recording and reporting requirements for financial regulatory agencies relating to the maintenance of financial and statistical information, including the submission of biennial and annual reports to the governor and the legislature describing all of the agency's financial activities and certain other information for specified periods of time. The bill authorizes a financial regulatory agency to enter into contracts and prohibits those contracts from creating a debt or liability to Texas, another entity, the agency's policy-making body, or employees of the agency or body, and it sets forth provisions relating to the authority of such an agency to acquire and sell property.
House Bill 2774 requires the office of the attorney general to represent a financial regulatory agency in any litigation and authorizes the attorney general to assess and collect from the agency reasonable attorney's fees associated with any litigation. The bill provides that a financial regulatory agency is a governmental body for the purposes of statutory open meetings and public information provisions and is a state agency for the purposes of the Administrative Procedure Act and miscellaneous statutory provisions relating to state licenses and permits. The bill provides that an agency employee is a member of the Employees Retirement System of Texas and that the agencies' transition to independent status has no effect on employee membership or any benefits under that system. The bill prohibits a financial regulatory agency from accepting a gift, grant, or donation from a party to an enforcement action or to pursue a specific investigation or enforcement action, and sets forth requirements relating to the reporting of gifts, grants, or donations.
House Bill 2774 requires the finance commission to have charge and control of the Finance Commission Building and use of staff, equipment, and facilities of the finance agencies and sets forth the deed specifications of those properties. The bill requires the Credit Union Commission to have charge and control of the Credit Union Department Building and use of staff, equipment, and facilities of the department and sets forth the deed specifications of those properties.
House Bill 2774 appropriates to each financial regulatory agency certain amounts out of the general revenue fund for the two-year period following September 1, 2009, and authorizes expenditures of the appropriation as the financial regulatory agency directs. The bill requires the agency to repay the amount of the appropriation to the general revenue fund according to a certain timetable. The bill prohibits the transfer of an agency to self-directed and semi‑independent status and the expiration of self-directed and semi-independent status from canceling, suspending, or preventing any debt owed to or by the agency; any fine, tax, penalty, or obligation of any party; any contract or other obligation of any party; or any action taken by the agency in the administration or enforcement of the agency's duties. The bill requires each financial regulatory agency to continue to exercise the powers and duties granted to the agency in the agency's enabling legislation, establishes that title to all supplies, materials, records, equipment, books, papers, and facilities used by each financial regulatory agency is transferred to each respective agency in fee simple, and provides for the severability of the bill's provisions.
House Bill 2774 requires the savings and mortgage lending commissioner to participate in the Nationwide Mortgage Licensing System and Registry as provided by the Texas Secure and Fair Enforcement (S.A.F.E.) for Mortgage Licensing Act of 2009. The bill authorizes the finance commission to adopt rules as required to carry out the intentions of the federal S.A.F.E. for Mortgage Licensing Act of 2008 and, on the commissioner's recommendation, to adopt rules to promote a fair and orderly administration of the mortgage broker recovery fund consistent with the purposes of the Mortgage Broker License Act.
House Bill 2774 changes the name of the mortgage broker advisory committee to the mortgage industry advisory committee, requires the savings and mortgage lending commissioner to appoint all six members to the committee, and revises the composition and duties of the committee. The bill authorizes the commissioner to collect a maximum $50 fee for any returned check or credit card charge back. The bill revises provisions relating to the eligibility for obtaining a license as a mortgage broker and a loan officer from DSML.
House Bill 2774 provides that the financial requirements for holding a mortgage broker or loan officer license must be met through participation in the mortgage broker recovery fund and removes provisions requiring a mortgage broker to maintain net assets or a surety bond in specified amounts as a financial requirement. The bill specifies that the license term is for a maximum of two years, provides as one of the alternative conditions for eligibility for renewal of such licenses that the licensee maintain specified licensure in Texas under the Insurance Code, and increases from $175 to $275 the license renewal fee for a loan officer's license. The bill adds to the grounds on which the commissioner may deny the renewal of a mortgage broker license or a loan officer license. The bill repeals requirements for the prominent display of a mortgage broker license certificate, a branch office certificate, or a loan officer license certificate, as applicable, in the license holder's place of business. Current law provisions relating to the renewal of a loan officer license and a mortgage broker license are set to expire January 1, 2011. On that date, new provisions relating to the renewal of those licenses take effect, capping the terms of their validity at two years and authorizing renewal on or before expiration if the mortgage broker or loan officer meets certain conditions.
House Bill 2774 sets forth new requirements for annual registration fees for a financial services company based on the number of exclusive agents the company has acting in Texas. The bill authorizes the commissioner to require reimbursement in an amount not to exceed $325 per examiner per day for onsite examination or investigation of a mortgage broker if records are located out of state or where the review is deemed necessary beyond the routine examination process. The bill sets forth hearing and notice requirements for disciplinary actions taken by the commissioner, removes a requirement that an administrative penalty collected from a person who violated a cease and desist order be deposited in the recovery fund, and authorizes the commissioner to collect and deposit court costs collected pursuant to a final order.
House Bill 2774 adds administration of the recovery fund to the commissioner's duties and clarifies that the fund is to be used only to reimburse residential mortgage loan applicants for actual damages and out-of-pocket losses stemming from acts committed by a licensed mortgage broker or loan officer that constitute a violation of certain provisions. The bill requires payments from the recovery fund to be reduced by the amount of any recovery from the mortgage broker or loan officer or from any person or entity making restitution to the applicant on behalf of the mortgage broker or loan officer, authorizes the recovery fund to be used at the commissioner's discretion 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 DSML, and entitles the commissioner, as fund manager, to reimbursement for reasonable and necessary costs and expenses incurred in the management of the fund.
House Bill 2774 changes the additional fee paid by an applicant for an original license or for a license renewal for deposit into the recovery fund from $20 to an amount determined by the commissioner, not to exceed $20. The bill requires that, if the balance remaining in the recovery fund at the end of the calendar year is more than $3.5 million, the commissioner may use the amount of money in excess to offset the expenses of participating in and sharing information with the Nationwide Mortgage Licensing System and Registry, and it repeals a provision that required transferring excess funds to the general revenue fund. The bill removes the requirement for license holders to pay an additional fee if the year-end fund balance is less than $500,000. The bill prohibits the filing of an application for the recovery of actual damages from the recovery fund after certain dates and establishes that this statute of limitations does not apply to subrogation claims brought by the commissioner for recovery of money paid out of the recovery fund.
House Bill 2774 revises the procedures by which a residential mortgage loan applicant seeks recovery from the fund. The bill requires the commissioner, in the event there are concurrent claims that exceed the limits on the amount payable for each claim, to prorate recovery based on the amount of damage suffered by each claimant.
House Bill 2774 authorizes the commissioner to seek to collect from the mortgage broker or loan officer the amount paid from the fund on behalf of the mortgage broker or loan officer and any costs associated with investigating and processing the claim or with collection of reimbursement for payments from the fund, plus interest at the current legal rate until the amount has been repaid in full. The bill requires any amount that is recovered by the commissioner to be deposited to the credit of the fund. The bill makes repayment a condition for restoring a person's eligibility to receive a new license after a revocation. The bill makes provisions regarding the commissioner's subrogation on the payment of an amount from the recovery fund applicable to an applicant for that recovery, rather than to a judgment creditor, and requires the applicant to assign all of the applicant's right, title, and interest in any subsequent judgment against the licensee up to the amount paid by the commissioner. The bill expands the conditions that constitute a waiver of rights by an applicant for reimbursement to include a failure to comply with a rule adopted by the finance commission relating to the recovery fund.
House Bill 2774 takes effect September 1, 2009, except for provisions relating to the mortgage broker advisory committee, which take effect April 1, 2010, and as otherwise provided above.