Amend CSHB 1188 by adding the following appropriately
numbered sections to the bill and renumbering subsequent sections
of the bill accordingly:
SECTION ____. Chapter 20, Title 132, Revised Statutes, is
amended by adding Article 9001 to read as follows:
Art. 9001. MORTGAGE BROKER REGISTRATION
Sec. 1. DEFINITIONS. In this article:
(1) "Commissioner" means the consumer credit
commissioner.
(2) "Mortgage" means a lien interest against real
estate created by a deed of trust, security deed, or other
instrument for debt.
(3) "Mortgage applicant" means a person who is
solicited to purchase or who purchases the services of a mortgage
broker.
(4) "Mortgage banker" means any person who makes,
services, or buys and sells mortgage loans with the person's own
funds.
(5) "Mortgage broker" means a person who, for
compensation, obtains or sells for another person a one-to-four
family residential mortgage or a person who, for compensation,
receives for another person an application from a prospective
borrower and places or attempts to place the application with a
mortgage banker or other lender for purposes of making a
one-to-four family residential mortgage. The term does not include
a person who delivers an application and other loan information for
a mortgage loan to a mortgage broker either on behalf of or at the
instruction of the prospective borrower.
(6) "Registrant" means a person who has been issued a
certificate of registration under this article.
Sec. 2 CERTIFICATE OF REGISTRATION REQUIREMENT. (a) A
person may not act as a mortgage broker in connection with an
extension of credit described by Section (a)(6), Article XVI, Texas
Constitution, without first having obtained a certificate of
registration from the commissioner for the person's main office and
for each other office to be maintained by the person for the
transaction of business as a mortgage broker in this state.
(b) An employee of a registrant is not required to obtain a
certificate of registration.
(c) A certificate of registration is not required for:
(1) 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;
(2) a state or federal credit union;
(3) a lender approved by a secretary of housing and
urban development for participation in a mortgage insurance program
under the National Housing Act, as amended (12 U.S.C. Section 1701
et seq.);
(4) a mortgage banker; or
(5) a person licensed under Chapter 3, Title 79,
Revised Statutes (Article 5069-3.01 et seq., Vernon's Texas Civil
Statutes), who makes, negotiates, or arranges a secondary mortgage
loan.
Sec. 3. APPLICATION FOR CERTIFICATE OF
REGISTRATION. (a) An application for a certificate of
registration as a mortgage broker must be in writing, under oath,
and in the form prescribed by the commissioner. The application
must be accompanied by an application fee of $150 for each office
location to be maintained by the applicant.
(b) The application fee is not refundable.
(c) If the applicant is a corporation or partnership, one of
the shareholders or partners, as appropriate, must be named in the
application as the person responsible for managing the operations
of the location or locations where business is to be transacted.
Sec. 4. QUALIFICATIONS. To be eligible for a certificate of
registration, a mortgage broker must:
(1) have at least one of the following minimum levels
of education, certification, or experience:
(A) an associate's degree in an area relating to
finance, banking, or business administration from an accredited
college or university, including an accredited community technical
college;
(B) the residential mortgage lender or certified
mortgage consultant certification, issued by the National
Association of Mortgage Brokers, or other certification similar in
scope and relevance;
(C) a real estate broker or salesman license
under The Real Estate License Act (Article 6573a, Vernon's Texas
Civil Statutes);
(D) an attorney licensed in this state;
(E) a certificated public accountant licensed in
this state; or
(F) three years of experience:
(i) in the mortgage and lending field,
which may include employment with or as a mortgage broker or with a
financial institution, mortgage lending institution, or other
lending institution; or
(ii) that the commissioner determines
meets a minimum comparable standard for education and experience;
(2) demonstrate evidence of compliance with the
financial requirements of this article; and
(3) have the financial responsibility, experience,
character, and general fitness to command the confidence of the
public and warrant the belief that the business will be operated
honestly and fairly in compliance with the purposes of this
article.
Sec. 5. MINIMUM NET ASSETS. (a) A registrant that
conducts business as a mortgage broker shall maintain net assets of
at least $25,000 and a surety bond in the amount of at least
$25,000 or a surety bond in the amount of at least $50,000. The
term of the surety bond must coincide with the term of the
certificate of registration.
(b) This section does not apply to a registrant who is
licensed to practice law in the state.
(c) In this section, "net assets" means the difference
between total assets and total indebtedness, as determined by
generally accepted accounting principles, except that assets of
doubtful of uncertain value are disallowed.
Sec. 6. CRIMINAL HISTORY RECORD INFORMATION. (a) On the
filing of the application and payment of the application fee by the
applicant, the commissioner is entitled to obtain from the
Department of Public Safety criminal history record information
maintained by the department that relates to a person who is an
applicant for a certificate of registration.
(b) Criminal history record information obtained under this
section is confidential and may not be released or disclosed to any
person except on court order or with the consent of the person who
is the subject of the criminal history record information.
Sec. 7. ISSUANCE OF CERTIFICATE OF REGISTRATION. (a) The
commissioner shall issue a certificate of registration to a person
who applies for the certificate not later than the 30th day after
the date of receipt of a completed application unless the
commissioner has reason to believe that the eligibility
requirements of the article are not satisfied or the applicant's
financial responsibility, experience, character, and general
fitness do not command the confidence of the public and warrant the
belief that the business will be operated honestly and fairly in
compliance with the purposes of this article.
(b) The commissioner shall notify an applicant in writing if
the application is denied. An applicant may appeal the decision by
submitting a written request for a hearing not later than the 30th
day after the date of the decision.
(c) A certificate or registration issued under this article
may be renewed annually on or before its expiration date by payment
of a renewal fee of $150 for each location of an office to be
maintained by the applicant and a finding by the commissioner that
the applicant meets the conditions set forth by Subsection (a) of
this section and that the applicant's certificate of registration
is not subject to an order of suspension or revocation by the
commissioner. If a renewal fee is submitted to the commissioner
after the registration expires but before the 181st day after the
expiration date of the registration, the fee must be accompanied by
a late renewal fee of $100 for each location of an office
maintained by the applicant for which the renewal fee is late.
(d) Before the 30th day preceding the effective date of an
address change, a registrant shall notify the commissioner in
writing of the new address. If a registrant intends to move the
business to a location outside the municipality in which it is
located, a new application must be filed accompanied by the
application fee and the relocation fee of $15 and a new certificate
must be obtained before conducting business at the new location.
(e) An application, renewal, late renewal, or relocation fee
may not be refunded after a certificate of registration has been
issued or renewed.
(f) A certificate of registration issued under this article
is not transferable and may not be assigned. Ownership or control
of a registrant may not change without the approval of the
commissioner.
Sec. 8. INVESTIGATION AND INSPECTION OF RECORDS. (a) On
receipt of a written complaint or other probable cause to believe
that a person is violating a provision of state law to which this
article applies, the commissioner may request the person to furnish
information and records relating to a transaction or business
practice alleged to be in violation of the law. If a person fails
to comply with a request, the commissioner may conduct an
investigation to determine whether a violation has occurred.
(b) All information obtained by the commissioner or an
employee or other agent of the commissioner by reason of the
person's official position, including information obtained in the
course of inspecting or investigating an applicant for a
certificate of registration, is confidential. That information
remains confidential for all purposes except for lawful use by the
commissioner regarding the affairs of the registrant or in
connection with criminal proceedings.
Sec. 9. PROHIBITIONS. A registrant or applicant for a
certificate of registration under this article may not:
(1) obtain a certification of registration through a
false or fraudulent representation or make a substantial
misrepresentation in a registration application;
(2) publish or cause to be published an advertisement
that is misleading, is likely to deceive the public, or in any
manner tends to create a misleading impression because it fails to
identify as a registrant the person causing the advertisement to
be published;
(3) engage in conduct that constitutes improper,
fraudulent, or dishonest dealings;
(4) fail to notify the commissioner if the registrant
or applicant, in a court of competent jurisdiction of this state or
another state or in a federal court, is convicted of or enters a
plea of guilty or nolo contendere to a felony or a criminal offense
involving fraud;
(5) fail to use fees collected in advance of closing
for the purposes for which the fees were paid; or
(6) charge or receive, directly or indirectly, a fee
for assisting a mortgage applicant in obtaining a mortgage until
all of the services that the registrant has agreed to perform for
the mortgage applicant are completed, and the proceeds of the
mortgage loan have been disbursed to or on behalf of the mortgage
applicant except as provided by Section 10 of this article.
Sec. 10. FEE ASSESSMENT AND DISCLOSURE. (a) Before
completion of all services, a registrant may charge and receive,
unless prohibited by law, the following fees for services in
assisting a mortgage applicant to obtain a mortgage:
(1) a fee to obtain a credit report;
(2) a fee for the appraisal of the real estate;
(3) a fee paid directly by the mortgage applicant to a
state or federal governmental agency or instrumentality for
processing a mortgage application relating to a
government-sponsored or guaranteed mortgage program; or
(4) subject to Subsection (b) of this section, fees
for locking in an interest rate, issuing a commitment letter, and
processing a loan or a loan application in connection with
obtaining refinancing a mortgage loan.
(b) A registrant may not charge and receive a fee for
locking in an interest rate, issuing a commitment letter, or
processing a loan or a loan application unless there is a written
agreement signed by the mortgage applicant and registrant that
contains:
(1) the expiration date of the locked-in interest
rate;
(2) the principal amount of the mortgage loan;
(3) the term of the mortgage loan;
(4) an identification of the property;
(5) the initial interest rate;
(6) the discount or points to be paid;
(7) the amounts and payment terms of the fee for the
locked-in interest rate and commitment fee;
(8) a statement of whether a fee described by
Subdivision (7) of this subsection is refundable and, if so, the
terms and conditions necessary to obtain the refund; and
(9) sources and amount or computation of amount to be
paid to a mortgage broker by a person other than the mortgage
applicant.
(c) If a fee is paid by a mortgage applicant for the
performance of the service described by Subsection (a)(2) of this
section and the registrant is unable to assist in obtaining a
mortgage for the mortgage applicant, the registrant shall return to
the mortgage applicant the original documents prepared by the bona
fide third party at the time that the request for the mortgage is
refused or denied.
(d) For purposes of this section, "bona fide third party"
means a person who is not an employee of, related to , or
affiliated with the registrant and who is not used for the purpose
of circumvention or evasion of this section.
Sec. 11. SUSPENSION, REVOCATION, OR REFUSAL OF LICENSE;
INVESTIGATION; CEASE AND DESIST ORDERS. (a) After notice and
opportunity for a hearing, the commissioner may suspend, revoke, or
refuse to issue or renew a certificate of registration if the
commissioner finds:
(1) the registrant has failed to pay a fee or charge
properly imposed by the commissioner under this article;
(2) the registrant, knowingly or without the exercise
of due care, has violated a provision of this article or a rule or
order made under this article;
(3) the existence of a fact or condition that clearly
would have justified the commissioner in refusing to issue the
certificate of registration, if the fact or condition existed at
the time the original applicant for the certificate of registration
was made;
(4) the registrant has aided, abetted, or conspired
with a person to circumvent the requirements of this article;
(5) the financial responsibility, experience,
character, or general fitness of the registrant or the registrant's
owners and managers does not command the confidence of the public
or warrant the belief that the business will be operated lawfully,
fairly, and within the purposes of this article; or
(6) the registrant has failed to maintain the minimum
financial requirements of this article.
(b) The commissioner may investigate alleged violations of
the article, or the rules adopted under this article, and
complaints concerning those alleged violations. The commissioner
may make application to any state district court for an order
enjoining such a violation and, on a showing by the commissioner
that a person has committed or is about to commit such a violation,
the court shall grant an injunction, restraining order, or other
appropriate relief.
(c) In the course of an investigation, the commissioner by
subpoena may compel the attendance and testimony of witnesses and
the production of any book, record, or other document. The
commissioner is entitled to examine the book, record, or other
document at the registrant's office or place of business and to
require that copies of the book, record, or other document relating
to the matter in question be made as considered necessary. The
copies must be verified by affidavit of the person or an officer of
the person who is the subject of the document. When certified by
the commissioner, the copies may be admissible in evidence in an
investigation or hearing under this article or other law to which
this article applies or an appeal to district court. For this
purpose, the commissioner may sign subpoenas, administer oaths and
affirmations, examine witnesses, and receive evidence.
(d) If a person fails to obey a subpoena, the district court
that has jurisdiction over the witness, on application by the
commissioner, may issue an order compelling a person to obey the
subpoena or to testify or produce any book, record, or other
document relating to the matter. The filing of an application to
enforce a subpoena shall be treated by the district court in the
same manner as a motion filed in a civil suit pending in the court.
The district court shall set the application for hearing and notice
of the filing of the application, and the hearing shall be served
on the person to whom the subpoena is directed.
(e) If the commissioner determines that a person is engaged
in, or is believed to be engaged in, activities that may constitute
a violation of this article, the commissioner, after notice and a
hearing, may issue a cease and desist order.
Sec. 12. CIVIL ACTIONS; INJUNCTIVE RELIEF; CRIMINAL
PROSECUTIONS. (a) A mortgage applicant injured by a violation of
this article may bring an action for recovery of damages and
reasonable attorney's fees and court costs.
(b) The commissioner, the attorney general, or a mortgage
applicant may bring an action to enjoin a violation of this
article.
(c) The remedies provided by this section are in addition to
any other remedy provided by law.
(d) In a proceeding or action brought under this article the
burden of proving an exemption is on the person claiming the
benefit of the exemption.
(e) A person does not violate this article with respect to
an act taken or omission made in reliance on a written notice,
written interpretation, or written report from the commissioner,
unless a subsequent amendment to the article or rules adopted under
the article affect the commissioner's notice, interpretation, or
report.
(f) On disbursement of mortgage proceeds to or on behalf of
the mortgage applicant, the registrant that assisted the mortgage
applicant to obtain the mortgage is considered to have completed
the performance of the registrant's services for the mortgage
applicant and owes no additional duties or obligations to the
mortgage applicant with respect to the mortgage. This subsection
does not limit or preclude the liability of a registrant for
failing to comply with this article or a rule adopted under this
article, for failing to comply with a provision of or duty arising
under an agreement with a mortgage applicant or lender under this
article, or for violating any other state or federal law.
Sec. 13. RULEMAKING POWERS. (a) The commissioner may adopt
rules consistent with a necessary to accomplish the purposes of
this article, including rules relating to:
(1) improper or fraudulent business practices or other
acts harmful to consumers in this state; and
(2) the interpretation, implementation, and
enforcement of this article.
(b) The commissioner may adopt rules to prohibit false,
misleading, or deceptive practices by registrants but may not adopt
any other rules restricting competitive bidding or advertising by
registrants. In adopting rules to prohibit false, misleading, or
deceptive practices by registrants, the commissioner may not
restrict:
(1) the use of any medium for advertising;
(2) the personal appearance of or voice of a person in
an advertisement;
(3) the size or duration of an advertisement; or
(4) the registrant's advertisement under a trade name.
(c) The commissioner by rule shall provide for proportionate
recovery from registrants of the cost of applications, renewals,
and investigation.
(d) The commissioner may not adopt rules that impose
additional qualifications or requirements for the issuance or
renewal of a certificate of registration.
Sec. 14. ACCOUNT. (a) The commissioner shall deliver all
money received under this article to the comptroller for deposit in
a special account in the general revenue fund.
(b) Money in the account may be used only to administer this
article.
Sec. 15. EFFECT ON TEXAS CREDIT SERVICES ORGANIZATIONS
ACT. A registrant is exempt from the requirements of Chapter 18,
Business & Commerce Code, to the extent that the registrant does
not charge a fee for any service regulated under that chapter.
Sec. 16. SECONDARY MARKET TRANSACTIONS. This article does
not prohibit a 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, provided that the compensation is disclosed in writing
to the mortgage applicant.
SECTION ____. A person is not required to be registered
under Article 9001, Revised Statutes, as added by this Act, before
January 1, 1998.