AN ACT
 1-1     relating to the licensing of mortgage brokers; providing penalties.
 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-3           SECTION 1.  Subchapter D, Chapter 11, Finance Code, is
 1-4     amended by adding Section 11.306 to read as follows:
 1-5           Sec. 11.306.  MORTGAGE BROKERS.  The finance commission may:
 1-6                 (1)  review any action or rule adopted by the savings
 1-7     and loan commissioner under Chapter 156; and
 1-8                 (2)  direct the savings and loan commissioner to adopt,
 1-9     repeal, or amend any rule or other action the savings and loan
1-10     commissioner may undertake under Chapter 156.
1-11           SECTION 2.  Subtitle E, Title 3, Finance Code, is amended by
1-12     adding Chapter 156 to read as follows:
1-13                       CHAPTER 156.  MORTGAGE BROKERS
1-14                      SUBCHAPTER A.  GENERAL PROVISIONS
1-15           Sec. 156.001.  SHORT TITLE.  This chapter may be cited as the
1-16     Mortgage Broker License Act.
1-17           Sec. 156.002.  DEFINITIONS.  In this chapter:
1-18                 (1)  "Commissioner" means the savings and loan
1-19     commissioner.
1-20                 (2)  "Disciplinary action" means an order by the
1-21     commissioner that requires one or more of the following:
1-22                       (A)  suspension or revocation of a license under
1-23     this chapter;
1-24                       (B)  probation of a suspension or revocation of a
 2-1     license under this chapter on terms and conditions that the
 2-2     commissioner determines appropriate;
 2-3                       (C)  a reprimand of a person licensed under this
 2-4     chapter; or
 2-5                       (D)  an administrative penalty imposed on a
 2-6     person licensed under this chapter under Section 156.302.
 2-7                 (3)  "Finance commission" means the Finance Commission
 2-8     of Texas.
 2-9                 (4)  "Fund" means the mortgage broker recovery fund
2-10     established by the commissioner under Subchapter F.
2-11                 (5)  "Loan officer" means an individual sponsored by a
2-12     licensed mortgage broker for the purposes of performing the acts of
2-13     a mortgage broker.  The term does not include:
2-14                       (A)  an individual who performs only clerical
2-15     functions such as delivering a loan application to a mortgage
2-16     broker or mortgage banker or gathering information related to a
2-17     mortgage loan application on behalf of the prospective borrower,
2-18     mortgage broker, or mortgage banker; or
2-19                       (B)  an individual who performs functions of a
2-20     loan processor.
2-21                 (6)  "Loan processor" means an individual who works
2-22     under the instruction of a loan officer or mortgage broker and
2-23     performs only clerical functions such as gathering information,
2-24     requesting information, word processing, sending correspondence, or
2-25     assembling files.
2-26                 (7)  "Mortgage applicant" means a person who is
 3-1     solicited to use or who uses a mortgage broker to obtain a mortgage
 3-2     loan.
 3-3                 (8)  "Mortgage banker" means a person who is:
 3-4                       (A)  approved or authorized by the United States
 3-5     Department of Housing and Urban Development as a mortgagee with
 3-6     direct endorsement underwriting authority;
 3-7                       (B)  an approved seller or servicer of the
 3-8     Federal National Mortgage Association;
 3-9                       (C)  an approved seller or servicer of the
3-10     Federal Home Loan Mortgage Association; or
3-11                       (D)  an approved issuer for the Governmental
3-12     National Mortgage Association.
3-13                 (9)  "Mortgage broker" means a person who receives an
3-14     application from a prospective borrower for the purposes of making
3-15     a mortgage loan from that person's own funds or from the funds of
3-16     another person.  The term does not include:
3-17                       (A)  a person who performs only clerical
3-18     functions such as delivering a loan application to a mortgage
3-19     broker or mortgage banker or gathering information related to a
3-20     mortgage loan application on behalf of the prospective borrower,
3-21     mortgage broker, or mortgage banker; or
3-22                       (B)  a person who performs functions of a loan
3-23     processor.
3-24                 (10)  "Mortgage loan" means a debt against real estate
3-25     secured by a first-lien security interest against one-to-four
3-26     family residential real estate created by a deed of trust, security
 4-1     deed, or other security instrument.
 4-2           Sec. 156.003.  SECONDARY MARKET TRANSACTIONS.  This chapter
 4-3     does not prohibit a mortgage broker from receiving compensation
 4-4     from a party other than the mortgage applicant for the sale,
 4-5     transfer, assignment, or release of rights on the closing of a
 4-6     mortgage transaction.
 4-7           Sec. 156.004.  DISCLOSURE TO APPLICANT.  At the time an
 4-8     applicant submits an application to a mortgage broker, the mortgage
 4-9     broker shall provide to the applicant a disclosure that specifies
4-10     the nature of the relationship between applicant and broker, the
4-11     duties the broker has to the applicant, and how the mortgage broker
4-12     will be compensated.  The commissioner, by rule, shall promulgate a
4-13     standard disclosure form to be used by the mortgage broker.
4-14           Sec. 156.005.  AFFILIATED BUSINESS ARRANGEMENTS.  Unless
4-15     prohibited by federal law, this chapter may not be construed to
4-16     prevent affiliated or controlled business arrangements or loan
4-17     origination services by or between mortgage brokers and other
4-18     professionals if the mortgage broker complies with all applicable
4-19     federal laws permitting those arrangements or services.
4-20            (Sections 156.006 to 156.100 reserved for expansion
4-21                  SUBCHAPTER B.  ADMINISTRATION PROVISIONS
4-22           Sec. 156.101.  ADMINISTRATION OF CHAPTER.  (a)  The
4-23     commissioner shall administer this chapter.
4-24           (b)  The commissioner may hire employees as necessary to
4-25     administer this chapter.  The salaries of the employees shall be
4-26     set by the commissioner in amounts not to exceed the amounts set by
 5-1     the General Appropriations Act.
 5-2           (c)  The commissioner may employ a general counsel,
 5-3     attorneys, investigators, and support staff to administer and
 5-4     enforce this chapter.
 5-5           Sec. 156.102.  RULEMAKING AUTHORITY.  (a)  Subject to review
 5-6     and compliance with the directives of the finance commission as
 5-7     provided by Section 11.306, the commissioner may adopt and enforce
 5-8     rules necessary for the intent of or to ensure compliance with this
 5-9     chapter.
5-10           (b)  The commissioner may adopt rules to prohibit false,
5-11     misleading, or deceptive practices by mortgage brokers and loan
5-12     officers but may not adopt any other rules restricting competitive
5-13     bidding or advertising by mortgage brokers or loan officers.  When
5-14     adopting rules under this subsection, the commissioner may not
5-15     restrict:
5-16                 (1)  the use of any medium for an advertisement;
5-17                 (2)  the personal appearance of or voice of a person in
5-18     an advertisement;
5-19                 (3)  the size or duration of an advertisement; or
5-20                 (4)  a mortgage broker's or loan officer's
5-21     advertisement under a trade name.
5-22           (c)  The commissioner may adopt rules regarding books and
5-23     records that a person licensed under this chapter is required to
5-24     keep, including the location at which the books and records must be
5-25     kept.
5-26           (d)  The commissioner shall consult with the mortgage broker
 6-1     advisory committee when proposing and adopting rules under this
 6-2     chapter.
 6-3           Sec. 156.103.  POWERS OF COMMISSIONER.  (a)  In addition to
 6-4     any other action, proceeding, or remedy authorized by law, the
 6-5     commissioner may institute an action in the commissioner's name to
 6-6     enjoin a violation of this chapter or a rule adopted under this
 6-7     chapter.  To sustain an action filed under this subsection, it is
 6-8     not necessary to allege or prove that an adequate remedy at law
 6-9     does not exist or that substantial or irreparable damage would
6-10     result from a continued violation of this chapter.
6-11           (b)  The commissioner is not required to provide an appeal
6-12     bond in any action or proceeding to enforce this chapter.
6-13           (c)  The commissioner may authorize specific employees to
6-14     conduct hearings and make recommendations for final decisions in
6-15     contested cases.
6-16           Sec. 156.104.  MORTGAGE BROKER ADVISORY COMMITTEE.  (a)  The
6-17     mortgage broker advisory committee is created to advise and assist
6-18     the commissioner.
6-19           (b)  The advisory committee is composed of six members to be
6-20     appointed as follows:
6-21                 (1)  the commissioner shall appoint four members, each
6-22     of whom:
6-23                       (A)  must hold a mortgage broker license;
6-24                       (B)  is actively engaged in the business of
6-25     brokering loans at the time of appointment; and
6-26                       (C)  has been primarily engaged in the business
 7-1     of brokering mortgage loans for at least two years before the
 7-2     member's appointment; and
 7-3                 (2)  the Texas Real Estate Commission shall appoint two
 7-4     members, each of whom must hold a real estate broker or salesperson
 7-5     license.
 7-6           (c)  Appointments to the advisory committee shall be made
 7-7     without regard to the sex, race, color, age, disability, religion,
 7-8     or national origin of the appointees.
 7-9           (d)  The members of the advisory committee serve for a
7-10     staggered three-year term, with the terms of two members expiring
7-11     February 1 of each year.
7-12           (e)  The advisory committee shall meet at least twice a year
7-13     at the call of the commissioner.
7-14           (f)  The commissioner may remove a member of the advisory
7-15     committee if:
7-16                 (1)  the member does not have at the time of
7-17     appointment the qualifications required by Subsection (b); or
7-18                 (2)  the commissioner determines that the member cannot
7-19     discharge the member's duties for a substantial part of the term
7-20     for which the member is appointed.
7-21           (g)  In the event of a vacancy during a term, the appointing
7-22     entity or official shall fill the vacancy for the unexpired part of
7-23     the term with a person who meets the qualifications of the vacated
7-24     position.
7-25           (h)  In addition to other powers and duties delegated to it
7-26     by the commissioner, the advisory committee shall advise the
 8-1     commissioner with respect to:
 8-2                 (1)  the proposal and adoption of rules relating to:
 8-3                       (A)  the licensing of mortgage brokers and loan
 8-4     officers;
 8-5                       (B)  the education and experience requirements
 8-6     for licensing mortgage brokers and loan officers;
 8-7                       (C)  conduct and ethics of mortgage brokers and
 8-8     loan officers;
 8-9                       (D)  continuing education for licensed mortgage
8-10     brokers and loan officers and the types of courses acceptable as
8-11     continuing education courses under this chapter; and
8-12                       (E)  the granting or denying of an application or
8-13     request for renewal for a mortgage broker license or loan officer
8-14     license;
8-15                 (2)  the form of or format for any applications or
8-16     other documents under this chapter; and
8-17                 (3)  the interpretation, implementation, and
8-18     enforcement of this chapter.
8-19           (i)  Each member of the advisory committee is entitled to a
8-20     per diem allowance and to reimbursement of travel expenses
8-21     necessarily incurred in performing functions as a member of the
8-22     committee, subject to any applicable limitation in the General
8-23     Appropriations Act.
8-24            (Sections 156.105 to 156.200 reserved for expansion)
8-25       SUBCHAPTER C.  MORTGAGE BROKER LICENSE AND LOAN OFFICER LICENSE
8-26           Sec. 156.201.  LICENSES REQUIRED.  (a)  A person may not act
 9-1     in the capacity of, engage in the business of, or advertise or hold
 9-2     that person out as engaging in or conducting the business of a
 9-3     mortgage broker in this state unless the person holds an active
 9-4     mortgage broker license or is exempt under Section 156.202.
 9-5           (b)  An individual may not act or attempt to act as a loan
 9-6     officer unless the individual at the time is:
 9-7                 (1)  licensed under this chapter;
 9-8                 (2)  sponsored by a licensed mortgage broker and acting
 9-9     for the mortgage broker; or
9-10                 (3)  exempt under Section 156.202.
9-11           (c)  Each mortgage broker licensed under this chapter is
9-12     responsible to the commissioner and members of the public for any
9-13     act or conduct performed under this chapter by the mortgage broker
9-14     or a loan officer sponsored by or acting for the mortgage broker.
9-15           Sec. 156.202.  EXEMPTIONS.  This chapter does not apply to:
9-16                 (1)  any of the following entities or an employee of
9-17     any of the following entities provided the employee is acting for
9-18     the benefit of the employer:
9-19                       (A)  a bank, savings bank, or savings and loan
9-20     association, or a subsidiary or an affiliate of a bank, savings
9-21     bank, or savings and loan association;
9-22                       (B)  a state or federal credit union;
9-23                       (C)  an insurance company licensed or authorized
9-24     to do business in this state under the Insurance Code;
9-25                       (D)  a mortgage banker; or
9-26                       (E)  an organization that qualifies for an
 10-1    exemption from state franchise and sales tax as a 501(c)(3)
 10-2    organization;
 10-3                (2)  an individual who makes a mortgage loan from the
 10-4    individual's own funds to a spouse, former spouse, or persons in
 10-5    the lineal line of consanguinity of the individual lending the
 10-6    money;
 10-7                (3)  an owner of real property who makes a mortgage
 10-8    loan to a purchaser of the property for all or part of the purchase
 10-9    price of the real estate against which the mortgage is secured; or
10-10                (4)  an individual who:
10-11                      (A)  makes a mortgage loan from the individual's
10-12    own funds;
10-13                      (B)  is not an authorized lender under Chapter
10-14    342, Finance Code; and
10-15                      (C)  does not regularly engage in the business of
10-16    making or brokering mortgage loans.
10-17          Sec. 156.203.  APPLICATION FOR A LICENSE; FEES.  (a)  An
10-18    application for a mortgage broker or loan officer license must be:
10-19                (1)  in writing;
10-20                (2)  under oath; and
10-21                (3)  on the form prescribed by the commissioner.
10-22          (b)  An application for a mortgage broker license must be
10-23    accompanied by:
10-24                (1)  an application fee in an amount determined by the
10-25    commissioner not to exceed $375; and
10-26                (2)  a recovery fund fee as provided by Section
 11-1    156.502.
 11-2          (c)  An application for a loan officer license must be
 11-3    accompanied by:
 11-4                (1)  an application fee in an amount determined by the
 11-5    commissioner not to exceed $175; and
 11-6                (2)  a recovery fund fee as provided by Section
 11-7    156.502.
 11-8          (d)  An application fee under this section is not refundable.
 11-9          Sec. 156.204.  QUALIFICATIONS.  (a)  To be eligible to be
11-10    licensed as a mortgage broker a person must:
11-11                (1)  be an individual who is at least 18 years of age;
11-12                (2)  be a citizen of the United States or a lawfully
11-13    admitted alien;
11-14                (3)  maintain a physical office in this state and
11-15    designate that office in the application;
11-16                (4)  provide the commissioner with satisfactory
11-17    evidence that the applicant satisfies one of the following:
11-18                      (A)  the person has received a bachelor's degree
11-19    in an area relating to finance, banking, or business administration
11-20    from an accredited college or university and has 18 months of
11-21    experience in the mortgage or lending field as evidenced by
11-22    documentary proof of full-time employment as a mortgage broker or
11-23    loan officer with a mortgage broker or a person exempt under
11-24    Section 156.202;
11-25                      (B)  the person is licensed in this state as:
11-26                            (i)  an active real estate broker under The
 12-1    Real Estate License Act (Article 6573a, Vernon's Texas Civil
 12-2    Statutes);
 12-3                            (ii)  an active attorney; or
 12-4                            (iii)  a local recording agent or insurance
 12-5    solicitor or agent for a legal reserve life insurance company under
 12-6    Chapter 21, Insurance Code, or holds an equivalent license under
 12-7    Chapter 21, Insurance Code; or
 12-8                      (C)  the person has three years of experience in
 12-9    the mortgage lending field as evidenced by documentary proof of
12-10    full-time employment as a loan officer with a mortgage broker or a
12-11    person exempt under Section 156.202;
12-12                (5)  demonstrate evidence of compliance with the
12-13    financial requirements of this chapter; and
12-14                (6)  not have been convicted of a criminal offense that
12-15    the commissioner determines directly relates to the occupation of a
12-16    mortgage broker under Article 6252-13c, Revised Statutes.
12-17          (b)  A mortgage broker may conduct business under a corporate
12-18    structure, partnership, or any other business form or as an
12-19    independent contractor for a corporation, partnership, or any other
12-20    business entity.  Before conducting mortgage broker activities
12-21    under, through, or for a corporation, partnership, or other
12-22    business entity, a mortgage broker must notify the commissioner, in
12-23    writing, of any corporate name, partnership name, assumed name, or
12-24    any other name under, through, or for which the mortgage broker
12-25    conducts activities for which a license is required under this
12-26    chapter.  The corporation, partnership, or other business entity
 13-1    under, through, or for which the mortgage broker conducts business
 13-2    is not required to be separately licensed as a mortgage broker
 13-3    provided that all individuals who perform mortgage broker
 13-4    activities are licensed as mortgage brokers or loan officers.  The
 13-5    commissioner shall require proof of compliance with this subsection
 13-6    at the time the mortgage broker applies for and renews a license.
 13-7          (c)  To be eligible to be licensed as a loan officer a person
 13-8    must:
 13-9                (1)  be an individual who is at least 18 years of age;
13-10                (2)  be a citizen of the United States or a lawfully
13-11    admitted alien;
13-12                (3)  designate in the application the name of the
13-13    mortgage broker sponsoring the loan officer;
13-14                (4)  provide the commissioner with satisfactory
13-15    evidence that the applicant satisfies one of the following:
13-16                      (A)  the person meets one of the requirements
13-17    described by Subsection (a)(4);
13-18                      (B)  the person has successfully completed 15
13-19    hours of education courses approved by the commissioner under this
13-20    section;
13-21                      (C)  the person has 18 months of experience as a
13-22    loan officer as evidenced by documentary proof of full-time
13-23    employment as a loan officer with a mortgage broker or a person
13-24    exempt under Section 156.202; or
13-25                      (D)  for applications received prior to January
13-26    1, 2000, the mortgage broker that will sponsor the applicant
 14-1    provides a certification under oath that the applicant has been
 14-2    provided necessary and appropriate education and training regarding
 14-3    all applicable state and federal law and regulations relating to
 14-4    mortgage loans; and
 14-5                (5)  not have been convicted of a criminal offense that
 14-6    the commissioner determines directly relates to the occupation of a
 14-7    loan officer under Article 6252-13c, Revised Statutes.
 14-8          Sec. 156.205.  FINANCIAL REQUIREMENTS FOR A MORTGAGE BROKER.
 14-9    (a)  In this section, "net assets" means the difference between
14-10    total assets and total liabilities, as determined by generally
14-11    acceptable accounting principles.
14-12          (b)  A mortgage broker must maintain net assets of at least
14-13    $25,000 or a surety bond in the amount of at least $50,000.  The
14-14    term of the surety bond must coincide with the term of the license.
14-15          (c)  The commissioner shall require proof of compliance with
14-16    this section at the time the mortgage broker applies for or renews
14-17    a license.
14-18          Sec. 156.206.  CRIMINAL BACKGROUND CHECK.  (a)  On receipt of
14-19    an application for a mortgage broker license or a loan officer
14-20    license, the commissioner shall conduct a criminal background check
14-21    of the applicant.
14-22          (b)  The commissioner shall obtain criminal history record
14-23    information on an applicant that is maintained by the Department of
14-24    Public Safety.  By rule, the commissioner may require applicants to
14-25    submit information and fingerprints necessary for the commissioner
14-26    to obtain criminal background information from the Federal Bureau
 15-1    of Investigation.  The commissioner may also obtain criminal
 15-2    history record information from any court or any local, state, or
 15-3    national governmental agency.
 15-4          (c)  The commissioner shall keep confidential any criminal
 15-5    background information obtained under this subsection and may not
 15-6    release or disclose the information unless:
 15-7                (1)  the information is a public record at the time the
 15-8    commissioner obtains the information; or
 15-9                (2)  the commissioner releases the information:
15-10                      (A)  under order from a court;
15-11                      (B)  with the permission of the applicant;
15-12                      (C)  to a person through whom the applicant is
15-13    conducting or will conduct business; or
15-14                      (D)  to a governmental agency.
15-15          Sec. 156.207.  ISSUANCE OF LICENSE CERTIFICATE; PROVISIONAL
15-16    LICENSE.  (a)  The commissioner shall issue a license certificate
15-17    to an applicant for a mortgage broker license if the commissioner
15-18    finds that the applicant meets all requirements and conditions for
15-19    the license.
15-20          (b)  When an applicant for a loan officer license has met all
15-21    requirements and conditions for the license, the commissioner shall
15-22    issue a license certificate to the mortgage broker sponsoring the
15-23    loan officer.
15-24          (c)  In accordance with any rules adopted under this
15-25    subsection, the commissioner may issue a provisional license to an
15-26    applicant if a significant delay is necessary to process the
 16-1    application, review information related to the application, or
 16-2    obtain information related to the application.  The commissioner
 16-3    may revoke a provisional license issued under this subsection on a
 16-4    ground listed under Section 156.303 or on any ground that the
 16-5    commissioner could have denied issuance of the license on the
 16-6    application.
 16-7          Sec. 156.208.  RENEWALS.  (a)  A mortgage broker license
 16-8    issued under this chapter is valid for two years and may be renewed
 16-9    on or before its expiration date if the mortgage broker:
16-10                (1)  pays to the commissioner a renewal fee in an
16-11    amount determined by the commissioner not to exceed $375 and a
16-12    recovery fund fee provided by Section 156.502;
16-13                (2)  has not been convicted of a felony the
16-14    commissioner determines is directly related to the occupation of a
16-15    mortgage broker under Article 6252-13c, Revised Statutes; and
16-16                (3)  provides the commissioner with satisfactory
16-17    evidence that the mortgage broker:
16-18                      (A)  has attended, during the term of the current
16-19    license, 15 hours of continuing education courses that the
16-20    commissioner, in accordance with the rules adopted under this
16-21    section, has approved as continuing education courses; or
16-22                      (B)  maintains an active license in this state
16-23    as:
16-24                            (i)  a real estate broker;
16-25                            (ii)  a real estate salesperson;
16-26                            (iii)  an attorney; or
 17-1                            (iv)  a local recording agent or insurance
 17-2    solicitor or agent for a legal reserve life insurance company under
 17-3    Chapter 21, Insurance Code, or an equivalent license under Chapter
 17-4    21, Insurance Code.
 17-5          (b)  A loan officer license issued under this chapter is
 17-6    valid for two years and may be renewed on or before its expiration
 17-7    date if the loan officer:
 17-8                (1)  pays to the commissioner a renewal fee in an
 17-9    amount determined by the commissioner not to exceed $175 and a
17-10    recovery fund fee provided by Section 156.502;
17-11                (2)  has not been convicted of a felony the
17-12    commissioner determines is directly related to the occupation of a
17-13    loan officer under Article 6252-13c, Revised Statutes; and
17-14                (3)  provides the commissioner with satisfactory
17-15    evidence that the loan officer:
17-16                      (A)  has attended, during the term of the current
17-17    license, 15 hours of continuing education courses that the
17-18    commissioner, in accordance with the rules adopted under this
17-19    section, has approved as continuing education courses, including
17-20    courses provided by or through the licensed mortgage broker with
17-21    whom the loan officer is associated after submission to and
17-22    approval by the commission; or
17-23                      (B)  maintains an active license in this state
17-24    as:
17-25                            (i)  a real estate broker;
17-26                            (ii)  a real estate salesperson;
 18-1                            (iii)  an attorney; or
 18-2                            (iv)  a local recording agent or insurance
 18-3    solicitor or agent for a legal reserve life insurance company under
 18-4    Chapter 21, Insurance Code, or an equivalent license under Chapter
 18-5    21, Insurance Code.
 18-6          (c)  The commissioner may require mortgage brokers or loan
 18-7    officers to submit requests for renewal on a form prescribed by the
 18-8    commissioner.
 18-9          (d)  On receipt of a request for a renewal of a license
18-10    issued under this subchapter, the commissioner may conduct a
18-11    criminal background check under Section 156.206.
18-12          (e)  A renewal fee is not refundable.
18-13          (f)  The commissioner by rule may adopt a system under which
18-14    licenses expire on a date or dates other than December 31.  If a
18-15    system is adopted under this subsection, dates relating to
18-16    expiration and issuance of licenses shall be adjusted accordingly.
18-17    For the biennium in which the license expiration date is changed,
18-18    license fees shall be prorated on a monthly basis so that each
18-19    license holder pays only that portion of the license fee that is
18-20    allocable to the number of months during which the license is
18-21    valid.  On renewal of the license on the new expiration date, the
18-22    total license renewal fee is payable.
18-23          (g)  The commissioner shall adopt rules related to the
18-24    approval of courses for continuing education credit under this
18-25    section that provide for the acceptance of continuing education
18-26    courses that are related to finance, financial consulting, lending,
 19-1    real estate contracts, discrimination laws, deceptive trade
 19-2    practices, real property conveyances, and other topics that are
 19-3    relevant to mortgage brokers and that are acceptable as continuing
 19-4    education courses to other professional licensing agencies.
 19-5          Sec. 156.209.  DENIAL OF APPLICATIONS AND RENEWALS.  (a)  If
 19-6    the commissioner declines or fails to issue or renew a license, the
 19-7    commissioner shall promptly give written notice to the applicant or
 19-8    the person requesting the renewal that the application or renewal,
 19-9    as appropriate, was denied.
19-10          (b)  Before the applicant or person requesting the renewal
19-11    may appeal to a district court as provided by Section 156.401, the
19-12    applicant or person must file with the commissioner, not later than
19-13    the 10th day after the date on which notice under Subsection (a) is
19-14    received, an appeal of the ruling requesting a time and place for a
19-15    hearing before a hearings officer designated by the commissioner.
19-16          (c)  The designated hearings officer shall set the time and
19-17    place for a hearing requested under Subsection (b) not later than
19-18    the 30th day after the date on which the appeal is received.  The
19-19    hearings officer shall provide at least 10 days' notice of the
19-20    hearing to the applicant or person requesting the renewal.  The
19-21    time of the hearing may be continued periodically with the consent
19-22    of the applicant or person requesting the renewal.  After the
19-23    hearing, the commissioner shall enter an order from the findings of
19-24    fact, conclusions of law, and recommendations of the hearings
19-25    officer.
19-26          (d)  If an applicant or person requesting the renewal fails
 20-1    to request a hearing under this section, the commissioner's refusal
 20-2    to issue or renew a license is final and may not be subject to
 20-3    review by the courts.
 20-4          (e)  A hearing held under this section is governed by Chapter
 20-5    2001, Government Code.  An appeal of a final order issued under
 20-6    this section may be made in accordance with Section 156.401.
 20-7          Sec. 156.210.  PROBATIONARY LICENSE.  The commissioner may
 20-8    issue a probationary license.  The commissioner by rule shall adopt
 20-9    reasonable terms and conditions for a probationary license.
20-10          Sec. 156.211.  CHANGE OF ADDRESS OR SPONSORSHIP; MODIFICATION
20-11    OF LICENSE.  (a)  Before the 10th day preceding the effective date
20-12    of an address change, a mortgage broker shall notify the
20-13    commissioner in writing of the new address accompanied by a change
20-14    of address fee of $25.  A new license certificate must be obtained
20-15    before the mortgage broker may conduct business at the new
20-16    location.
20-17          (b)  A loan officer may act only for the mortgage broker
20-18    sponsoring the loan officer.  A loan officer may be sponsored by
20-19    only one mortgage broker at a time.  When the sponsorship of a loan
20-20    officer is terminated, the loan officer and the mortgage broker
20-21    shall immediately notify the commissioner and the mortgage broker
20-22    shall return the loan officer license to the commissioner.  The
20-23    loan officer's license then becomes inactive.  The loan officer
20-24    license may be activated if, before the license expires, a mortgage
20-25    broker files a request, accompanied by a $25 fee, notifying the
20-26    commissioner that the mortgage broker will sponsor the loan officer
 21-1    and will assume responsibility for the actions of the loan officer.
 21-2          (c)  A fee under this section is not refundable.
 21-3          Sec. 156.212.  MAINTENANCE AND LOCATION OF OFFICES; DISPLAY
 21-4    OF LICENSE CERTIFICATES.  (a)  Each mortgage broker licensed under
 21-5    this chapter shall maintain a physical office in this state.  The
 21-6    address of the office shall be designated on the license
 21-7    certificate.
 21-8          (b)  If a mortgage broker maintains more than one place of
 21-9    business in this state, the mortgage broker shall apply for, pay a
21-10    fee of $50 for, and obtain an additional license certificate to be
21-11    known as a branch office license for each additional office to be
21-12    maintained by the mortgage broker.
21-13          (c)  The license certificate of a mortgage broker shall be at
21-14    all times prominently displayed in the mortgage broker's place of
21-15    business.  The branch office certificate shall be at all times
21-16    prominently displayed in the mortgage broker's branch office.
21-17          (d)  A loan officer license certificate shall be at all times
21-18    prominently displayed in the office of the mortgage broker for whom
21-19    the loan officer primarily conducts business.
21-20           (Sections 156.213 to 156.300 reserved for expansion
21-21    SUBCHAPTER D.  LICENSE REVOCATION AND SUSPENSION AND OTHER ACTIONS
21-22                          AGAINST LICENSE HOLDER
21-23          Sec. 156.301.  COMPLAINTS AND INVESTIGATIONS.  (a)  On the
21-24    signed written complaint of a person, the commissioner shall
21-25    investigate the actions and records of a person licensed under this
21-26    chapter if the complaint, or the complaint and documentary or other
 22-1    evidence presented in connection with the complaint, provides
 22-2    reasonable cause.  The commissioner, before commencing an
 22-3    investigation, shall notify a mortgage broker or loan officer in
 22-4    writing of the complaint and that the commissioner intends to
 22-5    investigate the matter.
 22-6          (b)  Except as provided by Subsection (a), the commissioner
 22-7    may not initiate an investigation or other action against a person
 22-8    licensed under this chapter on the basis of an anonymous complaint
 22-9    regardless of whether the complaint is in writing.  The
22-10    commissioner may conduct an undercover or covert investigation only
22-11    if the commissioner, after due consideration of the circumstances,
22-12    determines that the investigation is necessary to prevent immediate
22-13    harm and to carry out the purposes of this chapter.
22-14          (c)  The commissioner may authorize an employee of the
22-15    commissioner to file a signed written complaint against a person
22-16    licensed under this chapter and to conduct an investigation if:
22-17                (1)  a judgment against the person has been paid from a
22-18    recovery fund established under this chapter;
22-19                (2)  the person holds a provisional license issued
22-20    under Section 156.207(c);
22-21                (3)  the person is convicted of a criminal offense that
22-22    may constitute grounds for the suspension or revocation of the
22-23    license; or
22-24                (4)  the person fails to honor a check issued to the
22-25    commissioner.
22-26          Sec. 156.302.  ADMINISTRATIVE PENALTY.  (a)  The commissioner
 23-1    may impose an administrative penalty on a person licensed under
 23-2    this chapter who violates this chapter or a rule or order adopted
 23-3    under this chapter.
 23-4          (b)  The amount of the penalty may not exceed $2,500, and
 23-5    each day a violation continues or occurs is a separate violation
 23-6    for the purpose of imposing a penalty.  The amount shall be based
 23-7    on:
 23-8                (1)  the seriousness of the violation, including the
 23-9    nature, circumstances, extent, and gravity of the violation;
23-10                (2)  the history of previous violations;
23-11                (3)  the amount necessary to deter a future violation;
23-12                (4)  efforts to correct the violation; and
23-13                (5)  any other matter that justice may require.
23-14          (c)  The enforcement of the penalty may be stayed during the
23-15    time the order is under judicial review if the person pays the
23-16    penalty to the clerk of the court or files a supersedeas bond with
23-17    the court in the amount of the penalty.  A person who cannot afford
23-18    to pay the penalty or file the bond may stay the enforcement by
23-19    filing an affidavit in the manner required by the Texas Rules of
23-20    Civil Procedure for a party who cannot afford to file security for
23-21    costs, subject to the right of the commissioner to contest the
23-22    affidavit as provided by those rules.
23-23          (d)  The attorney general may sue to collect the penalty.
23-24          (e)  A proceeding to impose the penalty is considered to be a
23-25    contested case under Chapter 2001, Government Code.
23-26          Sec. 156.303.  DISCIPLINARY ACTION; CEASE AND DESIST ORDER.
 24-1    (a)  The commissioner may order disciplinary action against a
 24-2    licensed mortgage broker or a licensed loan officer when the
 24-3    commissioner, after a hearing, has determined that the person:
 24-4                (1)  obtained a license under this chapter through a
 24-5    false or fraudulent representation or made a material
 24-6    misrepresentation in an application for a license under this
 24-7    chapter;
 24-8                (2)  published or caused to be published an
 24-9    advertisement related to the business of a mortgage broker or loan
24-10    officer that:
24-11                      (A)  is misleading;
24-12                      (B)  is likely to deceive the public;
24-13                      (C)  in any manner tends to create a misleading
24-14    impression;
24-15                      (D)  fails to identify as a mortgage broker or
24-16    loan officer the person causing the advertisement to be published;
24-17    or
24-18                      (E)  violates federal or state law;
24-19                (3)  while performing an act for which a license under
24-20    this chapter is required, engaged in conduct that constitutes
24-21    improper, fraudulent, or dishonest dealings;
24-22                (4)  failed to notify the commissioner not later than
24-23    the 30th day after the date of the final conviction if the person,
24-24    in a court of this or another state or in a federal court, has been
24-25    convicted of or entered a plea of guilty or nolo contendere to a
24-26    felony or a criminal offense involving fraud;
 25-1                (5)  failed to use a fee collected in advance of
 25-2    closing of a mortgage loan for a purpose for which the fee was
 25-3    paid;
 25-4                (6)  charged or received, directly or indirectly, a fee
 25-5    for assisting a mortgage applicant in obtaining a mortgage loan
 25-6    before all of the services that the person agreed to perform for
 25-7    the mortgage applicant are completed, and the proceeds of the
 25-8    mortgage loan have been disbursed to or on behalf of the mortgage
 25-9    applicant, except as provided by Section 156.304;
25-10                (7)  failed within a reasonable time to honor a check
25-11    issued to the commissioner after the commissioner has mailed a
25-12    request for payment by certified mail to the person's last known
25-13    business address as reflected by the commissioner's records;
25-14                (8)  paid compensation to a person who is not licensed
25-15    or exempt under this chapter for acts for which a license under
25-16    this chapter is required;
25-17                (9)  induced or attempted to induce a party to a
25-18    contract to breach the contract so the person may make a mortgage
25-19    loan;
25-20                (10)  published or circulated an unjustified or
25-21    unwarranted threat of legal proceedings in matters related to the
25-22    person's actions or services as a mortgage broker or loan officer,
25-23    as applicable;
25-24                (11)  established an association, by employment or
25-25    otherwise, with a person not licensed or exempt under this chapter
25-26    who was expected or required to act as a mortgage broker or loan
 26-1    officer;
 26-2                (12)  aided, abetted, or conspired with a person to
 26-3    circumvent the requirements of this chapter;
 26-4                (13)  acted in the dual capacity of a mortgage broker
 26-5    or loan officer and real estate broker, salesperson, or attorney
 26-6    in a transaction without the knowledge and written consent of the
 26-7    mortgage applicant or in violation of applicable requirements under
 26-8    federal law;
 26-9                (14)  discriminated against a prospective borrower on
26-10    the basis of race, color, religion, sex, national origin, ancestry,
26-11    familial status, or a disability;
26-12                (15)  failed or refused on demand to:
26-13                      (A)  produce a document, book, or record
26-14    concerning a mortgage loan transaction conducted by the mortgage
26-15    broker or loan officer for inspection by the commissioner or the
26-16    commissioner's authorized personnel or representative;
26-17                      (B)  give the commissioner or the commissioner's
26-18    authorized personnel or representative free access to the books or
26-19    records relating to the person's business kept by an officer,
26-20    agent, or employee of the person or any business entity through
26-21    which the person conducts mortgage brokerage activities, including
26-22    a subsidiary or holding company affiliate; or
26-23                      (C)  provide information requested by the
26-24    commissioner as a result of a formal or informal complaint made to
26-25    the commissioner;
26-26                (16)  failed without just cause to surrender, on
 27-1    demand, a copy of a document or other instrument coming into the
 27-2    person's possession that was provided to the person by another
 27-3    person making the demand or that the person making the demand is
 27-4    under law entitled to receive; or
 27-5                (17)  disregarded or violated this chapter or a rule
 27-6    adopted by the commissioner under this chapter.
 27-7          (b)  In addition to disciplinary action by the commissioner
 27-8    authorized under Subsection (a), the commissioner, if the
 27-9    commissioner has reasonable cause to believe that a person licensed
27-10    under this chapter has or is about to violate this section, may
27-11    issue without notice and hearing an order to cease and desist from
27-12    continuing a particular action or an order to take affirmative
27-13    action, or both, to enforce compliance with this chapter.
27-14          (c)  An order issued under Subsection (b) must contain a
27-15    reasonably detailed statement of the facts on which the order is
27-16    made.  If a person against whom the order is made requests a
27-17    hearing, the commissioner shall set and give notice of a hearing
27-18    before the commissioner or a hearings officer.  The hearing shall
27-19    be governed by Chapter 2001, Government Code.  Based on the
27-20    findings of fact, conclusions of law, and recommendations of the
27-21    hearings officer, the commissioner by order may find a violation
27-22    has occurred or not occurred.
27-23          (d)  If a hearing is not requested under Subsection (c) not
27-24    later than the 30th day after the date on which an order is made,
27-25    the order is considered final and not appealable.
27-26          (e)  The commissioner, after giving notice, may impose
 28-1    against a person who violates a cease and desist order an
 28-2    administrative penalty in an amount not to exceed $1,000 for each
 28-3    day of the violation.  In addition to any other remedy provided by
 28-4    law, the commissioner may institute in district court a suit for
 28-5    injunctive relief and to collect the administrative penalty.  A
 28-6    bond is not required of the commissioner with respect to injunctive
 28-7    relief granted under this subsection.  A penalty collected under
 28-8    this subsection shall be deposited in the fund.
 28-9          Sec. 156.304.  FEE ASSESSMENT AND DISCLOSURE.  (a)  Before
28-10    the completion of all services to be performed, a mortgage broker
28-11    may charge and receive, unless prohibited by law, the following
28-12    fees for services in assisting a mortgage applicant to obtain a
28-13    mortgage:
28-14                (1)  a fee to obtain a credit report;
28-15                (2)  a fee for the appraisal of the real estate;
28-16                (3)  a fee for processing a mortgage application;
28-17                (4)  a fee for taking a mortgage application;
28-18                (5)  a fee for automated underwriting;
28-19                (6)  a fee for a courier service;
28-20                (7)  a fee to issue a loan commitment; or
28-21                (8)  subject to Subsection (b), a fee for locking in an
28-22    interest rate.
28-23          (b)  A mortgage broker or loan officer may not charge or
28-24    receive a fee for locking in an interest rate unless there is a
28-25    written agreement signed by the mortgage applicant and mortgage
28-26    broker that contains a statement of whether the fee to lock in the
 29-1    interest rate is refundable and, if so, the terms and conditions
 29-2    necessary to obtain the refund.
 29-3           (Sections 156.305 to 156.400 reserved for expansion
 29-4    SUBCHAPTER E.  HEARINGS; JUDICIAL REVIEW; CIVIL ACTIONS; UNLICENSED
 29-5                                 ACTIVITY
 29-6          Sec. 156.401.  HEARINGS AND JUDICIAL REVIEW.  (a)  The
 29-7    commissioner may employ an enforcement staff to investigate and
 29-8    prosecute complaints made against persons licensed under this
 29-9    chapter.  The commissioner may employ a hearings officer to conduct
29-10    hearings under this section.
29-11          (b)  If the commissioner proposes to suspend or revoke a
29-12    license issued under this chapter or if the commissioner refuses to
29-13    issue or renew a license to an applicant for a license or person
29-14    requesting a renewal of a license under this chapter, the applicant
29-15    or license holder is entitled to a hearing before the commissioner
29-16    or a hearings officer who shall make a proposal for decision to the
29-17    commissioner.  The commissioner or hearings officer shall prescribe
29-18    the time and place of the hearing.  The hearing is governed by
29-19    Chapter 2001, Government Code.
29-20          (c)  The commissioner or hearings officer may issue subpoenas
29-21    for the attendance of witnesses and the production of records or
29-22    documents.  Process issued by the commissioner or hearings officer
29-23    may extend to all parts of the state and may be served by any
29-24    person designated by the commissioner or hearings officer.
29-25          (d)  An individual aggrieved by a ruling, order, or decision
29-26    of the commissioner has the right to appeal to a district court in
 30-1    the county in which the hearing was held.  An appeal under this
 30-2    subsection is governed by Chapter 2001, Government Code.
 30-3          Sec. 156.402.  CIVIL ACTIONS AND INJUNCTIVE RELIEF.  (a)  A
 30-4    mortgage applicant injured by a violation of this chapter may bring
 30-5    an action for recovery of actual monetary damages and reasonable
 30-6    attorney's fees and court costs.
 30-7          (b)  The commissioner, the attorney general, or a mortgage
 30-8    applicant may bring an action to enjoin a violation of this
 30-9    chapter.
30-10          (c)  A remedy provided by this section is in addition to any
30-11    other remedy provided by law.
30-12          Sec. 156.403.  BURDEN OF PROOF TO ESTABLISH AN EXEMPTION.
30-13    The burden of proving an exemption in a proceeding or action
30-14    brought under this chapter is on the person claiming the benefit of
30-15    the exemption.
30-16          Sec. 156.404.  RELIANCE ON WRITTEN NOTICES FROM COMMISSIONER.
30-17    A person does not violate this chapter with respect to an action
30-18    taken or omission made in reliance on a written notice, written
30-19    interpretation, or written report from the commissioner, unless a
30-20    subsequent amendment to this chapter or a rule adopted under this
30-21    chapter affects the commissioner's notice, interpretation, or
30-22    report.
30-23          Sec. 156.405.  COMPLETION OF MORTGAGE BROKER SERVICES.
30-24    (a)  On disbursement of mortgage proceeds to or on behalf of the
30-25    mortgage applicant, the mortgage broker and loan officer who
30-26    assisted the mortgage applicant in obtaining the mortgage loan are
 31-1    considered to have completed the performance of the mortgage
 31-2    broker's and loan officer's services for the mortgage applicant and
 31-3    owe no additional duties or obligations to the mortgage applicant
 31-4    with respect to the mortgage loan.
 31-5          (b)  This section does not limit or preclude the liability of
 31-6    a mortgage broker or loan officer for:
 31-7                (1)  failing to comply with this chapter or a rule
 31-8    adopted under this chapter;
 31-9                (2)  failing to comply with a provision of or duty
31-10    arising under an agreement with a mortgage applicant or lender
31-11    under this chapter; or
31-12                (3)  violating any other state or federal law.
31-13          Sec. 156.406.  UNLICENSED ACTIVITY.  (a)  A person who is not
31-14    exempt under this chapter and who acts as a mortgage broker or loan
31-15    officer without first obtaining a license required under this
31-16    chapter commits an offense.  An offense under this subsection is a
31-17    Class B misdemeanor.  A second or subsequent conviction for an
31-18    offense under this subsection shall be punished as a Class A
31-19    misdemeanor.
31-20          (b)  A person who received money, or the equivalent of money,
31-21    as a fee or profit because of or in consequence of the person
31-22    acting as a mortgage broker or loan officer without an active
31-23    license or being exempt under this chapter is liable for damages in
31-24    an amount that is not less than the amount of the fee or profit
31-25    received and not to exceed three times the amount of the fee or
31-26    profit received, as may be determined by the court.  An aggrieved
 32-1    person may recover damages under this subsection in a court.
 32-2          (c)  If the commissioner has reasonable cause to believe that
 32-3    a person who is not licensed or exempt under this chapter has
 32-4    engaged, or is about to engage, in an act or practice for which a
 32-5    license is required under this chapter, the commissioner may issue
 32-6    without notice and hearing an order to cease and desist from
 32-7    continuing a particular action or an order to take affirmative
 32-8    action, or both, to enforce compliance with this chapter.  The
 32-9    order shall contain a reasonably detailed statement of the facts on
32-10    which the order is made.  If a person against whom the order is
32-11    made requests a hearing, the commissioner shall set and give notice
32-12    of a hearing before the commissioner or a hearings officer.  The
32-13    hearing shall be governed by Chapter 2001, Government Code.  Based
32-14    on the findings of fact, conclusions of law, and recommendations of
32-15    the hearings officer, the commissioner by order may find a
32-16    violation has occurred or not occurred.
32-17          (d)  If a hearing has not been requested under Subsection (c)
32-18    not later than the 30th day after the date the order is made, the
32-19    order is considered final and not appealable.  The commissioner,
32-20    after giving notice, may impose against a person who violates a
32-21    cease and desist order, an administrative penalty in an amount not
32-22    to exceed $1,000 for each day of a violation.  In addition to any
32-23    other remedy provided by law, the commissioner may institute in
32-24    district court a suit for injunctive relief and to collect the
32-25    administrative penalty.  A bond is not required of the commissioner
32-26    with respect to injunctive relief granted under this section.  A
 33-1    penalty collected under this subsection shall be deposited in the
 33-2    fund.
 33-3           (Sections 156.407 to 156.500 reserved for expansion
 33-4               SUBCHAPTER F.  MORTGAGE BROKER RECOVERY FUND
 33-5          Sec. 156.501.  MORTGAGE BROKER RECOVERY FUND.  (a)  The
 33-6    commissioner shall establish and maintain a mortgage broker
 33-7    recovery fund as provided by this subchapter.  The amounts received
 33-8    by the commissioner for deposit in the fund shall be held by the
 33-9    commissioner in trust for carrying out the purposes of the fund.
33-10          (b)  The fund shall be used to reimburse aggrieved persons to
33-11    whom a court awards actual damages because of certain acts
33-12    committed by a mortgage broker or loan officer who was licensed
33-13    under this chapter when the act was committed.  The use of the fund
33-14    is limited to an act that constitutes a violation of Section
33-15    156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13), or
33-16    (16) or 156.304.
33-17          (c)  Amounts in the fund may be invested and reinvested in
33-18    the same manner as funds of the Texas State Employees Retirement
33-19    System, and the interest from these investments shall be deposited
33-20    to the credit of the fund.  An investment may not be made under
33-21    this subsection if the investment will impair the necessary
33-22    liquidity required to satisfy judgment payments awarded under this
33-23    subchapter.
33-24          Sec. 156.502.  FUNDING.  (a)  On an application for an
33-25    original license or for renewal of a license issued under this
33-26    chapter, the applicant, in addition to paying the original
 34-1    application fee or renewal fee, shall pay a $20 fee.  The fee shall
 34-2    be deposited in the fund.
 34-3          (b)  If the balance remaining in the fund at the end of a
 34-4    calendar year after 2010 is less than $500,000, each mortgage
 34-5    broker and loan officer licensed under this chapter, on the next
 34-6    renewal of the license, shall pay, in addition to any other
 34-7    required fees, the lesser of a $10 fee or a pro rata share of the
 34-8    amount necessary to bring the fund to $1 million.  The fee shall be
 34-9    deposited in the fund.
34-10          (c)  If the balance remaining in the mortgage broker recovery
34-11    fund at the end of a calendar year is more than the greater of $3.5
34-12    million or the total amount of claims paid from the fund during the
34-13    previous four fiscal years, the amount of money in excess of the
34-14    greater amount shall be transferred to the general revenue fund.
34-15          Sec. 156.503.  STATUTE OF LIMITATIONS.  An action for a
34-16    judgment that subsequently results in an order for collection from
34-17    the fund may not be instituted after the second anniversary of the
34-18    date on which the cause of action accrues.
34-19          Sec. 156.504.  PROCEDURE FOR RECOVERY.  (a)  An aggrieved
34-20    person who recovers against a mortgage broker or loan officer
34-21    licensed under this chapter a valid court judgment for conduct
34-22    described by Section 156.501 that occurred on or after January 1,
34-23    2000, after final judgment has been entered, execution returned
34-24    nulla bona, and a judgment lien perfected, may file a verified
34-25    claim in the court in which the judgment was entered and, on 20
34-26    days' written notice to the commissioner and to the judgment
 35-1    debtor, may apply to the court for an order directing payment from
 35-2    the fund of any unpaid judgment amount, subject to Section 156.503.
 35-3          (b)  On the hearing on the application, the aggrieved person
 35-4    is required to show:
 35-5                (1)  that the judgment is based on facts allowing
 35-6    recovery under Section 156.501;
 35-7                (2)  that the person is not a spouse of the debtor, or
 35-8    the personal representative of the spouse, and that the person is
 35-9    not licensed as a mortgage broker or loan officer under this
35-10    chapter who is seeking to recover any compensation in the
35-11    transaction or transactions for which the application for payment
35-12    is made;
35-13                (3)  that based on the best available information, the
35-14    judgment debtor lacks sufficient attachable assets in this state or
35-15    any other state to satisfy the judgment and the surety bond
35-16    required by Section 156.205 is not sufficient to satisfy the
35-17    judgment; and
35-18                (4)  the amount that may be realized from the sale of
35-19    property or other assets liable to be sold or applied in
35-20    satisfaction of the judgment and the balance remaining due on the
35-21    judgment after application of the amount that may be realized.
35-22          (c)  A recovery on the judgment against a single defendant
35-23    made before payment from the fund shall be applied first by the
35-24    creditor to actual damages.
35-25          (d)  The court shall make an order directed to the
35-26    commissioner requiring payment from the fund of the amount the
 36-1    court finds to be payable on the claim, pursuant to and in
 36-2    accordance with the limitations contained in this subchapter, if
 36-3    the court is satisfied, on the hearing, of the truth of all matters
 36-4    required to be shown by the aggrieved person under Subsection (b)
 36-5    and that the aggrieved person has satisfied all of the requirements
 36-6    of this section.
 36-7          (e)  When the commissioner receives notice of entry of a
 36-8    final judgment and a hearing is scheduled under this section, the
 36-9    commissioner may notify the attorney general of the commissioner's
36-10    desire to enter an appearance, file a response, appear at the court
36-11    hearing, defend the action, or to take any other appropriate
36-12    action.  In taking any action described by this subsection, the
36-13    commissioner and the attorney general shall act only to protect the
36-14    fund from spurious or unjust claims or to ensure compliance with
36-15    the requirements for recovery under this subchapter.
36-16          (f)  The commissioner may relitigate any issue material and
36-17    relevant in the hearing on the application that was determined in
36-18    the underlying action on which the judgment in favor of the
36-19    applicant was based.
36-20          (g)  If the court finds that the aggregate amount of claims
36-21    against a licensed mortgage broker or loan officer exceeds the
36-22    limits contained in Section 156.505, the court shall reduce
36-23    proportionately the amount the court finds payable on the claim.
36-24          Sec. 156.505.  RECOVERY LIMITS.  (a)  A person entitled to
36-25    receive payment out of the fund is entitled to receive
36-26    reimbursement of actual, out-of-pocket damages, reasonable
 37-1    attorney's fees, and court costs as determined by the court as
 37-2    provided by this section.
 37-3          (b)  A payment from the fund may be made only pursuant to a
 37-4    court order as provided by Section 156.504.  A payment for claims:
 37-5                (1)  arising out of the same transaction, including
 37-6    attorney's fees, interest, and court costs, is limited in the
 37-7    aggregate to $25,000, regardless of the number of claimants; and
 37-8                (2)  based on judgments against a single person
 37-9    licensed as a mortgage broker or loan officer under this chapter is
37-10    limited in the aggregate to $50,000 until the fund has been
37-11    reimbursed for all amounts paid.
37-12          Sec. 156.506.  REVOCATION OF LICENSE FOR PAYMENT FROM FUND.
37-13    (a)  The commissioner may revoke a license issued under this
37-14    chapter on proof that the commissioner has made a payment from the
37-15    fund of any amount toward satisfaction of a judgment against a
37-16    person licensed as a mortgage broker or loan officer under this
37-17    chapter.
37-18          (b)  The commissioner may probate an order revoking a license
37-19    under this section.
37-20          (c)  A person on whose behalf payment was made from the fund
37-21    is not eligible to receive a new license under this chapter until
37-22    the person has repaid in full, plus interest at the current legal
37-23    rate, the amount paid from the fund on the person's behalf.
37-24          (d)  This section does not limit the authority of the
37-25    commissioner to take disciplinary action against a mortgage broker
37-26    or loan officer for a violation of this chapter or the rules
 38-1    adopted by the commissioner under this chapter.  The repayment in
 38-2    full to the fund of all obligations of a mortgage broker or loan
 38-3    officer does not nullify or modify the effect of any other
 38-4    disciplinary proceeding brought under this chapter.
 38-5          Sec. 156.507.  SUBROGATION.  When the commissioner has paid a
 38-6    judgment creditor an amount from the fund as directed by the court,
 38-7    the commissioner is subrogated to all of the rights of the judgment
 38-8    creditor to the extent of the amount paid.  The judgment creditor
 38-9    shall assign all of the creditor's right, title, and interest in
38-10    the judgment up to the amount paid by the commissioner, and that
38-11    amount has priority for repayment in the event of any subsequent
38-12    recovery on the judgment.  Any amount, including interest,
38-13    recovered by the commissioner on the judgment shall be deposited to
38-14    the credit of the fund.
38-15          Sec. 156.508.  FAILURE TO COMPLY WITH SUBCHAPTER.  The
38-16    failure of an aggrieved person to comply with a provision of this
38-17    subchapter relating to the fund constitutes a waiver of any rights
38-18    under this subchapter.
38-19          SECTION 3.  Subsection (a), Section 393.002, Finance Code, is
38-20    amended to read as follows:
38-21          (a)  This chapter does not apply to:
38-22                (1)  a person:
38-23                      (A)  authorized to make a loan or grant an
38-24    extension of consumer credit under the laws of this state or the
38-25    United States; and
38-26                      (B)  subject to regulation and supervision by
 39-1    this state or the United States;
 39-2                (2)  a lender approved by the United States secretary
 39-3    of housing and urban development for participation in a mortgage
 39-4    insurance program under the National Housing Act (12 U.S.C. Section
 39-5    1701 et seq.);
 39-6                (3)  a bank or savings and loan association the
 39-7    deposits or accounts of which are eligible to be insured by the
 39-8    Federal Deposit Insurance Corporation or a subsidiary of the bank
 39-9    or association;
39-10                (4)  a credit union doing business in this state;
39-11                (5)  a nonprofit organization exempt from taxation
39-12    under Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C.
39-13    Section 501(c)(3));
39-14                (6)  a real estate broker or salesman licensed under
39-15    The Real Estate License Act (Article 6573a, Vernon's Texas Civil
39-16    Statutes) who is acting within the course and scope of that
39-17    license;
39-18                (7)  an individual licensed to practice law in this
39-19    state who is acting within the course and scope of the individual's
39-20    practice as an attorney;
39-21                (8)  a broker-dealer registered with the Securities and
39-22    Exchange Commission or the Commodity Futures Trading Commission
39-23    acting within the course and scope of that regulation;
39-24                (9)  a consumer reporting agency; [or]
39-25                (10)  a person whose primary business is making loans
39-26    secured by liens on real property; or
 40-1                (11)  a mortgage broker or loan officer licensed under
 40-2    Chapter 156, Finance Code, who is acting within the course and
 40-3    scope of that license.
 40-4          SECTION 4.  Section 232.002, Family Code, is amended to read
 40-5    as follows:
 40-6          Sec. 232.002.  LICENSING AUTHORITIES SUBJECT TO CHAPTER.  The
 40-7    following [state agencies] are licensing authorities subject to
 40-8    this chapter:
 40-9                (1)  Department of Agriculture;
40-10                (2)  Texas Commission on Alcohol and Drug Abuse;
40-11                (3)  Texas Alcoholic Beverage Commission;
40-12                (4)  Texas Appraiser Licensing and Certification Board;
40-13                (5)  Texas Board of Architectural Examiners;
40-14                (6)  State Board of Barber Examiners;
40-15                (7)  Texas Board of Chiropractic Examiners;
40-16                (8)  Comptroller of Public Accounts;
40-17                (9)  Texas Cosmetology Commission;
40-18                (10)  Court Reporters Certification Board;
40-19                (11)  State Board of Dental Examiners;
40-20                (12)  Texas State Board of Examiners of Dietitians;
40-21                (13)  Texas Funeral Service Commission;
40-22                (14)  Texas Department of Health;
40-23                (15)  Texas Department of Human Services;
40-24                (16)  Texas Board of Professional Land Surveying;
40-25                (17)  Texas Department of Licensing and Regulation;
40-26                (18)  Texas State Board of Examiners of Marriage and
 41-1    Family Therapists;
 41-2                (19)  Texas State Board of Medical Examiners;
 41-3                (20)  Midwifery Board;
 41-4                (21)  Texas Natural Resource Conservation Commission;
 41-5                (22)  Board of Nurse Examiners;
 41-6                (23)  Texas Board of Occupational Therapy Examiners;
 41-7                (24)  Texas Optometry Board;
 41-8                (25)  Parks and Wildlife Department;
 41-9                (26)  Texas State Board of Examiners of Perfusionists;
41-10                (27)  Texas State Board of Pharmacy;
41-11                (28)  Texas Board of Physical Therapy Examiners;
41-12                (29)  Texas State Board of Plumbing Examiners;
41-13                (30)  Texas State Board of Podiatric Medical Examiners;
41-14                (31)  Polygraph Examiners Board;
41-15                (32)  Texas Board of Private Investigators and Private
41-16    Security Agencies;
41-17                (33)  Texas State Board of Examiners of Professional
41-18    Counselors;
41-19                (34)  Texas [State] Board of [Registration for]
41-20    Professional Engineers;
41-21                (35)  Department of Protective and Regulatory Services;
41-22                (36)  Texas State Board of Examiners of Psychologists;
41-23                (37)  Texas State Board of Public Accountancy;
41-24                (38)  Department of Public Safety of the State of
41-25    Texas;
41-26                (39)  Public Utility Commission of Texas;
 42-1                (40)  Railroad Commission of Texas;
 42-2                (41)  Texas Real Estate Commission;
 42-3                (42)  State Bar of Texas;
 42-4                (43)  Texas State Board of Social Worker Examiners;
 42-5                (44)  State Board of Examiners for Speech-Language
 42-6    Pathology and Audiology;
 42-7                (45)  Texas Structural Pest Control Board;
 42-8                (46)  Board of Tax Professional Examiners;
 42-9                (47)  Secretary of State;
42-10                (48)  Supreme Court of Texas;
42-11                (49)  Texas Transportation Commission;
42-12                (50)  State Board of Veterinary Medical Examiners;
42-13                (51)  Board of Vocational Nurse Examiners;
42-14                (52)  Texas Ethics Commission;
42-15                (53)  Advisory Board of Athletic Trainers;
42-16                (54)  State Committee of Examiners in the Fitting and
42-17    Dispensing of Hearing Instruments;
42-18                (55)  Texas Board of Licensure for Professional Medical
42-19    Physicists;
42-20                (56)  Texas Department of Insurance; [and]
42-21                (57)  Texas Board of Orthotics and Prosthetics; and
42-22                (58)  savings and loan commissioner.
42-23          SECTION 5.  (a)  This Act takes effect September 1, 1999.
42-24          (b)  A person is not required to be licensed under Chapter
42-25    156, Finance Code, as added by this Act, before January 1, 2000.
42-26          SECTION 6.  The importance of this legislation and the
 43-1    crowded condition of the calendars in both houses create an
 43-2    emergency and an imperative public necessity that the
 43-3    constitutional rule requiring bills to be read on three several
 43-4    days in each house be suspended, and this rule is hereby suspended.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 1074 passed the Senate on
         April 16, 1999, by a viva-voce vote; and that the Senate concurred
         in House amendments on May 25, 1999, by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 1074 passed the House, with
         amendments, on May 23, 1999, by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         _______________________________
                     Date
         _______________________________
                   Governor