76R14863 CLG-F                          
         By Carona                                             S.B. No. 1074
         Substitute the following for S.B. No. 1074:
         By Averitt                                        C.S.S.B. No. 1074
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the licensing of mortgage brokers; providing penalties.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter D, Chapter 11, Finance Code, is
 1-5     amended by adding Section 11.306 to read as follows:
 1-6           Sec. 11.306.  MORTGAGE BROKERS.  The finance commission may:
 1-7                 (1)  review any action or rule adopted by the savings
 1-8     and loan commissioner under Chapter 156; and
 1-9                 (2)  direct the savings and loan commissioner to adopt,
1-10     repeal, or amend any rule or other action the savings and loan
1-11     commissioner may undertake under Chapter 156.
1-12           SECTION 2.  Subtitle E, Title 3, Finance Code, is amended by
1-13     adding Chapter 156 to read as follows:
1-14                       CHAPTER 156.  MORTGAGE BROKERS
1-15                      SUBCHAPTER A.  GENERAL PROVISIONS
1-16           Sec. 156.001.  SHORT TITLE.  This chapter may be cited as the
1-17     Mortgage Broker License Act.
1-18           Sec. 156.002.  DEFINITIONS.  In this chapter:
1-19                 (1)  "Commissioner" means the savings and loan
1-20     commissioner.
1-21                 (2)  "Disciplinary action" means an order by the
1-22     commissioner that requires one or more of the following:
1-23                       (A)  suspension or revocation of a license under
 2-1     this chapter;
 2-2                       (B)  probation of a suspension or revocation of a
 2-3     license under this chapter on terms and conditions that the
 2-4     commissioner determines appropriate;
 2-5                       (C)  a reprimand of a person licensed under this
 2-6     chapter; or
 2-7                       (D)  an administrative penalty imposed on a
 2-8     person licensed under this chapter under Section 156.302.
 2-9                 (3)  "Finance commission" means the Finance Commission
2-10     of Texas.
2-11                 (4)  "Fund" means the mortgage broker recovery fund
2-12     established by the commissioner under Subchapter F.
2-13                 (5)  "Loan officer" means an individual sponsored by a
2-14     licensed mortgage broker for the purposes of performing the acts of
2-15     a mortgage broker.  The term does not include:
2-16                       (A)  an individual who performs only clerical
2-17     functions such as delivering a loan application to a mortgage
2-18     broker or mortgage banker or gathering information related to a
2-19     mortgage loan application on behalf of the prospective borrower,
2-20     mortgage broker, or mortgage banker; or
2-21                       (B)  an individual who performs functions of a
2-22     loan processor.
2-23                 (6)  "Loan processor" means an individual who works
2-24     under the instruction of a loan officer or mortgage broker and
2-25     performs only clerical functions such as gathering information,
2-26     requesting information, word processing, sending correspondence, or
2-27     assembling files.
 3-1                 (7)  "Mortgage applicant" means a person who is
 3-2     solicited to use or who uses a mortgage broker to obtain a mortgage
 3-3     loan.
 3-4                 (8)  "Mortgage banker" means a person who is:
 3-5                       (A)  approved or authorized by the United States
 3-6     Department of Housing and Urban Development as a mortgagee with
 3-7     direct endorsement underwriting authority;
 3-8                       (B)  an approved seller or servicer of the
 3-9     Federal National Mortgage Association;
3-10                       (C)  an approved seller or servicer of the
3-11     Federal Home Loan Mortgage Association; or
3-12                       (D)  an approved issuer for the Governmental
3-13     National Mortgage Association.
3-14                 (9)  "Mortgage broker" means a person who receives an
3-15     application from a prospective borrower for the purposes of making
3-16     a mortgage loan from that person's own funds or from the funds of
3-17     another person.  The term does not include:
3-18                       (A)  a person who performs only clerical
3-19     functions such as delivering a loan application to a mortgage
3-20     broker or mortgage banker or gathering information related to a
3-21     mortgage loan application on behalf of the prospective borrower,
3-22     mortgage broker, or mortgage banker; or
3-23                       (B)  a person who performs functions of a loan
3-24     processor.
3-25                 (10)  "Mortgage loan" means a debt against real estate
3-26     secured by a first-lien security interest against one-to-four
3-27     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
4-27     the General Appropriations Act.
 5-1           (c)  The commissioner may employ a general counsel,
 5-2     attorneys, investigators, and support staff to administer and
 5-3     enforce this chapter.
 5-4           Sec. 156.102.  RULEMAKING AUTHORITY.  (a)  Subject to review
 5-5     and compliance with the directives of the finance commission as
 5-6     provided by Section 11.306, the commissioner may adopt and enforce
 5-7     rules necessary for the intent of or to ensure compliance with this
 5-8     chapter.
 5-9           (b)  The commissioner may adopt rules to prohibit false,
5-10     misleading, or deceptive practices by mortgage brokers and loan
5-11     officers but may not adopt any other rules restricting competitive
5-12     bidding or advertising by mortgage brokers or loan officers.  When
5-13     adopting rules under this subsection, the commissioner may not
5-14     restrict:
5-15                 (1)  the use of any medium for an advertisement;
5-16                 (2)  the personal appearance of or voice of a person in
5-17     an advertisement;
5-18                 (3)  the size or duration of an advertisement; or
5-19                 (4)  a mortgage broker's or loan officer's
5-20     advertisement under a trade name.
5-21           (c)  The commissioner may adopt rules regarding books and
5-22     records that a person licensed under this chapter is required to
5-23     keep, including the location at which the books and records must be
5-24     kept.
5-25           (d)  The commissioner shall consult with the mortgage broker
5-26     advisory committee when proposing and adopting rules under this
5-27     chapter.
 6-1           Sec. 156.103.  POWERS OF COMMISSIONER.  (a)  In addition to
 6-2     any other action, proceeding, or remedy authorized by law, the
 6-3     commissioner may institute an action in the commissioner's name to
 6-4     enjoin a violation of this chapter or a rule adopted under this
 6-5     chapter.  To sustain an action filed under this subsection, it is
 6-6     not necessary to allege or prove that an adequate remedy at law
 6-7     does not exist or that substantial or irreparable damage would
 6-8     result from a continued violation of this chapter.
 6-9           (b)  The commissioner is not required to provide an appeal
6-10     bond in any action or proceeding to enforce this chapter.
6-11           (c)  The commissioner may authorize specific employees to
6-12     conduct hearings and make recommendations for final decisions in
6-13     contested cases.
6-14           Sec. 156.104.  MORTGAGE BROKER ADVISORY COMMITTEE.  (a)  The
6-15     mortgage broker advisory committee is created to advise and assist
6-16     the commissioner.
6-17           (b)  The advisory committee is composed of six members to be
6-18     appointed as follows:
6-19                 (1)  the commissioner shall appoint four members, each
6-20     of whom:
6-21                       (A)  must hold a mortgage broker license;
6-22                       (B)  is actively engaged in the business of
6-23     brokering loans at the time of appointment; and
6-24                       (C)  has been primarily engaged in the business
6-25     of brokering mortgage loans for at least two years before the
6-26     member's appointment; and
6-27                 (2)  the Texas Real Estate Commission shall appoint two
 7-1     members, each of whom must hold a real estate broker or salesperson
 7-2     license.
 7-3           (c)  Appointments to the advisory committee shall be made
 7-4     without regard to the sex, race, color, age, disability, religion,
 7-5     or national origin of the appointees.
 7-6           (d)  The members of the advisory committee serve for a
 7-7     staggered three-year term, with the terms of two members expiring
 7-8     February 1 of each year.
 7-9           (e)  The advisory committee shall meet at least twice a year
7-10     at the call of the commissioner.
7-11           (f)  The commissioner may remove a member of the advisory
7-12     committee if:
7-13                 (1)  the member does not have at the time of
7-14     appointment the qualifications required by Subsection (b); or
7-15                 (2)  the commissioner determines that the member cannot
7-16     discharge the member's duties for a substantial part of the term
7-17     for which the member is appointed.
7-18           (g)  In the event of a vacancy during a term, the appointing
7-19     entity or official shall fill the vacancy for the unexpired part of
7-20     the term with a person who meets the qualifications of the vacated
7-21     position.
7-22           (h)  In addition to other powers and duties delegated to it
7-23     by the commissioner, the advisory committee shall advise the
7-24     commissioner with respect to:
7-25                 (1)  the proposal and adoption of rules relating to:
7-26                       (A)  the licensing of mortgage brokers and loan
7-27     officers;
 8-1                       (B)  the education and experience requirements
 8-2     for licensing mortgage brokers and loan officers;
 8-3                       (C)  conduct and ethics of mortgage brokers and
 8-4     loan officers;
 8-5                       (D)  continuing education for licensed mortgage
 8-6     brokers and loan officers and the types of courses acceptable as
 8-7     continuing education courses under this chapter; and
 8-8                       (E)  the granting or denying of an application or
 8-9     request for renewal for a mortgage broker license or loan officer
8-10     license;
8-11                 (2)  the form of or format for any applications or
8-12     other documents under this chapter; and
8-13                 (3)  the interpretation, implementation, and
8-14     enforcement of this chapter.
8-15           (i)  Each member of the advisory committee is entitled to a
8-16     per diem allowance and to reimbursement of travel expenses
8-17     necessarily incurred in performing functions as a member of the
8-18     committee, subject to any applicable limitation in the General
8-19     Appropriations Act.
8-20            (Sections 156.105 to 156.200 reserved for expansion)
8-21       SUBCHAPTER C.  MORTGAGE BROKER LICENSE AND LOAN OFFICER LICENSE
8-22           Sec. 156.201.  LICENSES REQUIRED.  (a)  A person may not act
8-23     in the capacity of, engage in the business of, or advertise or hold
8-24     that person out as engaging in or conducting the business of a
8-25     mortgage broker in this state unless the person holds an active
8-26     mortgage broker license or is exempt under Section 156.202.
8-27           (b)  An individual may not act or attempt to act as a loan
 9-1     officer unless the individual at the time is:
 9-2                 (1)  sponsored by a licensed mortgage broker and acting
 9-3     for the mortgage broker; or
 9-4                 (2)  exempt under Section 156.202.
 9-5           (c)  Each mortgage broker licensed under this chapter is
 9-6     responsible to the commissioner and members of the public for any
 9-7     act or conduct performed under this chapter by the mortgage broker
 9-8     or a loan officer sponsored by or acting for the mortgage broker.
 9-9           Sec. 156.202.  EXEMPTIONS.  This chapter does not apply to:
9-10                 (1)  any of the following entities or an employee of
9-11     any of the following entities provided the employee is acting for
9-12     the benefit of the employer:
9-13                       (A)  a bank, savings bank, or savings and loan
9-14     association, or a subsidiary or an affiliate of a bank, savings
9-15     bank, or savings and loan association;
9-16                       (B)  a state or federal credit union;
9-17                       (C)  an insurance company licensed or authorized
9-18     to do business in this state under the Insurance Code;
9-19                       (D)  a mortgage banker; or
9-20                       (E)  an organization that qualifies for an
9-21     exemption from state franchise and sales tax as a 501(c)(3)
9-22     organization;
9-23                 (2)  an individual who makes a mortgage loan from the
9-24     individual's own funds to a spouse, former spouse, or persons in
9-25     the lineal line of consanguinity of the individual lending the
9-26     money;
9-27                 (3)  an owner of real property who makes a mortgage
 10-1    loan to a purchaser of the property for all or part of the purchase
 10-2    price of the real estate against which the mortgage is secured; or
 10-3                (4)  an individual who:
 10-4                      (A)  makes a mortgage loan from the individual's
 10-5    own funds;
 10-6                      (B)  is not an authorized lender under Chapter
 10-7    342, Finance Code; and
 10-8                      (C)  does not regularly engage in the business of
 10-9    making or brokering mortgage loans.
10-10          Sec. 156.203.  APPLICATION FOR A LICENSE; FEES.  (a)  An
10-11    application for a mortgage broker or loan officer license must be:
10-12                (1)  in writing;
10-13                (2)  under oath; and
10-14                (3)  on the form prescribed by the commissioner.
10-15          (b)  An application for a mortgage broker license must be
10-16    accompanied by:
10-17                (1)  an application fee in an amount determined by the
10-18    commissioner not to exceed $375; and
10-19                (2)  a recovery fund fee as provided by Section
10-20    156.502.
10-21          (c)  An application for a loan officer license must be
10-22    accompanied by:
10-23                (1)  an application fee in an amount determined by the
10-24    commissioner not to exceed $175; and
10-25                (2)  a recovery fund fee as provided by Section
10-26    156.502.
10-27          (d)  An application fee under this section is not refundable.
 11-1          Sec. 156.204.  QUALIFICATIONS.  (a)  To be eligible to be
 11-2    licensed as a mortgage broker a person must:
 11-3                (1)  be an individual who is at least 18 years of age;
 11-4                (2)  be a citizen of the United States or a lawfully
 11-5    admitted alien;
 11-6                (3)  maintain a physical office in this state and
 11-7    designate that office in the application;
 11-8                (4)  provide the commissioner with satisfactory
 11-9    evidence that the applicant satisfies one of the following:
11-10                      (A)  the person has received a bachelor's degree
11-11    in an area relating to finance, banking, or business administration
11-12    from an accredited college or university and has 18 months of
11-13    experience in the mortgage or lending field as evidenced by
11-14    documentary proof of full-time employment as a mortgage broker or
11-15    loan officer with a mortgage broker or a person exempt under
11-16    Section 156.202;
11-17                      (B)  the person is licensed in this state as:
11-18                            (i)  an active real estate broker under The
11-19    Real Estate License Act (Article 6573a, Vernon's Texas Civil
11-20    Statutes); or
11-21                            (ii)  an active attorney; or
11-22                      (C)  the person has three years of experience in
11-23    the mortgage lending field as evidenced by documentary proof of
11-24    full-time employment as a loan officer with a mortgage broker or a
11-25    person exempt under Section 156.202;
11-26                (5)  demonstrate evidence of compliance with the
11-27    financial requirements of this chapter; and
 12-1                (6)  not have been convicted of a criminal offense that
 12-2    the commissioner determines directly relates to the occupation of a
 12-3    mortgage broker under Article 6252-13c, Revised Statutes.
 12-4          (b)  A mortgage broker may conduct business under a corporate
 12-5    structure, partnership, or any other business form or as an
 12-6    independent contractor for a corporation, partnership, or any other
 12-7    business entity.  Before conducting mortgage broker activities
 12-8    under, through, or for a corporation, partnership, or other
 12-9    business entity, a mortgage broker must notify the commissioner, in
12-10    writing, of any corporate name, partnership name, assumed name, or
12-11    any other name under, through, or for which the mortgage broker
12-12    conducts activities for which a license is required under this
12-13    chapter.  The corporation, partnership, or other business entity
12-14    under, through, or for which the mortgage broker conducts business
12-15    is not required to be separately licensed as a mortgage broker
12-16    provided that all individuals who perform mortgage broker
12-17    activities are licensed as mortgage brokers or loan officers.  The
12-18    commissioner shall require proof of compliance with this subsection
12-19    at the time the mortgage broker applies for and renews a license.
12-20          (c)  To be eligible to be licensed as a loan officer a person
12-21    must:
12-22                (1)  be an individual who is at least 18 years of age;
12-23                (2)  be a citizen of the United States or a lawfully
12-24    admitted alien;
12-25                (3)  designate in the application the name of the
12-26    mortgage broker sponsoring the loan officer;
12-27                (4)  provide the commissioner with satisfactory
 13-1    evidence that the applicant satisfies one of the following:
 13-2                      (A)  the person meets one of the requirements
 13-3    described by Subsection (a)(4);
 13-4                      (B)  the person has successfully completed 15
 13-5    hours of education courses approved by the commissioner under this
 13-6    section;
 13-7                      (C)  the person has 18 months of experience as a
 13-8    loan officer as evidenced by documentary proof of full-time
 13-9    employment as a loan officer with a mortgage broker or a person
13-10    exempt under Section 156.202; or
13-11                      (D)  for applications received prior to January
13-12    1, 2000, the mortgage broker that will sponsor the applicant
13-13    provides a certification under oath that the applicant has been
13-14    provided necessary and appropriate education and training regarding
13-15    all applicable state and federal law and regulations relating to
13-16    mortgage loans; and
13-17                (5)  not have been convicted of a criminal offense that
13-18    the commissioner determines directly relates to the occupation of a
13-19    loan officer under Article 6252-13c, Revised Statutes.
13-20          Sec. 156.205.  FINANCIAL REQUIREMENTS FOR A MORTGAGE BROKER.
13-21    (a)  In this section, "net assets" means the difference between
13-22    total assets and total liabilities, as determined by generally
13-23    acceptable accounting principles.
13-24          (b)  A mortgage broker must maintain net assets of at least
13-25    $25,000 or a surety bond in the amount of at least $50,000.  The
13-26    term of the surety bond must coincide with the term of the license.
13-27          (c)  The commissioner shall require proof of compliance with
 14-1    this section at the time the mortgage broker applies for or renews
 14-2    a license.
 14-3          Sec. 156.206.  CRIMINAL BACKGROUND CHECK.  (a)  On receipt of
 14-4    an application for a mortgage broker license or a loan officer
 14-5    license, the commissioner shall conduct a criminal background check
 14-6    of the applicant.
 14-7          (b)  The commissioner shall obtain criminal history record
 14-8    information on an applicant that is maintained by the Department of
 14-9    Public Safety.  By rule, the commissioner may require applicants to
14-10    submit information and fingerprints necessary for the commissioner
14-11    to obtain criminal background information from the Federal Bureau
14-12    of Investigation.  The commissioner may also obtain criminal
14-13    history record information from any court or any local, state, or
14-14    national governmental agency.
14-15          (c)  The commissioner shall keep confidential any criminal
14-16    background information obtained under this subsection and may not
14-17    release or disclose the information unless:
14-18                (1)  the information is a public record at the time the
14-19    commissioner obtains the information; or
14-20                (2)  the commissioner releases the information:
14-21                      (A)  under order from a court;
14-22                      (B)  with the permission of the applicant;
14-23                      (C)  to a person through whom the applicant is
14-24    conducting or will conduct business; or
14-25                      (D)  to a governmental agency.
14-26          Sec. 156.207.  ISSUANCE OF LICENSE CERTIFICATE; PROVISIONAL
14-27    LICENSE.  (a)  The commissioner shall issue a license certificate
 15-1    to an applicant for a mortgage broker license if the commissioner
 15-2    finds that the applicant meets all requirements and conditions for
 15-3    the license.
 15-4          (b)  When an applicant for a loan officer license has met all
 15-5    requirements and conditions for the license, the commissioner shall
 15-6    issue a license certificate to the mortgage broker sponsoring the
 15-7    loan officer.
 15-8          (c)  In accordance with any rules adopted under this
 15-9    subsection, the commissioner may issue a provisional license to an
15-10    applicant if a significant delay is necessary to process the
15-11    application, review information related to the application, or
15-12    obtain information related to the application.  The commissioner
15-13    may revoke a provisional license issued under this subsection on a
15-14    ground listed under Section 156.303 or on any ground that the
15-15    commissioner could have denied issuance of the license on the
15-16    application.
15-17          Sec. 156.208.  RENEWALS.  (a)  A mortgage broker license
15-18    issued under this chapter is valid for two years and may be renewed
15-19    on or before its expiration date if the mortgage broker:
15-20                (1)  pays to the commissioner a renewal fee in an
15-21    amount determined by the commissioner not to exceed $375 and a
15-22    recovery fund fee provided by Section 156.502;
15-23                (2)  has not been convicted of a felony the
15-24    commissioner determines is directly related to the occupation of a
15-25    mortgage broker under Article 6252-13c, Revised Statutes; and
15-26                (3)  provides the commissioner with satisfactory
15-27    evidence that the mortgage broker:
 16-1                      (A)  has attended, during the term of the current
 16-2    license, 15 hours of continuing education courses that the
 16-3    commissioner, in accordance with the rules adopted under this
 16-4    section, has approved as continuing education courses; or
 16-5                      (B)  maintains an active license in this state as
 16-6    a real estate broker, real estate salesperson, or attorney.
 16-7          (b)  A loan officer license issued under this chapter is
 16-8    valid for two years and may be renewed on or before its expiration
 16-9    date if the loan officer:
16-10                (1)  pays to the commissioner a renewal fee in an
16-11    amount determined by the commissioner not to exceed $175 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    loan officer under Article 6252-13c, Revised Statutes; and
16-16                (3)  provides the commissioner with satisfactory
16-17    evidence that the loan officer:
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, including
16-22    courses provided by or through the licensed mortgage broker with
16-23    whom the loan officer is associated after submission to and
16-24    approval by the commission; or
16-25                      (B)  maintains an active license in this state as
16-26    a real estate broker, real estate salesperson, or attorney.
16-27          (c)  The commissioner may require mortgage brokers or loan
 17-1    officers to submit requests for renewal on a form prescribed by the
 17-2    commissioner.
 17-3          (d)  On receipt of a request for a renewal of a license
 17-4    issued under this subchapter, the commissioner may conduct a
 17-5    criminal background check under Section 156.206.
 17-6          (e)  A renewal fee is not refundable.
 17-7          (f)  The commissioner by rule may adopt a system under which
 17-8    licenses expire on a date or dates other than December 31.  If a
 17-9    system is adopted under this subsection, dates relating to
17-10    expiration and issuance of licenses shall be adjusted accordingly.
17-11    For the biennium in which the license expiration date is changed,
17-12    license fees shall be prorated on a monthly basis so that each
17-13    license holder pays only that portion of the license fee that is
17-14    allocable to the number of months during which the license is
17-15    valid.  On renewal of the license on the new expiration date, the
17-16    total license renewal fee is payable.
17-17          (g)  The commissioner shall adopt rules related to the
17-18    approval of courses for continuing education credit under this
17-19    section that provide for the acceptance of continuing education
17-20    courses that are related to finance, financial consulting, lending,
17-21    real estate contracts, discrimination laws, deceptive trade
17-22    practices, real property conveyances, and other topics that are
17-23    relevant to mortgage brokers and that are acceptable as continuing
17-24    education courses to other professional licensing agencies.
17-25          Sec. 156.209.  DENIAL OF APPLICATIONS AND RENEWALS.  (a)  If
17-26    the commissioner declines or fails to issue or renew a license, the
17-27    commissioner shall promptly give written notice to the applicant or
 18-1    the person requesting the renewal that the application or renewal,
 18-2    as appropriate, was denied.
 18-3          (b)  Before the applicant or person requesting the renewal
 18-4    may appeal to a district court as provided by Section 156.401, the
 18-5    applicant or person must file with the commissioner, not later than
 18-6    the 10th day after the date on which notice under Subsection (a) is
 18-7    received, an appeal of the ruling requesting a time and place for a
 18-8    hearing before a hearings officer designated by the commissioner.
 18-9          (c)  The designated hearings officer shall set the time and
18-10    place for a hearing requested under Subsection (b) not later than
18-11    the 30th day after the date on which the appeal is received.  The
18-12    hearings officer shall provide at least 10 days' notice of the
18-13    hearing to the applicant or person requesting the renewal.  The
18-14    time of the hearing may be continued periodically with the consent
18-15    of the applicant or person requesting the renewal.  After the
18-16    hearing, the commissioner shall enter an order from the findings of
18-17    fact, conclusions of law, and recommendations of the hearings
18-18    officer.
18-19          (d)  If an applicant or person requesting the renewal fails
18-20    to request a hearing under this section, the commissioner's refusal
18-21    to issue or renew a license is final and may not be subject to
18-22    review by the courts.
18-23          (e)  A hearing held under this section is governed by Chapter
18-24    2001, Government Code.  An appeal of a final order issued under
18-25    this section may be made in accordance with Section 156.401.
18-26          Sec. 156.210.  PROBATIONARY LICENSE.  The commissioner may
18-27    issue a probationary license.  The commissioner by rule shall adopt
 19-1    reasonable terms and conditions for a probationary license.
 19-2          Sec. 156.211.  CHANGE OF ADDRESS OR SPONSORSHIP; MODIFICATION
 19-3    OF LICENSE.  (a)  Before the 10th day preceding the effective date
 19-4    of an address change, a mortgage broker shall notify the
 19-5    commissioner in writing of the new address accompanied by a change
 19-6    of address fee of $25.  A new license certificate must be obtained
 19-7    before the mortgage broker may conduct business at the new
 19-8    location.
 19-9          (b)  A loan officer may act only for the mortgage broker
19-10    sponsoring the loan officer.  A loan officer may be sponsored by
19-11    only one mortgage broker at a time.  When the sponsorship of a loan
19-12    officer is terminated, the loan officer and the mortgage broker
19-13    shall immediately notify the commissioner and the mortgage broker
19-14    shall return the loan officer license to the commissioner.  The
19-15    loan officer's license then becomes inactive.  The loan officer
19-16    license may be activated if, before the license expires, a mortgage
19-17    broker files a request, accompanied by a $25 fee, notifying the
19-18    commissioner that the mortgage broker will sponsor the loan officer
19-19    and will assume responsibility for the actions of the loan officer.
19-20          (c)  A fee under this section is not refundable.
19-21          Sec. 156.212.  MAINTENANCE AND LOCATION OF OFFICES; DISPLAY
19-22    OF LICENSE CERTIFICATES.  (a)  Each mortgage broker licensed under
19-23    this chapter shall maintain a physical office in this state.  The
19-24    address of the office shall be designated on the license
19-25    certificate.
19-26          (b)  If a mortgage broker maintains more than one place of
19-27    business in this state, the mortgage broker shall apply for, pay a
 20-1    fee of $50 for, and obtain an additional license certificate to be
 20-2    known as a branch office license for each additional office to be
 20-3    maintained by the mortgage broker.
 20-4          (c)  The license certificate of a mortgage broker shall be at
 20-5    all times prominently displayed in the mortgage broker's place of
 20-6    business.  The branch office certificate shall be at all times
 20-7    prominently displayed in the mortgage broker's branch office.
 20-8          (d)  A loan officer license certificate shall be at all times
 20-9    prominently displayed in the office of the mortgage broker for whom
20-10    the loan officer primarily conducts business.
20-11           (Sections 156.213 to 156.300 reserved for expansion
20-12    SUBCHAPTER D.  LICENSE REVOCATION AND SUSPENSION AND OTHER ACTIONS
20-13                          AGAINST LICENSE HOLDER
20-14          Sec. 156.301.  COMPLAINTS AND INVESTIGATIONS.  (a)  On the
20-15    signed written complaint of a person, the commissioner shall
20-16    investigate the actions and records of a person licensed under this
20-17    chapter if the complaint, or the complaint and documentary or other
20-18    evidence presented in connection with the complaint, provides
20-19    reasonable cause.  The commissioner, before commencing an
20-20    investigation, shall notify a mortgage broker or loan officer in
20-21    writing of the complaint and that the commissioner intends to
20-22    investigate the matter.
20-23          (b)  Except as provided by Subsection (a), the commissioner
20-24    may not initiate an investigation or other action against a person
20-25    licensed under this chapter on the basis of an anonymous complaint
20-26    regardless of whether the complaint is in writing.  The
20-27    commissioner may conduct an undercover or covert investigation only
 21-1    if the commissioner, after due consideration of the circumstances,
 21-2    determines that the investigation is necessary to prevent immediate
 21-3    harm and to carry out the purposes of this chapter.
 21-4          (c)  The commissioner may authorize an employee of the
 21-5    commissioner to file a signed written complaint against a person
 21-6    licensed under this chapter and to conduct an investigation if:
 21-7                (1)  a judgment against the person has been paid from a
 21-8    recovery fund established under this chapter;
 21-9                (2)  the person holds a provisional license issued
21-10    under Section 156.207(c);
21-11                (3)  the person is convicted of a criminal offense that
21-12    may constitute grounds for the suspension or revocation of the
21-13    license; or
21-14                (4)  the person fails to honor a check issued to the
21-15    commissioner.
21-16          Sec. 156.302.  ADMINISTRATIVE PENALTY.  (a)  The commissioner
21-17    may impose an administrative penalty on a person licensed under
21-18    this chapter who violates this chapter or a rule or order adopted
21-19    under this chapter.
21-20          (b)  The amount of the penalty may not exceed $2,500, and
21-21    each day a violation continues or occurs is a separate violation
21-22    for the purpose of imposing a penalty.  The amount shall be based
21-23    on:
21-24                (1)  the seriousness of the violation, including the
21-25    nature, circumstances, extent, and gravity of the violation;
21-26                (2)  the history of previous violations;
21-27                (3)  the amount necessary to deter a future violation;
 22-1                (4)  efforts to correct the violation; and
 22-2                (5)  any other matter that justice may require.
 22-3          (c)  The enforcement of the penalty may be stayed during the
 22-4    time the order is under judicial review if the person pays the
 22-5    penalty to the clerk of the court or files a supersedeas bond with
 22-6    the court in the amount of the penalty.  A person who cannot afford
 22-7    to pay the penalty or file the bond may stay the enforcement by
 22-8    filing an affidavit in the manner required by the Texas Rules of
 22-9    Civil Procedure for a party who cannot afford to file security for
22-10    costs, subject to the right of the commissioner to contest the
22-11    affidavit as provided by those rules.
22-12          (d)  The attorney general may sue to collect the penalty.
22-13          (e)  A proceeding to impose the penalty is considered to be a
22-14    contested case under Chapter 2001, Government Code.
22-15          Sec. 156.303.  DISCIPLINARY ACTION; CEASE AND DESIST ORDER.
22-16    (a)  The commissioner may order disciplinary action against a
22-17    licensed mortgage broker or a licensed loan officer when the
22-18    commissioner, after a hearing, has determined that the person:
22-19                (1)  obtained a license under this chapter through a
22-20    false or fraudulent representation or made a material
22-21    misrepresentation in an application for a license under this
22-22    chapter;
22-23                (2)  published or caused to be published an
22-24    advertisement related to the business of a mortgage broker or loan
22-25    officer that:
22-26                      (A)  is misleading;
22-27                      (B)  is likely to deceive the public;
 23-1                      (C)  in any manner tends to create a misleading
 23-2    impression;
 23-3                      (D)  fails to identify as a mortgage broker or
 23-4    loan officer the person causing the advertisement to be published;
 23-5    or
 23-6                      (E)  violates federal or state law;
 23-7                (3)  while performing an act for which a license under
 23-8    this chapter is required, engaged in conduct that constitutes
 23-9    improper, fraudulent, or dishonest dealings;
23-10                (4)  failed to notify the commissioner not later than
23-11    the 30th day after the date of the final conviction if the person,
23-12    in a court of this or another state or in a federal court, has been
23-13    convicted of or entered a plea of guilty or nolo contendere to a
23-14    felony or a criminal offense involving fraud;
23-15                (5)  failed to use a fee collected in advance of
23-16    closing of a mortgage loan for a purpose for which the fee was
23-17    paid;
23-18                (6)  charged or received, directly or indirectly, a fee
23-19    for assisting a mortgage applicant in obtaining a mortgage loan
23-20    before all of the services that the person agreed to perform for
23-21    the mortgage applicant are completed, and the proceeds of the
23-22    mortgage loan have been disbursed to or on behalf of the mortgage
23-23    applicant, except as provided by Section 156.304;
23-24                (7)  failed within a reasonable time to honor a check
23-25    issued to the commissioner after the commissioner has mailed a
23-26    request for payment by certified mail to the person's last known
23-27    business address as reflected by the commissioner's records;
 24-1                (8)  paid compensation to a person who is not licensed
 24-2    or exempt under this chapter for acts for which a license under
 24-3    this chapter is required;
 24-4                (9)  induced or attempted to induce a party to a
 24-5    contract to breach the contract so the person may make a mortgage
 24-6    loan;
 24-7                (10)  published or circulated an unjustified or
 24-8    unwarranted threat of legal proceedings in matters related to the
 24-9    person's actions or services as a mortgage broker or loan officer,
24-10    as applicable;
24-11                (11)  established an association, by employment or
24-12    otherwise, with a person not licensed or exempt under this chapter
24-13    who was expected or required to act as a mortgage broker or loan
24-14    officer;
24-15                (12)  aided, abetted, or conspired with a person to
24-16    circumvent the requirements of this chapter;
24-17                (13)  acted in the dual capacity of a mortgage broker
24-18    or loan officer and real estate broker, salesperson, or attorney
24-19    in a transaction without the knowledge and written consent of the
24-20    mortgage applicant or in violation of applicable requirements under
24-21    federal law;
24-22                (14)  discriminated against a prospective borrower on
24-23    the basis of race, color, religion, sex, national origin, ancestry,
24-24    familial status, or a disability;
24-25                (15)  failed or refused on demand to:
24-26                      (A)  produce a document, book, or record
24-27    concerning a mortgage loan transaction conducted by the mortgage
 25-1    broker or loan officer for inspection by the commissioner or the
 25-2    commissioner's authorized personnel or representative;
 25-3                      (B)  give the commissioner or the commissioner's
 25-4    authorized personnel or representative free access to the books or
 25-5    records relating to the person's business kept by an officer,
 25-6    agent, or employee of the person or any business entity through
 25-7    which the person conducts mortgage brokerage activities, including
 25-8    a subsidiary or holding company affiliate; or
 25-9                      (C)  provide information requested by the
25-10    commissioner as a result of a formal or informal complaint made to
25-11    the commissioner;
25-12                (16)  failed without just cause to surrender, on
25-13    demand, a copy of a document or other instrument coming into the
25-14    person's possession that was provided to the person by another
25-15    person making the demand or that the person making the demand is
25-16    under law entitled to receive; or
25-17                (17)  disregarded or violated this chapter or a rule
25-18    adopted by the commissioner under this chapter.
25-19          (b)  In addition to disciplinary action by the commissioner
25-20    authorized under Subsection (a), the commissioner, if the
25-21    commissioner has reasonable cause to believe that a person licensed
25-22    under this chapter has or is about to violate this section, may
25-23    issue without notice and hearing an order to cease and desist from
25-24    continuing a particular action or an order to take affirmative
25-25    action, or both, to enforce compliance with this chapter.
25-26          (c)  An order issued under Subsection (b) must contain a
25-27    reasonably detailed statement of the facts on which the order is
 26-1    made.  If a person against whom the order is made requests a
 26-2    hearing, the commissioner shall set and give notice of a hearing
 26-3    before the commissioner or a hearings officer.  The hearing shall
 26-4    be governed by Chapter 2001, Government Code.  Based on the
 26-5    findings of fact, conclusions of law, and recommendations of the
 26-6    hearings officer, the commissioner by order may find a violation
 26-7    has occurred or not occurred.
 26-8          (d)  If a hearing is not requested under Subsection (c) not
 26-9    later than the 30th day after the date on which an order is made,
26-10    the order is considered final and not appealable.
26-11          (e)  The commissioner, after giving notice, may impose
26-12    against a person who violates a cease and desist order an
26-13    administrative penalty in an amount not to exceed $1,000 for each
26-14    day of the violation.  In addition to any other remedy provided by
26-15    law, the commissioner may institute in district court a suit for
26-16    injunctive relief and to collect the administrative penalty.  A
26-17    bond is not required of the commissioner with respect to injunctive
26-18    relief granted under this subsection.  A penalty collected under
26-19    this subsection shall be deposited in the fund.
26-20          Sec. 156.304.  FEE ASSESSMENT AND DISCLOSURE.  (a)  Before
26-21    the completion of all services to be performed, a mortgage broker
26-22    may charge and receive, unless prohibited by law, the following
26-23    fees for services in assisting a mortgage applicant to obtain a
26-24    mortgage:
26-25                (1)  a fee to obtain a credit report;
26-26                (2)  a fee for the appraisal of the real estate;
26-27                (3)  a fee for processing a mortgage application;
 27-1                (4)  a fee for taking a mortgage application;
 27-2                (5)  a fee for automated underwriting;
 27-3                (6)  a fee for a courier service;
 27-4                (7)  a fee to issue a loan commitment; or
 27-5                (8)  subject to Subsection (b), a fee for locking in an
 27-6    interest rate.
 27-7          (b)  A mortgage broker or loan officer may not charge or
 27-8    receive a fee for locking in an interest rate unless there is a
 27-9    written agreement signed by the mortgage applicant and mortgage
27-10    broker that contains a statement of whether the fee to lock in the
27-11    interest rate is refundable and, if so, the terms and conditions
27-12    necessary to obtain the refund.
27-13           (Sections 156.305 to 156.400 reserved for expansion
27-14    SUBCHAPTER E.  HEARINGS; JUDICIAL REVIEW; CIVIL ACTIONS; UNLICENSED
27-15                                 ACTIVITY
27-16          Sec. 156.401.  HEARINGS AND JUDICIAL REVIEW.  (a)  The
27-17    commissioner may employ an enforcement staff to investigate and
27-18    prosecute complaints made against persons licensed under this
27-19    chapter.  The commissioner may employ a hearings officer to conduct
27-20    hearings under this section.
27-21          (b)  If the commissioner proposes to suspend or revoke a
27-22    license issued under this chapter or if the commissioner refuses to
27-23    issue or renew a license to an applicant for a license or person
27-24    requesting a renewal of a license under this chapter, the applicant
27-25    or license holder is entitled to a hearing before the commissioner
27-26    or a hearings officer who shall make a proposal for decision to the
27-27    commissioner.  The commissioner or hearings officer shall prescribe
 28-1    the time and place of the hearing.  The hearing is governed by
 28-2    Chapter 2001, Government Code.
 28-3          (c)  The commissioner or hearings officer may issue subpoenas
 28-4    for the attendance of witnesses and the production of records or
 28-5    documents.  Process issued by the commissioner or hearings officer
 28-6    may extend to all parts of the state and may be served by any
 28-7    person designated by the commissioner or hearings officer.
 28-8          (d)  An individual aggrieved by a ruling, order, or decision
 28-9    of the commissioner has the right to appeal to a district court in
28-10    the county in which the hearing was held.  An appeal under this
28-11    subsection is governed by Chapter 2001, Government Code.
28-12          Sec. 156.402.  CIVIL ACTIONS AND INJUNCTIVE RELIEF.  (a)  A
28-13    mortgage applicant injured by a violation of this chapter may bring
28-14    an action for recovery of actual monetary damages and reasonable
28-15    attorney's fees and court costs.
28-16          (b)  The commissioner, the attorney general, or a mortgage
28-17    applicant may bring an action to enjoin a violation of this
28-18    chapter.
28-19          (c)  A remedy provided by this section is in addition to any
28-20    other remedy provided by law.
28-21          Sec. 156.403.  BURDEN OF PROOF TO ESTABLISH AN EXEMPTION.
28-22    The burden of proving an exemption in a proceeding or action
28-23    brought under this chapter is on the person claiming the benefit of
28-24    the exemption.
28-25          Sec. 156.404.  RELIANCE ON WRITTEN NOTICES FROM COMMISSIONER.
28-26    A person does not violate this chapter with respect to an action
28-27    taken or omission made in reliance on a written notice, written
 29-1    interpretation, or written report from the commissioner, unless a
 29-2    subsequent amendment to this chapter or a rule adopted under this
 29-3    chapter affects the commissioner's notice, interpretation, or
 29-4    report.
 29-5          Sec. 156.405.  COMPLETION OF MORTGAGE BROKER SERVICES.
 29-6    (a)  On disbursement of mortgage proceeds to or on behalf of the
 29-7    mortgage applicant, the mortgage broker and loan officer who
 29-8    assisted the mortgage applicant in obtaining the mortgage loan are
 29-9    considered to have completed the performance of the mortgage
29-10    broker's and loan officer's services for the mortgage applicant and
29-11    owe no additional duties or obligations to the mortgage applicant
29-12    with respect to the mortgage loan.
29-13          (b)  This section does not limit or preclude the liability of
29-14    a mortgage broker or loan officer for:
29-15                (1)  failing to comply with this chapter or a rule
29-16    adopted under this chapter;
29-17                (2)  failing to comply with a provision of or duty
29-18    arising under an agreement with a mortgage applicant or lender
29-19    under this chapter; or
29-20                (3)  violating any other state or federal law.
29-21          Sec. 156.406.  UNLICENSED ACTIVITY.  (a)  A person who is not
29-22    exempt under this chapter and who acts as a mortgage broker or loan
29-23    officer without first obtaining a license required under this
29-24    chapter commits an offense.  An offense under this subsection is a
29-25    Class B misdemeanor.  A second or subsequent conviction for an
29-26    offense under this subsection shall be punished as a Class A
29-27    misdemeanor.
 30-1          (b)  A person who received money, or the equivalent of money,
 30-2    as a fee or profit because of or in consequence of the person
 30-3    acting as a mortgage broker or loan officer without an active
 30-4    license or being exempt under this chapter is liable for damages in
 30-5    an amount that is not less than the amount of the fee or profit
 30-6    received and not to exceed three times the amount of the fee or
 30-7    profit received, as may be determined by the court.  An aggrieved
 30-8    person may recover damages under this subsection in a court.
 30-9          (c)  If the commissioner has reasonable cause to believe that
30-10    a person who is not licensed or exempt under this chapter has
30-11    engaged, or is about to engage, in an act or practice for which a
30-12    license is required under this chapter, the commissioner may issue
30-13    without notice and hearing an order to cease and desist from
30-14    continuing a particular action or an order to take affirmative
30-15    action, or both, to enforce compliance with this chapter.  The
30-16    order shall contain a reasonably detailed statement of the facts on
30-17    which the order is made.  If a person against whom the order is
30-18    made requests a hearing, the commissioner shall set and give notice
30-19    of a hearing before the commissioner or a hearings officer.  The
30-20    hearing shall be governed by Chapter 2001, Government Code.  Based
30-21    on the findings of fact, conclusions of law, and recommendations of
30-22    the hearings officer, the commissioner by order may find a
30-23    violation has occurred or not occurred.
30-24          (d)  If a hearing has not been requested under Subsection (c)
30-25    not later than the 30th day after the date the order is made, the
30-26    order is considered final and not appealable.  The commissioner,
30-27    after giving notice, may impose against a person who violates a
 31-1    cease and desist order, an administrative penalty in an amount not
 31-2    to exceed $1,000 for each day of a violation.  In addition to any
 31-3    other remedy provided by law, the commissioner may institute in
 31-4    district court a suit for injunctive relief and to collect the
 31-5    administrative penalty.  A bond is not required of the commissioner
 31-6    with respect to injunctive relief granted under this section.  A
 31-7    penalty collected under this subsection shall be deposited in the
 31-8    fund.
 31-9           (Sections 156.407 to 156.500 reserved for expansion
31-10               SUBCHAPTER F.  MORTGAGE BROKER RECOVERY FUND
31-11          Sec. 156.501.  MORTGAGE BROKER RECOVERY FUND.  (a)  The
31-12    commissioner shall establish and maintain a mortgage broker
31-13    recovery fund as provided by this subchapter.  The amounts received
31-14    by the commissioner for deposit in the fund shall be held by the
31-15    commissioner in trust for carrying out the purposes of the fund.
31-16          (b)  The fund shall be used to reimburse aggrieved persons to
31-17    whom a court awards actual damages because of certain acts
31-18    committed by a mortgage broker or loan officer who was licensed
31-19    under this chapter when the act was committed.  The use of the fund
31-20    is limited to an act that constitutes a violation of Section
31-21    156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13), or
31-22    (16) or 156.304.
31-23          (c)  Amounts in the fund may be invested and reinvested in
31-24    the same manner as funds of the Texas State Employees Retirement
31-25    System, and the interest from these investments shall be deposited
31-26    to the credit of the fund.  An investment may not be made under
31-27    this subsection if the investment will impair the necessary
 32-1    liquidity required to satisfy judgment payments awarded under this
 32-2    subchapter.
 32-3          Sec. 156.502.  FUNDING.  (a)  On an application for an
 32-4    original license or for renewal of a license issued under this
 32-5    chapter, the applicant, in addition to paying the original
 32-6    application fee or renewal fee, shall pay a $20 fee.  The fee shall
 32-7    be deposited in the fund.
 32-8          (b)  If the balance remaining in the fund at the end of a
 32-9    calendar year after 2010 is less than $500,000, each mortgage
32-10    broker and loan officer licensed under this chapter, on the next
32-11    renewal of the license, shall pay, in addition to any other
32-12    required fees, the lesser of a $10 fee or a pro rata share of the
32-13    amount necessary to bring the fund to $1 million.  The fee shall be
32-14    deposited in the fund.
32-15          (c)  If the balance remaining in the mortgage broker recovery
32-16    fund at the end of a calendar year is more than the greater of $3.5
32-17    million or the total amount of claims paid from the fund during the
32-18    previous four fiscal years, the amount of money in excess of the
32-19    greater amount shall be transferred to the general revenue fund.
32-20          Sec. 156.503.  STATUTE OF LIMITATIONS.  An action for a
32-21    judgment that subsequently results in an order for collection from
32-22    the fund may not be instituted after the second anniversary of the
32-23    date on which the cause of action accrues.
32-24          Sec. 156.504.  PROCEDURE FOR RECOVERY.  (a)  An aggrieved
32-25    person who recovers against a mortgage broker or loan officer
32-26    licensed under this chapter a valid court judgment for conduct
32-27    described by Section 156.501 that occurred on or after January 1,
 33-1    2000, after final judgment has been entered, execution returned
 33-2    nulla bona, and a judgment lien perfected, may file a verified
 33-3    claim in the court in which the judgment was entered and, on 20
 33-4    days' written notice to the commissioner and to the judgment
 33-5    debtor, may apply to the court for an order directing payment from
 33-6    the fund of any unpaid judgment amount, subject to Section 156.503.
 33-7          (b)  On the hearing on the application, the aggrieved person
 33-8    is required to show:
 33-9                (1)  that the judgment is based on facts allowing
33-10    recovery under Section 156.501;
33-11                (2)  that the person is not a spouse of the debtor, or
33-12    the personal representative of the spouse, and that the person is
33-13    not licensed as a mortgage broker or loan officer under this
33-14    chapter who is seeking to recover any compensation in the
33-15    transaction or transactions for which the application for payment
33-16    is made;
33-17                (3)  that based on the best available information, the
33-18    judgment debtor lacks sufficient attachable assets in this state or
33-19    any other state to satisfy the judgment and the surety bond
33-20    required by Section 156.205 is not sufficient to satisfy the
33-21    judgment; and
33-22                (4)  the amount that may be realized from the sale of
33-23    property or other assets liable to be sold or applied in
33-24    satisfaction of the judgment and the balance remaining due on the
33-25    judgment after application of the amount that may be realized.
33-26          (c)  A recovery on the judgment against a single defendant
33-27    made before payment from the fund shall be applied first by the
 34-1    creditor to actual damages.
 34-2          (d)  The court shall make an order directed to the
 34-3    commissioner requiring payment from the fund of the amount the
 34-4    court finds to be payable on the claim, pursuant to and in
 34-5    accordance with the limitations contained in this subchapter, if
 34-6    the court is satisfied, on the hearing, of the truth of all matters
 34-7    required to be shown by the aggrieved person under Subsection (b)
 34-8    and that the aggrieved person has satisfied all of the requirements
 34-9    of this section.
34-10          (e)  When the commissioner receives notice of entry of a
34-11    final judgment and a hearing is scheduled under this section, the
34-12    commissioner may notify the attorney general of the commissioner's
34-13    desire to enter an appearance, file a response, appear at the court
34-14    hearing, defend the action, or to take any other appropriate
34-15    action.  In taking any action described by this subsection, the
34-16    commissioner and the attorney general shall act only to protect the
34-17    fund from spurious or unjust claims or to ensure compliance with
34-18    the requirements for recovery under this subchapter.
34-19          (f)  The commissioner may relitigate any issue material and
34-20    relevant in the hearing on the application that was determined in
34-21    the underlying action on which the judgment in favor of the
34-22    applicant was based.
34-23          (g)  If the court finds that the aggregate amount of claims
34-24    against a licensed mortgage broker or loan officer exceeds the
34-25    limits contained in Section 156.505, the court shall reduce
34-26    proportionately the amount the court finds payable on the claim.
34-27          Sec. 156.505.  RECOVERY LIMITS.  (a)  A person entitled to
 35-1    receive payment out of the fund is entitled to receive
 35-2    reimbursement of actual, out-of-pocket damages, reasonable
 35-3    attorney's fees, and court costs as determined by the court as
 35-4    provided by this section.
 35-5          (b)  A payment from the fund may be made only pursuant to a
 35-6    court order as provided by Section 156.504.  A payment for claims:
 35-7                (1)  arising out of the same transaction, including
 35-8    attorney's fees, interest, and court costs, is limited in the
 35-9    aggregate to $25,000, regardless of the number of claimants; and
35-10                (2)  based on judgments against a single person
35-11    licensed as a mortgage broker or loan officer under this chapter is
35-12    limited in the aggregate to $50,000 until the fund has been
35-13    reimbursed for all amounts paid.
35-14          Sec. 156.506.  REVOCATION OF LICENSE FOR PAYMENT FROM FUND.
35-15    (a)  The commissioner may revoke a license issued under this
35-16    chapter on proof that the commissioner has made a payment from the
35-17    fund of any amount toward satisfaction of a judgment against a
35-18    person licensed as a mortgage broker or loan officer under this
35-19    chapter.
35-20          (b)  The commissioner may probate an order revoking a license
35-21    under this section.
35-22          (c)  A person on whose behalf payment was made from the fund
35-23    is not eligible to receive a new license under this chapter until
35-24    the person has repaid in full, plus interest at the current legal
35-25    rate, the amount paid from the fund on the person's behalf.
35-26          (d)  This section does not limit the authority of the
35-27    commissioner to take disciplinary action against a mortgage broker
 36-1    or loan officer for a violation of this chapter or the rules
 36-2    adopted by the commissioner under this chapter.  The repayment in
 36-3    full to the fund of all obligations of a mortgage broker or loan
 36-4    officer does not nullify or modify the effect of any other
 36-5    disciplinary proceeding brought under this chapter.
 36-6          Sec. 156.507.  SUBROGATION.  When the commissioner has paid a
 36-7    judgment creditor an amount from the fund as directed by the court,
 36-8    the commissioner is subrogated to all of the rights of the judgment
 36-9    creditor to the extent of the amount paid.  The judgment creditor
36-10    shall assign all of the creditor's right, title, and interest in
36-11    the judgment up to the amount paid by the commissioner, and that
36-12    amount has priority for repayment in the event of any subsequent
36-13    recovery on the judgment.  Any amount, including interest,
36-14    recovered by the commissioner on the judgment shall be deposited to
36-15    the credit of the fund.
36-16          Sec. 156.508.  FAILURE TO COMPLY WITH SUBCHAPTER.  The
36-17    failure of an aggrieved person to comply with a provision of this
36-18    subchapter relating to the fund constitutes a waiver of any rights
36-19    under this subchapter.
36-20          SECTION 3.  Subsection (a), Section 393.002, Finance Code, is
36-21    amended to read as follows:
36-22          (a)  This chapter does not apply to:
36-23                (1)  a person:
36-24                      (A)  authorized to make a loan or grant an
36-25    extension of consumer credit under the laws of this state or the
36-26    United States; and
36-27                      (B)  subject to regulation and supervision by
 37-1    this state or the United States;
 37-2                (2)  a lender approved by the United States secretary
 37-3    of housing and urban development for participation in a mortgage
 37-4    insurance program under the National Housing Act (12 U.S.C. Section
 37-5    1701 et seq.);
 37-6                (3)  a bank or savings and loan association the
 37-7    deposits or accounts of which are eligible to be insured by the
 37-8    Federal Deposit Insurance Corporation or a subsidiary of the bank
 37-9    or association;
37-10                (4)  a credit union doing business in this state;
37-11                (5)  a nonprofit organization exempt from taxation
37-12    under Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C.
37-13    Section 501(c)(3));
37-14                (6)  a real estate broker or salesman licensed under
37-15    The Real Estate License Act (Article 6573a, Vernon's Texas Civil
37-16    Statutes) who is acting within the course and scope of that
37-17    license;
37-18                (7)  an individual licensed to practice law in this
37-19    state who is acting within the course and scope of the individual's
37-20    practice as an attorney;
37-21                (8)  a broker-dealer registered with the Securities and
37-22    Exchange Commission or the Commodity Futures Trading Commission
37-23    acting within the course and scope of that regulation;
37-24                (9)  a consumer reporting agency; [or]
37-25                (10)  a person whose primary business is making loans
37-26    secured by liens on real property; or
37-27                (11)  a mortgage broker or loan officer licensed under
 38-1    Chapter 156, Finance Code, who is acting within the course and
 38-2    scope of that license.
 38-3          SECTION 4.  Section 232.002, Family Code, is amended to read
 38-4    as follows:
 38-5          Sec. 232.002.  LICENSING AUTHORITIES SUBJECT TO CHAPTER.  The
 38-6    following [state agencies] are licensing authorities subject to
 38-7    this chapter:
 38-8                (1)  Department of Agriculture;
 38-9                (2)  Texas Commission on Alcohol and Drug Abuse;
38-10                (3)  Texas Alcoholic Beverage Commission;
38-11                (4)  Texas Appraiser Licensing and Certification Board;
38-12                (5)  Texas Board of Architectural Examiners;
38-13                (6)  State Board of Barber Examiners;
38-14                (7)  Texas Board of Chiropractic Examiners;
38-15                (8)  Comptroller of Public Accounts;
38-16                (9)  Texas Cosmetology Commission;
38-17                (10)  Court Reporters Certification Board;
38-18                (11)  State Board of Dental Examiners;
38-19                (12)  Texas State Board of Examiners of Dietitians;
38-20                (13)  Texas Funeral Service Commission;
38-21                (14)  Texas Department of Health;
38-22                (15)  Texas Department of Human Services;
38-23                (16)  Texas Board of Professional Land Surveying;
38-24                (17)  Texas Department of Licensing and Regulation;
38-25                (18)  Texas State Board of Examiners of Marriage and
38-26    Family Therapists;
38-27                (19)  Texas State Board of Medical Examiners;
 39-1                (20)  Midwifery Board;
 39-2                (21)  Texas Natural Resource Conservation Commission;
 39-3                (22)  Board of Nurse Examiners;
 39-4                (23)  Texas Board of Occupational Therapy Examiners;
 39-5                (24)  Texas Optometry Board;
 39-6                (25)  Parks and Wildlife Department;
 39-7                (26)  Texas State Board of Examiners of Perfusionists;
 39-8                (27)  Texas State Board of Pharmacy;
 39-9                (28)  Texas Board of Physical Therapy Examiners;
39-10                (29)  Texas State Board of Plumbing Examiners;
39-11                (30)  Texas State Board of Podiatric Medical Examiners;
39-12                (31)  Polygraph Examiners Board;
39-13                (32)  Texas Board of Private Investigators and Private
39-14    Security Agencies;
39-15                (33)  Texas State Board of Examiners of Professional
39-16    Counselors;
39-17                (34)  Texas [State] Board of [Registration for]
39-18    Professional Engineers;
39-19                (35)  Department of Protective and Regulatory Services;
39-20                (36)  Texas State Board of Examiners of Psychologists;
39-21                (37)  Texas State Board of Public Accountancy;
39-22                (38)  Department of Public Safety of the State of
39-23    Texas;
39-24                (39)  Public Utility Commission of Texas;
39-25                (40)  Railroad Commission of Texas;
39-26                (41)  Texas Real Estate Commission;
39-27                (42)  State Bar of Texas;
 40-1                (43)  Texas State Board of Social Worker Examiners;
 40-2                (44)  State Board of Examiners for Speech-Language
 40-3    Pathology and Audiology;
 40-4                (45)  Texas Structural Pest Control Board;
 40-5                (46)  Board of Tax Professional Examiners;
 40-6                (47)  Secretary of State;
 40-7                (48)  Supreme Court of Texas;
 40-8                (49)  Texas Transportation Commission;
 40-9                (50)  State Board of Veterinary Medical Examiners;
40-10                (51)  Board of Vocational Nurse Examiners;
40-11                (52)  Texas Ethics Commission;
40-12                (53)  Advisory Board of Athletic Trainers;
40-13                (54)  State Committee of Examiners in the Fitting and
40-14    Dispensing of Hearing Instruments;
40-15                (55)  Texas Board of Licensure for Professional Medical
40-16    Physicists;
40-17                (56)  Texas Department of Insurance; [and]
40-18                (57)  Texas Board of Orthotics and Prosthetics; and
40-19                (58)  savings and loan commissioner.
40-20          SECTION 5.  (a)  This Act takes effect September 1, 1999.
40-21          (b)  A person is not required to be licensed under Chapter
40-22    156, Finance Code, as added by this Act, before January 1, 2000.
40-23          SECTION 6.  The importance of this legislation and the
40-24    crowded condition of the calendars in both houses create an
40-25    emergency and an imperative public necessity that the
40-26    constitutional rule requiring bills to be read on three several
40-27    days in each house be suspended, and this rule is hereby suspended.