LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 23, 1999 TO: Honorable Kip Averitt, Chair, House Committee on Financial Institutions FROM: John Keel, Director, Legislative Budget Board IN RE: SB1074 by Carona (Relating to the licensing of mortgage brokers; providing penalties.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1074, As Engrossed: positive impact of $920 through the * * biennium ending August 31, 2001. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $394,941 * * 2001 (394,021) * * 2002 521,654 * * 2003 (389,562) * * 2004 619,970 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Revenue Savings/(Cost) Revenue Number of State * * Gain/(Loss) from General Gain/(Loss) Employees from * * from General Revenue Fund from New - FY 1999 * * Revenue Fund 0001 Other Mortgage * * 0001 Broker Recovery * * Trust Fund * * 2000 $989,500 $(594,559) $84,000 8.5 * * 2001 67,450 (461,471) 4,200 8.5 * * 2002 1,093,638 (571,984) 92,620 8.5 * * 2003 72,447 (462,009) 4,620 8.5 * * 2004 1,203,819 (583,849) 102,100 8.5 * *************************************************************************** Technology Impact The Texas Savings and Loan Department (TSLD) estimates the need for additional computer hardware and software in fiscal years 2000 and 2001, and for licensing record maintenance in fiscal years 2000 through 2004. Fiscal Analysis The bill would create a licensing requirement for mortgage brokers and loan officers to be administered by the Texas Savings and Loan Department (TSLD). Mortgage brokers covered by the bill would be required to make application to the department for a license along with an application fee not to exceed $375. A loan officer license application would have an application fee not to exceed $175. Licenses would be valid for two years and could be renewed for a fee not to exceed $375 for mortgage brokers and a fee not to exceed $175 for loan officers. The bill would also require licensees to pay a $20 fee into the new Mortgage Broker Recovery Trust Fund which would be outside the State Treasury and would be held by the Texas Treasury Safekeeping Trust Company. The fund would be used for reimbursing individuals for damages for acts committed by licensed mortgage brokers or loan officers. The bill would also create the new Texas Mortgage Broker Committee to advise TSLD in the administration of the bill's provisions. Committee members would be entitled to a per diem allowance and reimbursement of travel expenses as provided by the General Appropriations Act. The bill would take effect September 1, 1999, but a person would not be required to be licensed until January 1, 2000. Methodology The Comptroller estimates 1,200 brokers and 3,000 loan officers would initially apply for licenses in fiscal year 2000. Revenues for 2000 include fees for applications by the above individuals, branch office licenses, changes in supervising mortgage brokers, and address changes. TSLD estimates revenues for fiscal year 2001 based on a smaller number of individuals who would obtain new licenses in the second year, and continued fees for changes in supervising mortgage brokers and addresses. Fees for 2002, 2003, and 2004 reflect the two-year renewal cycle for licensees with a five percent annual increase in the number of licensees. TSLD estimates the need for an additional 8.5 FTEs and associated operating costs in fiscal year 2000 through fiscal year 2004. TSLD estimates a cost of $39 per applicant for DPS and FBI criminal background checks required by the bill. TSLD also estimates the need for per diem and travel expenses for the new Texas Mortgage Broker Committee. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: LBB Staff: JK, TH, RT, DP