LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 5, 1999 TO: Honorable David Sibley, Chair, Senate Committee on Economic Development FROM: John Keel, Director, Legislative Budget Board IN RE: SB1074 by Carona (Relating to the licensing of mortgage brokers; providing civil and administrative penalties.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1074, As Introduced: impact of $0 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 $92,080 * * 2001 (92,080) * * 2002 112,329 * * 2003 (112,328) * * 2004 70,130 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Savings/(Cost) Revenue Revenue Number of State * * from General Gain/(Loss) Gain/(Loss) Employees from * * Revenue Fund from General from New - FY 1999 * * 0001 Revenue Fund Other Mortgage * * 0001 Broker Recovery * * Trust Fund * * 2000 $(354,604) $446,684 $84,000 4.2 * * 2001 (171,764) 79,684 7,000 4.0 * * 2002 (324,883) 437,212 84,000 4.2 * * 2003 (182,540) 70,212 7,000 4.0 * * 2004 (337,870) 408,000 84,000 4.2 * *************************************************************************** Fiscal Analysis The bill would create a licensing requirement for mortgage brokers and loan officers to be administered by the Texas Real Estate Commission (TREC). A person would be required to submit an application for a mortgage broker license to the commission along with an application fee of $130. A loan officer license application would have an application fee of $80. Licenses would be valid for two years and could be renewed at the same rate. The bill would also require licensees to pay a $20 fee into the new Mortgage Broker Recovery Trust Fund which would be a trust fund 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 the commission 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. This 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. Estimated revenues for fiscal year 2001 are 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. TREC estimates the need for an additional 4.25 FTEs and associated operating costs in 2000, 2002, and 2004 and four FTEs and associated operating costs in 2001 and 2003. TREC estimates a cost of $39 ($15 DPS, $24 FBI) per applicant for criminal background checks required by the bill. TREC also estimates the need for per diem and travel expenses for the new Texas Mortgage Broker Committee. It is assumed that the TREC would increase fees in an amount to offset the increased costs associated with the bill. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: LBB Staff: JK, TH, RT, DP