77R10944 DWS-F                           
         By McCall, Averitt, Bosse, Chisum, Gallego            H.B. No. 1636
         Substitute the following for H.B. No. 1636:
         By Averitt                                        C.S.H.B. No. 1636
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to continuation and functions of the Savings and Loan
 1-3     Department and the regulation of certain financial institutions and
 1-4     businesses.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 13.010, Finance Code, is amended to read
 1-7     as follows:
 1-8           Sec. 13.010.  CONFLICTS OF INTEREST. (a)  In this section,
 1-9     "Texas trade association" means a cooperative and voluntarily
1-10     joined association of business or professional competitors in this
1-11     state designed to assist its members and its industry or profession
1-12     in dealing with mutual business or professional problems and in
1-13     promoting their common interest.
1-14           (b)  A person may not be a Savings and Loan Department
1-15     employee employed in a "bona fide executive, administrative, or
1-16     professional capacity," as that phrase is used for purposes of
1-17     establishing an exemption to the overtime provisions of the federal
1-18     Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.),
1-19     and its subsequent amendments, if:
1-20                 (1)  the person is an officer, employee, or paid
1-21     consultant of a Texas trade association in a field regulated by the
1-22     Savings and Loan Department; or
1-23                 (2)  the person's spouse is an officer, manager, or
1-24     paid consultant of a Texas trade association in a field regulated
 2-1     by the Savings and Loan Department.
 2-2           (c)  A person may not act as the general counsel to the
 2-3     Savings and Loan Department if the person is required to register
 2-4     as a lobbyist under Chapter 305, Government Code, because of the
 2-5     person's activities for compensation on behalf of a profession
 2-6     related to the operation of the Savings and Loan Department [An
 2-7     officer or employee of the Savings and Loan Department may not be:]
 2-8                 [(1)  an officer, employee, or paid consultant of a
 2-9     trade association in the savings association industry or the
2-10     savings bank industry; or]
2-11                 [(2)  related within the second degree by affinity or
2-12     consanguinity, as determined under Chapter 573, Government Code, to
2-13     a person who is an officer, employee, or paid consultant of a trade
2-14     association in the savings association industry or the savings bank
2-15     industry].
2-16           (d) [(b)]  Before the 11th day after the date on which an
2-17     employee begins employment with the Savings and Loan Department,
2-18     the employee shall read the conflict-of-interest statutes
2-19     applicable to employees of the Savings and Loan Department and sign
2-20     a notarized affidavit stating that the employee has read those
2-21     statutes.
2-22           SECTION 2. Section 13.011, Finance Code, is amended to read
2-23     as follows:
2-24           Sec. 13.011.  CONSUMER INFORMATION AND COMPLAINTS. (a)  The
2-25     savings and loan commissioner shall prepare information of consumer
2-26     interest describing:
2-27                 (1)  the regulatory functions of the Savings and Loan
 3-1     Department; and
 3-2                 (2)  the procedures by which consumer complaints are
 3-3     filed with and resolved by the Savings and Loan Department.
 3-4           (b)  The information under Subsection (a) must be made
 3-5     available to the public and appropriate state agencies.
 3-6           (c)  The Savings and Loan Department shall maintain a file on
 3-7     each written complaint filed with the Savings and Loan Department.
 3-8     The file must include:
 3-9                 (1)  the name of the person who filed the complaint;
3-10                 (2)  the date the complaint is received by the Savings
3-11     and Loan Department;
3-12                 (3)  the subject matter of the complaint;
3-13                 (4)  the name of each person contacted in relation to
3-14     the complaint;
3-15                 (5)  a summary of the results of the review or
3-16     investigation of the complaint; and
3-17                 (6)  an explanation of the reason the file was closed,
3-18     if the agency closed the file without taking action other than to
3-19     investigate the complaint.
3-20           (d)  The Savings and Loan Department shall provide to the
3-21     person filing the complaint and to each person who is a subject of
3-22     the complaint a copy of the Savings and Loan Department's policies
3-23     and procedures relating to complaint investigation and resolution.
3-24           (e)  The Savings and Loan Department, at least quarterly
3-25     until final disposition of the complaint, shall notify the person
3-26     filing the complaint and each person who is a subject of the
3-27     complaint of the status of the investigation [keep an information
 4-1     file about each filed complaint relating to a state savings
 4-2     association or savings bank.]
 4-3           [(d)  At least quarterly until final disposition of any
 4-4     written complaint that is filed with the Savings and Loan
 4-5     Department relating to a state savings association or savings bank,
 4-6     the Savings and Loan Department shall notify the parties to the
 4-7     complaint of the status of the complaint] unless the notice would
 4-8     jeopardize an undercover investigation.
 4-9           SECTION 3. Section 13.012, Finance Code, is amended to read
4-10     as follows:
4-11           Sec. 13.012.  SUNSET PROVISION. The office of savings and
4-12     loan commissioner and the Savings and Loan Department are subject
4-13     to Chapter 325, Government Code (Texas Sunset Act). Unless
4-14     continued in existence as provided by that chapter, the office and
4-15     department are abolished September 1, 2013 [2001].
4-16           SECTION 4. Chapter 13, Finance Code, is amended by adding
4-17     Sections 13.013-13.015 to read as follows:
4-18           Sec. 13.013.  STANDARDS OF CONDUCT. The savings and loan
4-19     commissioner or the savings and loan commissioner's designee shall
4-20     provide to agency employees, as often as necessary, information
4-21     regarding the requirements for office or employment under this
4-22     chapter, including information regarding a person's
4-23     responsibilities under applicable laws relating to standards of
4-24     conduct for state officers or employees.
4-25           Sec. 13.014.  EQUAL EMPLOYMENT OPPORTUNITY POLICY. (a)  The
4-26     savings and loan commissioner or the savings and loan
4-27     commissioner's designee shall prepare and maintain a written policy
 5-1     statement that implements a program of equal employment opportunity
 5-2     to ensure that all personnel decisions are made without regard to
 5-3     race, color, disability, sex, religion, age, or national origin.
 5-4           (b)  The policy statement must include:
 5-5                 (1)  personnel policies, including policies relating to
 5-6     recruitment, evaluation, selection, training, and promotion of
 5-7     personnel, that show the intent of the Savings and Loan Department
 5-8     to avoid the unlawful employment practices described by Chapter 21,
 5-9     Labor Code; and
5-10                 (2)  an analysis of the extent to which the composition
5-11     of the Savings and Loan Department's personnel is in accordance
5-12     with state and federal law and a description of reasonable methods
5-13     to achieve compliance with state and federal law.
5-14           (c)  The policy statement must:
5-15                 (1)  be updated annually;
5-16                 (2)  be reviewed by the state Commission on Human
5-17     Rights for compliance with Subsection (b)(1); and
5-18                 (3)  be filed with the governor's office.
5-19           Sec. 13.015.  EMPLOYEE INCENTIVE PROGRAM. The savings and
5-20     loan commissioner or the savings and loan commissioner's designee
5-21     shall provide to agency employees information and training on the
5-22     benefits and methods of participation in the state employee
5-23     incentive program.
5-24           SECTION 5. Section 156.206(b), Finance Code, is amended to
5-25     read as follows:
5-26           (b)  The commissioner shall obtain criminal history record
5-27     information on an applicant that is maintained by the Department of
 6-1     Public Safety and shall[.  By rule, the commissioner may require
 6-2     applicants to submit information and fingerprints necessary for the
 6-3     commissioner to] obtain criminal history record [background]
 6-4     information on an applicant maintained by [from] the Federal Bureau
 6-5     of Investigation.  The commissioner may also obtain criminal
 6-6     history record information from any court or any local, state, or
 6-7     national governmental agency.
 6-8           SECTION 6. Section 156.207, Finance Code, is amended to read
 6-9     as follows:
6-10           Sec. 156.207.  ISSUANCE OF LICENSE CERTIFICATE;  PROVISIONAL
6-11     LICENSE. (a)  The commissioner shall issue a license certificate to
6-12     an applicant for a mortgage broker license if the commissioner
6-13     finds that the applicant meets all requirements and conditions for
6-14     the license.
6-15           (b)  When an applicant for a loan officer license has met all
6-16     requirements and conditions for the license, the commissioner shall
6-17     issue a license certificate to the mortgage broker sponsoring the
6-18     loan officer.
6-19           (c)  In accordance with any rules adopted under this
6-20     subsection, the commissioner may issue a provisional license to an
6-21     applicant if a significant delay is necessary to process the
6-22     application, review information related to the application, or
6-23     obtain information related to the application.  If the commissioner
6-24     has not received criminal history record information from the
6-25     Federal Bureau of Investigation before the 61st day after the date
6-26     the commissioner requested the information, the commissioner shall
6-27     issue a provisional license to the applicant, if the applicant
 7-1     otherwise meets all requirements and conditions for a license.  If
 7-2     the commissioner has not received criminal history record
 7-3     information from the Federal Bureau of Investigation before the
 7-4     181st day after the date the commissioner requested the
 7-5     information, the provisional status of the license ends and, except
 7-6     as provided by Subsection (d), the license is subject to the
 7-7     provisions of this chapter and other law applicable to a license
 7-8     issued to an applicant who meets all requirements and conditions
 7-9     for a license under this chapter.
7-10           (d)  The commissioner may revoke a [provisional] license
7-11     issued under Subsection (c), regardless of whether the license is
7-12     provisional, [this subsection] on a ground listed under Section
7-13     156.303 or on any ground that the commissioner could have denied
7-14     issuance of the license on the application.
7-15           SECTION 7. Subchapter C, Chapter 156, Finance Code, is
7-16     amended by adding Section 156.2071 to read as follows:
7-17           Sec. 156.2071.  PERSON LICENSED IN OTHER JURISDICTION. (a)
7-18     The commissioner may waive any prerequisite to obtaining a license
7-19     for an applicant after reviewing the applicant's credentials and
7-20     determining that the applicant holds a license issued by another
7-21     jurisdiction that has licensing requirements substantially
7-22     equivalent to those of this state.
7-23           (b)  The commissioner may issue a provisional license to an
7-24     applicant currently licensed in another jurisdiction who seeks a
7-25     license in this state and who:
7-26                 (1)  has been licensed in good standing as a mortgage
7-27     broker or loan officer for at least two years in another
 8-1     jurisdiction, including a foreign country, that has licensing
 8-2     requirements substantially equivalent to the requirements of this
 8-3     chapter;
 8-4                 (2)  has  passed  a  national  or other  examination
 8-5     recognized by the commissioner relating to mortgage brokers or loan
 8-6     officers; and
 8-7                 (3)  is sponsored by a person licensed under this
 8-8     chapter with whom the provisional license holder will practice
 8-9     during the time the person holds a provisional license.
8-10           (c)  The commissioner may waive the requirement of Subsection
8-11     (b)(3) for an applicant if the commissioner determines that
8-12     compliance with that subsection would be a hardship to the
8-13     applicant.
8-14           (d)  A provisional license under this section is valid until
8-15     the date the commissioner approves or denies the provisional
8-16     license holder's application for a license.  The commissioner shall
8-17     issue a license under this chapter to the provisional license
8-18     holder if:
8-19                 (1)  the provisional license holder is eligible to be
8-20     licensed under Subsection (a); or
8-21                 (2)  the commissioner verifies that the provisional
8-22     license holder meets the academic and experience requirements for a
8-23     license under this chapter and the provisional license holder
8-24     satisfies any other licensing requirements under this chapter.
8-25           (e)  The commissioner  must approve or deny a provisional
8-26     license holder's application for a license not later than the 180th
8-27     day after the date the provisional license is issued.
 9-1           (f)  The finance commission may establish a fee for
 9-2     provisional licenses under this section in an amount reasonable and
 9-3     necessary to cover the cost of issuing the license.
 9-4           SECTION 8. Subchapter C, Chapter 156, Finance Code, is
 9-5     amended by adding Section 156.2081 to read as follows:
 9-6           Sec. 156.2081.  RENEWAL AFTER EXPIRATION; NOTICE. (a)  A
 9-7     person whose license has expired may not engage in activities that
 9-8     require a license until the license has been renewed.
 9-9           (b)  A person whose license has been expired for 90 days or
9-10     less but who is otherwise eligible to renew a license may renew the
9-11     license by paying to the commissioner a renewal fee that is equal
9-12     to 1-1/2 times the normally required renewal fee.
9-13           (c)  A person whose license has been expired for more than 90
9-14     days but less than one year but who is otherwise eligible to renew
9-15     a license may renew the license by paying to the commissioner a
9-16     renewal fee that is equal to two times the normally required
9-17     renewal fee.
9-18           (d)  A person whose license has been expired for one year or
9-19     more may not renew the license.  The person may obtain a new
9-20     license by complying with the requirements and procedures for
9-21     obtaining an original license.
9-22           (e)  A person who was licensed in this state, moved to
9-23     another state, and is currently licensed and has been in practice
9-24     in the other state for the two years preceding the date of
9-25     application may obtain a new license by paying to the commissioner
9-26     a fee that is equal to two times the normally required renewal fee
9-27     for the license.
 10-1          (f)  Not later than the 30th day before the date a person's
 10-2    license is scheduled to expire, the commissioner shall send written
 10-3    notice of the impending expiration to the person at the person's
 10-4    last known address according to the records of the Savings and Loan
 10-5    Department.
 10-6          SECTION 9. Subchapter C, Chapter 156, Finance Code, is
 10-7    amended by adding Section 156.213 to read as follows:
 10-8          Sec. 156.213.  ANNUAL REPORT. (a)  Each licensed mortgage
 10-9    broker shall file an annual report with the Savings and Loan
10-10    Department.  The report must include:
10-11                (1)  data on loan originations in this state for the
10-12    mortgage broker;
10-13                (2)  information on each loan officer sponsored by the
10-14    mortgage broker; and
10-15                (3)  any other information required by finance
10-16    commission rule.
10-17          (b)  Trade information, including information used to
10-18    determine statistical entries in the report related to loan
10-19    origination volume, is confidential and may not be disclosed by the
10-20    Savings and Loan Department.
10-21          SECTION 10. Section 156.301, Finance Code, is amended to read
10-22    as follows:
10-23          Sec. 156.301.  INSPECTIONS; [COMPLAINTS AND] INVESTIGATIONS.
10-24    (a)  The commissioner may conduct inspections of a person licensed
10-25    under this chapter as the commissioner determines necessary to
10-26    determine whether the person is complying with this chapter and
10-27    applicable rules.  The inspections may include inspection of the
 11-1    books, records, documents, operations, and facilities of the person
 11-2    and access to any documents required under rules adopted under this
 11-3    chapter.  The commissioner may share evidence of criminal activity
 11-4    gathered during an inspection or investigation with any state or
 11-5    federal law enforcement agency.
 11-6          (b)  On the signed written complaint of a person, the
 11-7    commissioner shall investigate the actions and records of a person
 11-8    licensed under this chapter if the complaint, or the complaint and
 11-9    documentary or other evidence presented in connection with the
11-10    complaint, provides reasonable cause.  The commissioner, before
11-11    commencing an investigation, shall notify a mortgage broker or loan
11-12    officer in writing of the complaint and that the commissioner
11-13    intends to investigate the matter.
11-14          (c)  For reasonable cause, [(b)  Except as provided by
11-15    Subsection (a),] the commissioner at any time may investigate [not
11-16    initiate an investigation or other action against] a person
11-17    licensed under this chapter to determine whether the person is
11-18    complying with this chapter and applicable rules [on the basis of
11-19    an anonymous complaint regardless of whether the complaint is in
11-20    writing].
11-21          (d)  The commissioner may conduct an undercover or covert
11-22    investigation only if the commissioner, after due consideration of
11-23    the circumstances, determines that the investigation is necessary
11-24    to prevent immediate harm and to carry out the purposes of this
11-25    chapter.
11-26          (e)  The finance commission by rule shall provide guidelines
11-27    to govern an inspection or an investigation, including rules to:
 12-1                (1)  determine the information and records to which the
 12-2    commissioner may demand access during an inspection or an
 12-3    investigation; and
 12-4                (2)  establish what constitutes reasonable cause for an
 12-5    investigation.
 12-6          (f)  Information obtained by the commissioner during an
 12-7    inspection or an investigation is confidential unless disclosure of
 12-8    the information is permitted or required by other law.  [(c)  The
 12-9    commissioner may authorize an employee of the commissioner to file
12-10    a signed written complaint against a person licensed under this
12-11    chapter and to conduct an investigation if:]
12-12                [(1)  a judgment against the person has been paid from
12-13    a recovery fund established under this chapter;]
12-14                [(2)  the person holds a provisional license issued
12-15    under Section 156.207(c);]
12-16                [(3)  the person is convicted of a criminal offense
12-17    that may constitute grounds for the suspension or revocation of the
12-18    license; or]
12-19                [(4)  the person fails to honor a check issued to the
12-20    commissioner.]
12-21          SECTION 11. Section 156.302(e), Finance Code, is amended to
12-22    read as follows:
12-23          (e)  An appeal of an administrative [A proceeding to impose
12-24    the] penalty under this section is considered to be a contested
12-25    case under Chapter 2001, Government Code.
12-26          SECTION 12. This Act takes effect September 1, 2001.