LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 29, 2001 TO: Honorable Kip Averitt, Chair, House Committee on Financial Institutions FROM: John Keel, Director, Legislative Budget Board IN RE: HB1636 by McCall (Relating to continuation and functions of the Savings and Loan Department and the regulation of certain financial institutions and businesses.), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1636, Committee Report 1st House, Substituted: positive impact * * of $0 through the biennium ending August 31, 2003. * * * * 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 * * 2002 $0 * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Probable Revenue Change in Number of * * Year Savings/(Cost) from Gain/(Loss) from State Employees from * * General Revenue Fund General Revenue Fund FY 2001 * * 0001 0001 * * 2002 $(378,169) $378,169 6.0 * * 2003 (366,169) 366,169 6.0 * * 2004 (366,169) 366,169 6.0 * * 2005 (366,169) 366,169 6.0 * * 2006 (366,169) 366,169 6.0 * ************************************************************************** Technology Impact Additional laptop computers for the additional six Full-time Equivalents (FTEs) totaling $12,000 for fiscal year 2002. Fiscal Analysis The provisions of the bill require the Savings and Loan Department (SLD) to obtain criminal background information on mortgage broker license applicants from the Federal Bureau of Investigation (FBI). It also requires the agency to inspect mortgage brokers and to initiate investigations when reasonable cause exists. The provisions of the bill establish various rates for renewal fees after the expiration of the license. The bill also continues the SLD until September 1, 2013. Methodology It is estimated that six additional FTEs would be required to conduct routine inspections and it is assumed that oversight can be achieved through examinations every four years. According to the SLD, there are approximately 10,157 licensed individuals who are part of 2,835 mortgage broker business units. The inspections would occur on a business unit-based approach, as opposed to an individual approach. It is estimated that the six financial examiners would examine 708 units per year that are based throughout the state. The provisions of the bill require the SLD to obtain FBI criminal history records for each mortgage broker license applicant. The FBI requires that a criminal history check be first run by the Department of Public Safety (DPS) at $15 each. Once the DPS check is completed, the FBI will conduct its review for $24 each. The SLD estimates that there would be 1,000 new applicants per year. The total estimated cost for the criminal history checks is $39,000 per year, which does not include FBI checks for renewals. It is assumed the agency would adjust fees to offset any additional costs to implement the bill. The effective date of the bill is September 1, 2001. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 449 Finance Commission of Texas, 450 Texas Savings and Loan Department, 116 Sunset Advisory Commission LBB Staff: JK, JO, RT, DE