By: Solomons H.B. No. 955
A BILL TO BE ENTITLED
AN ACT
relating to interest rates, usury, consumer protections,
commercial and consumer lending, licensing of mortgage brokers,
savings bank charters, and the regulation of lenders; providing
civil and criminal penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. CONSUMER PROTECTION
SECTION 1.01. Title 1, Finance Code, is amended by adding
new Chapter 10 to read as follows:
CHAPTER 10. UNFAIR OR DECEPTIVE ACTS OR PRACTICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 10.001. PURPOSE. The purpose of this chapter is to
protect consumers in their relationships with persons engaged in a
financial services business by:
(1) defining trade practices in this state which are
unfair methods of competition or unfair or deceptive acts or
practices;
(2) providing for the determination of whether a trade
practice is an unfair method of competition or an unfair or
deceptive act or practice;
(3) prohibiting those trade practices; and
(4) requiring relevant public officials to enforce
this chapter.
Sec. 10.002. DEFINITIONS. In this chapter:
(1) "Financial service" means any service subject to
this code.
(2) "Financial services business" means the provision
of any financial service.
(3) "Financial services provider" means a person
engaged in the financial services business.
(4) "Intentionally" means actual awareness of the
falsity, deception, or unfairness of the act or practice on which a
claim for damages is based, coupled with the specific intent that
the consumer act in detrimental reliance on the falsity or
deception or in detrimental ignorance of the unfairness. Intention
may be inferred from objective manifestations that indicate that
the person acted intentionally or from facts showing that a
defendant acted with flagrant disregard of prudent and fair
business practices to the extent that the defendant should be
treated as having acted intentionally.
(5) "Knowingly" means actual awareness of the falsity,
unfairness, or deceptiveness of the act or practice on which a claim
for damages is based. Actual awareness may be inferred if objective
manifestations indicate that a person acted with actual awareness.
(6) "Pattern of unconscionable actions" means
repeated unconscionable actions or courses of action, as defined by
this chapter, that:
(A) is intentionally committed by a person
engaged in the financial services business with the specific intent
that the consumer act in detrimental reliance on the falsity or
deception or in detrimental ignorance of the unfairness;
(B) that causes damages to consumers; and
(C) which represents a significant portion of
financial services conducted by the person.
(7) "Person" means an individual, corporation,
association, partnership, trust, or other legal entity engaged in
the financial services business, including a mortgage broker,
pawnshop employee, credit counselor, or other holder of a license
issued by an agency governed by Title 2 of this code, or by a person
required to register with an agency governed by Title 2 of this
code.
(8) "Supervisory public official" means
(A) a public official who has authority by law to
examine the financial service provider's condition or affairs; or
(B) the attorney general.
(9) "Unconscionable action or course of action" means
an act or practice which, to a consumer's detriment, takes
advantage of the lack of knowledge, ability, experience, or
capacity of the consumer to a grossly unfair degree.
Sec. 10.003. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage in
this state in a trade practice defined by this chapter as, or
determined under this chapter to be, an unfair method of
competition or an unfair or deceptive act or practice in the
financial service business.
SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES DEFINED.
Sec. 10.101. MISREPRESENTATION. (a) It is an unfair method
of competition or an unfair or deceptive act or practice in the
financial services business to:
(1) make, issue, circulate, or cause to be made,
issued, or circulated an estimate, illustration, circular, or
statement misrepresenting with respect to a financial service:
(A) the terms of the financial service;
(B) the benefits or advantages promised by the
financial service; or
(C) the costs to be assessed in connection with
the financial service;
(2) make a false or misleading statement, either
written or verbal, regarding the costs previously paid on a similar
financial service;
(3) make a misleading representation or
misrepresentation regarding the financial condition of a financial
services provider;
(4) use a name or title of a financial service that
misrepresents the true nature of the financial service;
(5) fail to state a material fact necessary to make
other statements not misleading, considering the circumstances
under which the statements were made;
(6) fail to disclose a matter required by law to be
disclosed, including failure to make a disclosure in accordance
with another provision of this code; or
(7) make a misrepresentation to a debtor for the
purpose of inducing or that tends to induce the debtor to renew or
refinance an existing extension of credit.
(b) It is an unfair method of competition or an unfair or
deceptive act or practice in the financial services business to
misrepresent a financial service by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make
other statements made not misleading, considering the
circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a
reasonably prudent person to a false conclusion of a material fact;
(4) making statements or representations of material
facts, terms, or conditions regarding a financial service to a
potential account-holder, borrower, or customer which are not
intended by the person engaged in the financial services business
to be the actual material facts, terms, or conditions of the
financial service ultimately offered to the potential
account-holder, borrower, or customer;
(5) making a material misstatement of law or
regulation; or
(6) failing to disclose a matter required by law to be
disclosed, including failing to make a disclosure in accordance
with another provision of this code.
Sec. 10.102. FALSE INFORMATION AND ADVERTISING. (a) It is
an unfair method of competition or an unfair or deceptive act or
practice in the financial services business to make, publish,
disseminate, circulate, deliver to any person, or place before the
public, or directly or indirectly cause to be made, published,
disseminated, circulated, delivered to any person, or placed before
the public an advertisement, announcement, or statement containing
an untrue, deceptive, or misleading assertion, representation, or
statement regarding:
(1) the financial services business;
(2) a person conducting the financial services
business; or
(3) the benefits or advantages promised by the
financial service.
(b) This section applies to an advertisement, announcement,
or statement made, published, disseminated, circulated, or placed
before the public:
(1) in a newspaper, magazine, or other publication;
(2) in a notice, circular, pamphlet, or letter;
(3) on a billboard or other form of outdoor promotion
or advertising;
(4) on a poster, placard, or other form of indoor
promotion or advertising;
(5) over a radio or television station;
(6) on an Internet webpage;
(7) over the telephone; or
(8) in any other manner determined by a supervisory
public official to be an advertisement, announcement, or statement
made, published, disseminated, circulated, or placed before the
public.
Sec. 10.103. FALSE FINANCIAL STATEMENT. (a) It is an
unfair method of competition or an unfair or deceptive act or
practice in the financial services business to, with intent to
deceive:
(1) file with a supervisory public official or other
public official a false statement of financial condition of a
financial services provider; or
(2) make, publish, disseminate, circulate, deliver to
any person, or place before the public or directly or indirectly
cause to be made, published, disseminated, circulated, delivered to
any person, or placed before the public a false statement of
financial condition of a financial services provider.
(b) It is an unfair method of competition or an unfair or
deceptive act or practice in the financial services business to
make a false entry in a financial service provider's book, report,
or statement or willfully omit to make a true entry of a material
fact relating to the financial service provider's business in the
financial service provider's book, report, or statement with the
intent to deceive:
(1) an agent or examiner lawfully appointed to examine
the financial service provider's condition or affairs; or
(2) a public official to whom the financial service
provider is required by law to report or who has the authority by
law to examine the financial service provider's conditions or
affairs.
Sec. 10.104. ATTEMPT TO EVADE LAW. It is an unfair method
of competition or an unfair or deceptive act or practice in the
financial services business to knowingly evade the application of
this code or a rule adopted under this code by use of any device,
subterfuge, or pretense.
SUBCHAPTER C. DETERMINATION OF UNFAIR METHODS OF COMPETITION
OR UNFAIR OR DECEPTIVE ACTS OR PRACTICES.
Sec. 10.201. EXAMINATION AND INVESTIGATION. (a) A
supervisory public official may examine and investigate the affairs
of a person engaged in the financial services business in this state
to determine whether the person has engaged in an unfair method of
competition or unfair or deceptive act or practice.
(b) The finance commission or the credit union department,
following an examination and investigation under this section, may
issue an order, adopt rules, or initiate a proceeding to define
particular acts or practices not otherwise included in Subchapter B
as an unfair method of competition or unfair or deceptive act or
practice.
Sec. 10.202. ENFORCEMENT. When a supervisory public
official has reason to believe that a person engaged in the
financial services business in this state has engaged or is
engaging in this state in an unfair method of competition or unfair
or deceptive act or practice defined by Subchapter B and that a
proceeding by the supervisory public official's agency is in the
interest of the public, the agency shall proceed under the
enforcement authority available to the agency under this code.
SUBCHAPTER D. ADDITIONAL PENALTIES FOR PATTERNS OF
UNCONSCIONABLE ACTIONS
Sec. 10.301. CIVIL PENALTIES. (a) In addition to any
penalty or remedy available under the laws of this state or federal
law, a person who commits a pattern of unconscionable actions
defined by this chapter is liable to the state for a civil penalty
of $25,000.
(b) The attorney general may sue to collect the penalty.
Sec. 10.305. CRIMINAL PENALTIES. Nothing in this chapter
precludes, diminishes, or limits the applicability of the Texas
Penal Code or other laws that establish penal sanctions for acts or
practices that are also covered by this chapter.
Sec. 10.311. EFFECT ON LICENSURE. (a) A person who has
been convicted of engaging in a pattern of unconscionable actions
may not obtain or renew a license issued by:
(1) the Texas Department of Banking;
(2) the Department of Savings and Mortgage Lending;
(3) the Consumer Credit Commissioner;
(4) the Credit Union Department;
(5) the Texas Real Estate Commission;
(6) the State Bar of Texas; or
(7) the Texas Department of Insurance
(b) Notwithstanding any other law, the agencies described
by Subsection (a) shall revoke the licenses issued to a person who
has been convicted of engaging in a pattern of unconscionable
actions.
(c) For purposes of this section, a person is considered
convicted if a sentence is imposed on the person, the person
receives community supervision, including deferred adjudication
community supervision, or the court defers final disposition of the
person's case.
ARTICLE 2. USURY REFORM
SECTION 2.01. Section 303.009, Finance Code, is amended to
read as follows:
Sec. 303.009. MAXIMUM AND MINIMUM WEEKLY, MONTHLY,
QUARTERLY, OR ANNUALIZED CEILING. (a) [Except as provided by
Subsection (e), if] If the rate computed for the weekly, monthly,
quarterly, or annualized ceiling is less than 18 percent a year, the
ceiling is 18 percent a year.
(b) Except as provided by Subsection (c) or (d), [(d) or
(e)], if the rate computed for the weekly, monthly, quarterly, or
annualized ceiling is more than 24 percent, the ceiling is 24
percent a year.
(c) For a contract made, extended, or renewed under which
credit is extended for a business, commercial, investment, or
similar purpose, [and the amount of the credit extension is
$250,000 or more, the 24 percent limitation on the ceilings in
Subsection (b) does not apply, and the limitation on] the ceilings
are [determined by those computations is] 28 percent a year.
(d) For an open-end account credit agreement that provides
for credit card transactions on which a merchant discount is not
imposed or received by the creditor, [if the rate computed for the
weekly ceiling, monthly ceiling, quarterly ceiling, or annualized
ceiling is more than 21 percent a year,] the ceiling is 21 percent a
year.
(e) Repealed by Acts of the 76th Legislature, Regular
Session, 1999.
(f) In this chapter, "weekly ceiling," "monthly ceiling,"
"quarterly ceiling," or "annualized ceiling" refers to that ceiling
as determined after the application of this section.
SECTION 2.02. Subchapter A, Chapter 303, Finance Code, is
amended by adding new Section 303.017 to read as follows:
Sec. 303.017. OPTIONAL RATE STRUCTURE FOR CONSUMER LOAN. A
bank, savings association, savings bank, or credit union may
contract for, charge, and receive a rate of interest under the
authority of the applicable alternative rate ceiling of this
chapter on a loan for personal, family, or household use. An
authorized lender may charge all reasonable expenses and fees
incurred in connection with making, closing, disbursing,
extending, readjusting, or renewing a loan, whether or not those
expenses or fees are paid to third parties. An authorized lender
may alternatively elect to make a loan for personal, family, or
household use under the provisions and restrictions of Chapter 342.
SECTION 2.03. Section 303.201, Finance Code, is amended to
read as follows:
Sec. 303.201. LICENSE REQUIRED. A person engaged in the
business of making loans for personal, family, or household use for
which the rate is authorized under this chapter must obtain a
license under Chapter 342 unless the person is not required to
obtain a license under Section 342.051.
SECTION 2.04. Section 305.001, Finance Code, is amended to
read as follows:
Sec. 305.001. LIABILITY FOR USURIOUS INTEREST. (a) A
creditor who contracts for, charges, or receives interest that is
greater than the amount authorized by this subtitle in connection
with a transaction for personal, family, or household use is liable
to the obligor for an amount that is equal to the greater of:
(1) three times the amount computed by subtracting the
amount of interest allowed by law from the total amount of interest
contracted for, charged, or received; or
(2) $2,000 or 20 percent of the amount of the
principal, whichever is less.
(b) A creditor who contracts for or receives interest that
is greater than the amount authorized by this subtitle in
connection with a commercial transaction is liable to the obligor
for an amount that is equal to three times the amount computed by
subtracting the amount of interest allowed by law from the total
amount of interest contracted for or received.
(c) [(b)] This section applies only to a contract or
transaction subject to this subtitle.
(d) [(c)] A creditor who charges or receives interest in
excess of the amount contracted for, but not in excess of the
maximum amount authorized by law, is not subject to penalties for
usurious interest but may be liable for other remedies and relief as
provided by law.
SECTION 2.05. Section 305.002, Finance Code, is
amended to read as follows:
Sec. 305.002. ADDITIONAL LIABILITY FOR MORE THAN TWICE
AUTHORIZED RATE OF INTEREST. (a) In addition to the amount
determined under Section 305.001, a creditor who charges and
receives interest that is greater than twice the amount authorized
by this subtitle is liable to the obligor for:
(1) the principal amount on which the interest is
charged and received; and
(2) the interest and all other amounts charged and
received.
(b) This section applies only to a contract or transaction
for personal, family, or household use subject to this subtitle.
SECTION 2.06. Section 306.001, Finance Code, is amended to
read as follows:
Sec. 306.001. DEFINITIONS. In this chapter:
(1) "Account purchase transaction" means an agreement
under which a person engaged in a commercial enterprise sells
accounts, instruments, documents, or chattel paper subject to this
subtitle at a discount, regardless of whether the person has a
repurchase obligation related to the transaction.
(2) "Affiliate of an obligor" means a person who
directly or indirectly, or through one or more intermediaries or
other entities, owns an interest in, controls, is controlled by, or
is under common control with the obligor. In this subdivision,
"control" means the possession, directly or indirectly, or with
another person or persons, of the power to direct or cause the
direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise.
(3) "Asset-backed securities" means debt obligations
of beneficial ownership that:
(A) are a part of a single issue or single series
of securities in an aggregate of $1 million or more and issuable in
one or more classes;
(B) are secured by a pledge of, or represent an
undivided ownership interest in:
(i) one or more fixed or revolving fund
assets that by their terms convert into cash within a definite
period; and
(ii) rights or other assets designed to
assure the servicing or timely distribution of proceeds to security
holders; and
(C) are issued for a business, commercial,
agricultural, investment, or similar purpose by a pass-through
entity.
(4) "Business entity" means a partnership,
corporation, joint venture, limited liability company, or other
business organization or business association, however organized.
(5) "Commercial loan" means a loan that is made
primarily for business, commercial, investment, agricultural, or
similar purposes. The term does not include a loan made primarily
for personal, family, or household use.
(6) "Guaranty" means an agreement under which a
person:
(A) assumes, guarantees, or otherwise becomes
primarily or contingently liable for the payment or performance of
an obligation of another person;
(B) provides security, by creation of a lien or
security interest or otherwise, for the payment or performance of
an obligation of another person; or
(C) agrees to purchase or to advance
consideration to purchase an obligation of another person or
property that is security for the payment or performance of the
obligation.
(7) "Pass-through entity" means a business entity,
association, grantor or common-law trust under state law, or
segregated pool of assets under federal tax law that, on the date of
original issuance of asset-backed securities, does not have
significant assets other than:
(A) assets pledged to or held for the benefit of
holders of the asset-backed securities; or
(B) assets pledged to or held for the benefit of
holders of other asset-backed securities previously issued.
(8) "Prepayment premium [penalty]" means compensation
paid by or that is or will become due from an obligor to a creditor
solely as a result or condition of the payment or maturity of all or
a portion of the principal amount of a loan before its stated
maturity or a regularly scheduled date of payment, as a result of
the obligor's election to pay all or a portion of the principal
amount before its stated maturity or a regular scheduled date of
payment.
(9) "Qualified commercial loan":
(A) means:
(i) a commercial loan in which one or more
persons as part of the same transaction lends, advances, borrows,
or receives, or is obligated to lend or advance or entitled to
borrow or receive, money or credit with an aggregate value of:
(a) $1 [$3] million or more if the
commercial loan is secured by real property; or
(b) $100,000 [$250,000] or more if the
commercial loan is not secured by real property and, if the
aggregate value of the commercial loan is less than $500,000, the
loan documents contain a written verification from the borrower
that:
(1) the borrower has been
advised by the lender to seek the advice of an attorney and an
accountant in connection with the commercial loan; and
(2) the borrower has had the
opportunity to seek the advice of an attorney and accountant of the
borrower's choice in connection with the commercial loan; and
(ii) a renewal or extension of a commercial
loan described by Paragraph (A), regardless of the principal amount
of the loan at the time of the renewal or extension; and
(B) does not include a commercial loan made for
the purpose of financing a business licensed by the Motor Vehicle
Board of the Texas Department of Transportation under Section
2301.251(a), Occupations Code.
SECTION 2.07. Section 306.005, Finance Code, is amended to
read as follows:
Sec. 306.005. PREPAYMENT PREMIUM [PENALTY]. A creditor and
an obligor may agree to a prepayment premium [penalty] in a loan
subject to this chapter. A prepayment premium [penalty] is not
interest.
SECTION 2.08. Section 306.006, Finance Code, is amended to
read as follows:
Sec. 306.006. CERTAIN AUTHORIZED CHARGES ON COMMERCIAL
LOANS. In addition to the interest authorized by this chapter, the
parties to a commercial loan may agree and stipulate for:
(1) a delinquency charge on the amount of any
installment or other amount in default for a period of not less than
10 days in a reasonable amount not to exceed five percent of the
total amount of the installment; and
(2) a returned check fee in an amount that does not
[to] exceed the maximum fee authorized in Section 3.506 of the
Business & Commerce Code[$25] on any check, draft, order, or other
instrument or form of remittance that is returned unpaid or
dishonored for any reason.
SECTION 2.09. Chapter 306, Finance Code, is amended by
adding new Section 306.007 to read as follows:
Sec. 306.007. GUARANTIES, ASSUMPTIONS, PAYMENTS, AND OTHER
AGREEMENTS WITH RESPECT TO A COMMERCIAL LOAN TO AN OBLIGOR. With
respect to any commercial loan, an obligor may be required to
assume, pay, or provide a guaranty of another person's existing or
future obligation, and the other person's obligation shall not
constitute interest with respect to any obligation of the obligor.
SECTION 2.10. Section 345.104, Finance Code, is amended to
read as follows:
Sec. 345.104. USE OF OPTIONAL CEILING. (a) As an
alternative to the maximum rate or amount authorized for a time
price differential under Section 345.103, a retail charge agreement
may provide for a rate or amount of time price differential that
does not exceed[:]
[(1)] the rate or amount authorized by Chapter 303[;
or
[(2) the rate or amount of the applicable market
competitive rate ceiling published under Subchapter D].
(b) The provisions of Chapter 303 applicable to open-end
accounts apply to a retail charge agreement to which this section
applies.
SECTION 2.11. Section 346.003, Finance Code, is amended to
read as follows:
Sec. 346.003. REVOLVING CREDIT ACCOUNTS. (a) A revolving
credit account is an open-end account:
(1) that is established by a creditor for a customer
under a written agreement between the creditor and the customer;
(2) that the customer accepts by using the account;
and
(3) under which:
(A) the unpaid balance of and interest on the
extensions of credit are debited to the account;
(B) interest is not precomputed but may be
computed on the balances of the account outstanding from time to
time;
(C) the customer may defer payment of any part of
the balance of the account; and
(D) the customer may obtain from the creditor one
or more extensions of credit as described by Subsection (b) [or
(c)].
(b) A revolving loan account is a revolving credit account
under which a customer may obtain a loan from a creditor.
(c) [A revolving triparty account is a revolving credit
account under which:
[(1) a customer may use a credit card to:
[(A) obtain a loan from a creditor, with the
advance made by the creditor or a person participating with the
creditor;
[(B) lease goods from a person participating with
the creditor; or
[(C) purchase goods or services from a person
participating with the creditor;
[(2) the creditor is obligated to pay the
participating person; and
[(3) the customer is obligated to pay the creditor the
amount of the loan or the cost of the lease or purchase.
(d)] Interest may be computed on the balance of the account
from time to time.
SECTION 2.12. Section 346.004, Finance Code, is amended to
read as follows:
Sec. 346.004. APPLICATION OF CHAPTER TO REVOLVING CREDIT
ACCOUNTS. Unless the contract for account provides that this
chapter applies [otherwise], this chapter does not apply [applies]
to a revolving credit account described by Section 346.003 if
[regardless of whether] the loan or extension of credit is for
commercial [consumer] or business purposes.
SECTION 2.13. Subchapter A, Chapter 346, Finance Code, is
amended by adding new Section 346.006 to read as follows:
Sec. 346.006. CREDIT CARD ACCOUNT. A credit card account is
a revolving credit account under which:
(1) a customer may use a credit card to:
(A) obtain a loan from a creditor, with the
advance made by the creditor or a person participating with the
creditor;
(B) lease goods from a person participating with
the creditor; or
(C) purchase goods or services from a person
participating with the creditor;
(2) the creditor is obligated to pay the participating
person; and
(3) the customer is obligated to pay the creditor the
amount of the loan or the cost of the lease or purchase.
SECTION 2.14. Subchapter C, Chapter 346, Finance Code, is
redesignated Subchapter D.
SECTION 2.15. Chapter 346, Finance Code is amended by
adding new Subchapter C to read as follows:
SUBCHAPTER C. INTEREST CHARGE AND FEES FOR CREDIT CARD
ACCOUNTS.
Sec. 346.151. MAXIMUM INTEREST RATE. (a) A credit card
account may provide for interest on an account at an annual rate
that does not exceed 24 percent a year.
(b) A credit card account may provide for interest computed
under a method other than the average daily balance method if the
amount of interest computed under that method does not exceed 24
percent a year, as calculated using the average daily balance
method.
Sec. 346.152. PERMISSIBLE INTEREST RATE FOR BILLING CYCLE.
(a) A credit card account that provides for equal billing cycles
may provide for interest for a billing cycle at the rate equal to
one-twelfth of the applicable annual interest rate on the account
during that billing cycle.
(b) In any 12-month period, billing cycles are considered to
be equal if:
(1) the number of billing cycles in the period does not
exceed 12; and
(2) the difference between the length of the longest
and shortest billing cycles in the period does not exceed eight
calendar days.
Sec. 346.153. FEES. If the contract provides, the lender or
issuer of an account may charge or collect any of the following
fees:
(1) an annual or other periodic charge;
(2) a transaction charge for each separate purchase,
loan, or advance;
(3) a minimum interest charge for each regular billing
date on which interest charges are due on unpaid balances;
(4) A late payment or delinquency charge;
(5) A returned payment charge;
(6) A stop payment charge;
(7) An overlimit charge;
(8) A charge for providing invoices, checks, or
documentary evidence;
(9) A fee incident to the application for and the
opening and administration of the credit card account; or
(10) An automated teller machine or similar electronic
or interchange fee or charge.
SECTION 2.16. Subchapter A, Chapter 347, Finance Code, is
amended by adding new Section 347.007 to read as follows:
Sec. 347.007. APPLICATION OF CHAPTER TO COMMERCIAL LOANS.
This chapter does not apply to a credit transaction secured by a
manufactured home that is entered into primarily for commercial or
business purposes.
SECTION 2.17. Section 348.001, Finance Code, is amended to
read as follows:
Sec. 348.001. DEFINITIONS. In this chapter:
(1) "Buyer's order" means a nonbinding, preliminary
written computation relating to the purchase in a retail
installment transaction of a motor vehicle that describes
specifically:
(A) the motor vehicle being purchased; and
(B) each motor vehicle being traded in.
(2) "Heavy commercial vehicle" means:
(A) a truck or truck tractor that:
(1) has a gross vehicular weight of 19,000
pounds or more; and
(2) is not used primarily for personal,
family, or household use; or
(B) a trailer or semitrailer designed for use in
combination with a vehicle described by Paragraph (A).
(3) "Holder" means:
(A) a retail seller; or
(B) if a retail installment contract or the
outstanding balance under the contract is sold or otherwise
transferred, the person to whom it is sold or otherwise
transferred.
(4) "Motor home" means a motor vehicle that is
designed to provide temporary living quarters and that:
(A) is built on a motor vehicle chassis as an
integral part of or a permanent attachment to the chassis; and
(B) contains at least four of the following
independent life support systems that are permanently installed and
designed to be removed only for repair or replacement and that meet
the standards of the American National Standards Institute,
Standards for Recreational Vehicles:
(i) a cooking facility with an on-board
fuel source;
(ii) a gas or electric refrigerator;
(iii) a toilet with exterior evacuation;
(iv) a heating or air conditioning system
with an on-board power or fuel source separate from the vehicle
engine;
(v) a potable water supply system that
includes at least a sink, a faucet, and a water tank with an
exterior service supply connection; or
(vi) a 110-125 volt electric power supply.
(5) [(4)] "Motor vehicle" means an automobile, motor
[mobile] home, truck, truck tractor, trailer, semitrailer, or bus
designed and used primarily to transport persons or property on a
highway. The term includes a commercial vehicle or heavy
commercial vehicle. The term does not include:
(A) a boat trailer;
(B) a vehicle propelled or drawn exclusively by
muscular power;
(C) a vehicle that is designed to run only on
rails or tracks; or
(D) machinery that is not designed primarily for
highway transportation but [buy] may incidentally transport
persons or property on a public highway.
(6) [(5)] "Retail buyer" means a person who purchases
or agrees to purchase a motor vehicle from a retail seller in a
retail installment transaction.
(7) [(6)] "Retail installment contract" means one or
more instruments entered into in this state that evidence a retail
installment transaction. The term includes a chattel mortgage, a
conditional sale contract, a security agreement, and a document
that evidences a bailment or lease described by Section 348.002.
The term does not include a buyer's order.
(8) [(7)] "Retail installment transaction" means a
transaction in which a retail buyer purchases a motor vehicle from a
retail seller other than principally for the purpose of resale and
agrees with the retail seller to pay part or all of the cash price in
one or more deferred installments.
(9) [(8)] "Retail seller" means a person in the
business of selling motor vehicles to retail buyers in retail
installment transactions.
(10) [(9)] "Time price differential" means the total
amount added to the principal balance to determine the balance of
the retail buyer's indebtedness under a retail installment
contract.
(11) "Towable recreation vehicle" means a
nonmotorized vehicle that:
(A) was originally designed and manufactured
primarily to provide temporary human habitation in conjunction with
recreational, camping, or seasonal use;
(B) is titled and registered with the Texas
Department of Transportation as a travel trailer through a county
tax assessor-collector;
(C) is permanently built on a single chassis;
(D) contains at least one life support system;
and
(E) is designed to be towable by a motor vehicle.
SECTION 2.18. Chapter 348.007, Finance Code, is amended to
read as follows:
Sec. 348.007. APPLICABILITY OF CHAPTER. (a) Each retail
installment transaction is subject to this chapter.
(b) A transaction in which a retail buyer purchases a
towable recreation vehicle from a retail seller other than
principally for the purpose of resale and agrees with the retail
seller to pay part of all of the cash price in one or more deferred
installments may be subject to this chapter instead of Chapter 345
at the option of the seller.
(c) [(b)] This chapter does not affect or apply to a loan
made or the business of making loans under other law of this state
and does not affect a rule of law applicable to a retail installment
sale that is not a retail installment transaction.
(d) [(c)] The provisions of this chapter defining specific
rates and amounts of charges and requiring certain credit
disclosures to be made control over any contrary law of this state
respecting those subjects.
SECTION 2.19. Section 124.002, Finance Code, is amended to
read as follows:
Sec. 124.002. LIMITATIONS ON INTEREST RATES. The interest
rate on a loan to a member may not exceed:
(1) 1-1/2 percent per month on the unpaid balance;
[or]
(2) 24% per year for credit card accounts; or
(3) a higher rate authorized by law, including a rate
authorized by Chapter 303.
ARTICLE 3. TEXAS SAVINGS AND MORTGAGE LENDING DEPARTMENT
SECTION 3.01. NAME CHANGE. (a) The Legislature finds:
(1) The Texas Savings and Loan Department regulates
state-chartered savings and loan institutions and savings banks,
licensed mortgage brokers and loan officers. The department also
registers mortgage bankers;
(2) There is one state-chartered savings and loan
institution that has not converted to a state-chartered savings
bank or other form of institution; and
(3) The department's name no longer fits the
activities and regulatory responsibilities of the department, and
the department's name does not provide sufficient clarity of its
functions to the public.
(b) The Savings and Loan Department is renamed the
Department of Savings and Mortgage Lending.
(c) Whenever a provision of a statute or rule refers to the
Savings and Loan Department, the term shall mean the Department of
Savings and Mortgage Lending.
(d) Whenever a provision of a statute or rule refers to the
savings and loan commissioner, the term shall mean the savings and
mortgage lending commissioner.
SECTION 3.02. Section 119.201(a), Finance Code, is amended
to read as follows:
(a) The commissioner may require a savings bank that
knowingly violates this subtitle or a rule adopted under this
subtitle to pay to the department [Savings and Loan Department] an
administrative penalty not to exceed $10,000 [$1,000] for each day
that the violation occurs after notice of the violation is given by
the commissioner.
SECTION 3.03. The commissioner shall study the desirability
and feasibility of developing alternative thrift charters,
including special purpose charters, and shall issue a report,
including findings and legislative recommendations, to the
legislature no later than December 31, 2006.
ARTICLE 4. CONSUMER CREDIT COMMISSIONER
SECTION 4.01. Section 14.208, Finance Code, is amended to
read as follows:
Sec. 14.208. INJUNCTION; APPEAL. (a) If the commissioner
has reasonable cause to believe that a person is violating or is
about to violate a statute to which this chapter applies, the
commissioner, in addition to any other authorized action, may issue
without notice and hearing an order [the person] to cease and desist
[refrain] from the violation or an order to take affirmative action
or both to enforce compliance. [A person may appeal the order to
the finance commission in accordance with Chapter 2001, Government
Code.]
(b) If a person against whom the order is made requests a
hearing, the commissioner shall set and give notice of a hearing
before the commissioner or a hearings officer. The hearing shall be
governed by Chapter 2001, Government Code. Based on the findings of
fact, conclusions of law, and recommendations of the hearings
officer, the commissioner by order may find a violation has
occurred or not occurred.
(c) If a hearing has not been requested under Subsection (b)
not later than the 30th day after the date the order is made, the
order is considered final and not appealable. The commissioner,
after giving notice, may impose against a person who violates a
cease and desist order an administrative penalty in an amount not to
exceed $1,000 for each day of violation. In addition to any other
remedy provided by law, the commissioner may institute in district
court a suit for injunctive relief and to collect an administrative
penalty. A bond is not required of the commissioner with respect to
injunctive relief granted under this section. [The commissioner,
on relation of the attorney general at the request of the
commissioner, may also bring action in district court to enjoin the
person from engaging in or continuing the violation or doing an act
that furthers the violation.] In the action, the court may enter as
proper an order awarding a preliminary or final injunction.
SECTION 4.02. The title of Subchapter F, Chapter 14,
Finance Code, is amended to read as follows:
SUBCHAPTER F. ADMINISTRATIVE PENALTY; RESTITUTION ORDER;
ASSURANCE OF VOLUNTARY COMPLIANCE
SECTION 4.03. Section 14.252, Finance Code, is amended to
read as follows:
Sec. 14.252. AMOUNT OF PENALTY. (a) The commissioner may
assess an administrative penalty for a violation in an amount not to
exceed $2,500 [$1,000] for each day of the violation.
(b) [The aggregate amount of penalties under this
subchapter that the commissioner may assess against a person during
one calendar year may not exceed the lesser of:
(1) $50,000; or
(2) $5,000 for each business location at which an
element of violation occurred.
[(c)] In determining the amount of an administrative
penalty, the commissioner shall consider:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the prohibited act;
(2) the extent of actual or potential harm to a third
party;
(3) the history of violations;
(4) the amount necessary to deter future violations;
(5) efforts to correct the violation; and
(6) any other matter that justice may require.
SECTION 4.04. Section 14.258, Finance Code, is amended to
read as follows:
Sec. 14.258. COURT ORDERS. (a) The enforcement of the
penalty may be stayed during the time the order is under judicial
review if the person pays the penalty to the clerk of the court or
files a supersedeas bond with the court in the amount of the
penalty. A person who cannot afford to pay the penalty or file the
bond may stay the enforcement by filing an affidavit in the manner
required by the Texas Rules of Civil Procedure for a party who
cannot afford to file security for costs, subject to the right of
the commissioner to contest the affidavit as provided by those
rules.
(b) The attorney general may sue to collect the penalty.
[See, also, italicized material following text of this
section.]
[(a) A court that sustains the occurrence of a violation may
uphold or reduce the amount the amount of the administrative
penalty and order the person to pay that amount.
(b) A court that does not sustain the occurrence of a
violation shall order that no penalty is owed.
(c) If a person has paid a penalty and a court in a final
judgment reduces or does not uphold the amount, the court shall
order that the appropriate amount plus accrued interest be remitted
to the person. The interest rate is the rate authorized by Chapter
304, and interest shall be paid for the period beginning on the date
the penalty was paid and ending on the date the penalty is
remitted.]
Section 5 of Acts 1997, 75th Leg., ch. 1396, eff. Sept. 1, 1997,
amends subsec. (l) of Vernon's Ann.Civ.St. art. 5069-2.03(A) [now
this section] without reference to the repeal of said article by
Acts 1997, 75th Leg., ch. 1008, Sec. 6. As so amended, subsec. (l)
reads:
["When the judgment of the court becomes final, the court shall
proceed under this subsection. If the person paid the amount of the
penalty and if that amount is reduced or is not upheld by the court,
the court shall order that the appropriate amount plus accrued
interest be remitted to the person. The rate of the interest is the
rate authorized by Chapter 1E of this title, and the interest shall
be paid for the period beginning on the date the penalty was paid
and ending on the date the penalty is remitted."]
SECTION 4.05. Chapter 14, Finance Code, is amended by
adding new Sections 14.261-14.264 to read as follows:
Sec. 14.261. ACCEPTANCE OF ASSURANCE. (a) In
administering this chapter, the commissioner may accept assurance
of voluntary compliance from a person who is engaging in, has
engaged in, or is about to engage in an act or practice in violation
of:
(1) this chapter or a rule adopted under this chapter;
(2) Chapter 394; or
(3) Subtitle B, Title 4 or a rule adopted under
Subtitle B, Title 4.
(b) The assurance must be in writing and be filed with the
commissioner.
(c) The commissioner may condition acceptance of an
assurance of voluntary compliance on the stipulation that the
person offering the assurance restore to a person in interest money
that may have been acquired by the act or practice described in
Subsection (a).
(d) The commission may adopt rules to establish the form of
the assurance or require certain information be contained in an
assurance.
Sec. 14.262. EFFECT OF ASSURANCE. (a) An assurance of
voluntary compliance is not an admission of a prior violation of:
(1) this chapter or a rule adopted under this chapter;
(2) Chapter 394; or
(3) Subtitle B, Title 4 or a rule adopted under
Subtitle B, Title 4.
(b) Unless an assurance of voluntary compliance is
rescinded by agreement, a subsequent failure to comply with the
assurance is prima facie evidence of a violation of:
(1) this chapter or a rule adopted under this chapter;
(2) Chapter 394; or
(3) Subtitle B, Title 4 or a rule adopted under
Subtitle B, Title 4.
Sec. 14.263. REOPENING. A matter closed by the filing of an
assurance of voluntary compliance may be reopened at any time.
Sec. 14.264. RIGHT TO BRING ACTION NOT AFFECTED. An
assurance of voluntary compliance does not affect the right of an
individual to bring an action, except that the right of an
individual in relation to money received according to a stipulation
under Section 14.261(c) is governed by the terms of the assurance.
SECTION 4.06. Sections 371.303(a)-(c), Finance Code, are
amended to read as follows:
Sec. 371.303. ADMINISTRATIVE PENALTY. (a) The
commissioner may assess an administrative penalty against a person
who violates this chapter or a rule adopted under this chapter.
(b) The commissioner may assess the administrative penalty
in an amount[:
(1) equal to the average profit made by the pawnshop on
a business day in the six months before the date the violation
occurred, not to exceed $1,000, or
(2) for a violation of Section 371.304,] not to exceed
$1,000.
(c) Each day a violation continues or occurs may be
considered a separate violation for purposes of this section. The
aggregate amount of penalties that may be assessed under this
section against a person during one calendar year may not exceed
$50,000 [$10,000] for violations an element of which occurred at
the same business location.
ARTICLE 5. SAVINGS BANKS AND LIMITED SAVINGS BANKS
SECTION 5.01. Section 91.002, Finance Code, is amended by
amending Subdivisions (2) and (18) and adding new Subdivision (26)
to read as follows:
(2) "Board" means the board of directors of a savings
bank or the managers of a savings bank organized as a limited
savings bank.
(18) "Member" means:
(A) with respect to a mutual savings bank, a
person:
(i) [(A)] holding an account with the
mutual savings bank;
(ii) [(B)] assuming or obligated on a loan
in which the mutual savings bank has an interest; or
(iii) [(C)] owning property that secures a
loan in which the mutual savings bank has an interest; or
(B) with respect to a savings bank organized as a
limited savings bank, a person who owns a membership interest in the
limited savings bank.
(26) "Limited savings bank" means a savings bank
electing to be organized as a limited liability company under this
subtitle.
SECTION 5.02. Section 92.001, Finance Code, is amended to
read as follows:
Sec. 92.001. APPLICABILITY OF OTHER LAW. (a) With respect
to a savings bank, other than a savings bank organized as a limited
savings bank, organized prior to January 1, 2006, the [The] Texas
Business Corporation Act, the Texas Miscellaneous Corporation Act
(Article 1302-1.01 et seq., Vernon's Texas Civil Statutes), and
other law relating to general business corporations apply to a
savings bank to the extent not inconsistent with this subtitle or
the proper business of a savings bank.
(b) With respect to a savings bank organized as a limited
savings bank prior to January 1, 2006, the Texas Limited Liability
Act, and any other law relating to a limited liability company
organized in Texas apply to a limited savings bank to the extent not
inconsistent with this subtitle or the proper business of a limited
savings bank.
(c) With respect to a savings bank, other than a savings
bank organized as a limited savings bank, organized on or after
January 1, 2006, the provisions of the Business Organizations Code
applicable to general business corporations apply to a savings bank
to the extent not inconsistent with this subtitle or the proper
business of a savings bank.
(d) With respect to a savings bank organized as a limited
savings bank on or after January 1, 2006, the provisions of the
Business Organizations Code applicable to a limited liability
company organized in Texas apply to a limited savings bank to the
extent not inconsistent with this subtitle or the proper business
of a limited savings bank.
(e) With respect to a savings bank or limited savings bank
organized prior to January 1, 2006, the finance commission may
establish rules permitting a savings bank or limited savings bank
to elect to be governed by the provisions of the Business
Organizations Code to the extent not inconsistent with this
subtitle or the proper business of a savings bank or limited savings
bank.
SECTION 5.03. Section 92.201, Finance Code, is amended to
read as follows:
Sec. 92.201. PURPOSE OF INCORPORATION. A person may apply
to incorporate a savings bank for the purpose of:
(1) purchasing the assets, assuming the liabilities
other than liability to shareholders, and continuing the business
of a financial institution the commissioner considers to be in an
unsafe condition; [or]
(2) acquiring an existing financial institution by
merger; or
(3) facilitating any reorganization or merger with or
into a savings bank under rules adopted by the finance commission.
SECTION 5.04. Section 92.102, Finance Code, is amended to
read as follows:
Sec. 92.102. INCORPORATION REQUIREMENTS. (a) An
application to incorporate a savings bank under this subchapter
must be submitted to the commissioner.
(b) The application must include information required by
the commissioner or by rule of the finance commission.
(c) The savings bank must have capital in an amount
determined by the commissioner to be sufficient to carry out the
purposes for which incorporation is requested.
(d) Chapter 2001, Government Code does not apply to the
application if:
(1) [If] the commissioner considers the financial
institution to be reorganized or merged to be in an unsafe
condition; or [:]
(2) the savings bank incorporated under this
subchapter does not survive the merger or is facilitating the
continuation of an existing savings bank corporate reorganization
as defined by rules adopted by the finance commission.
[(1) Chapter 2001, Government Code, does not apply to
the application; and]
(e) [(2)] If the commissioner considers the financial
institution to be reorganized or merged to be in an unsafe
condition, the application and all information relating to the
application are confidential and not subject to public disclosure.
SECTION 5.05. Section 92.156, Finance Code, is amended to
read as follows:
Sec. 92.156. INDEMNITY BONDS OF DIRECTORS, OFFICERS, AND
EMPLOYEES. (a) A savings bank shall maintain [on file with the
commissioner] a blanket indemnity bond with an adequate corporate
surety protecting the savings bank from loss by or through
dishonest or criminal action or omission, including fraud, theft,
robbery, or burglary, by an officer or employee of the savings bank
or a director of the savings bank when the director performs the
duty of an officer or employee.
(b) A savings bank that employs a collections agent who is
not covered by the bond required by Subsection (a) shall provide for
the bonding of the agent in an amount equal to at least twice the
average monthly collection of the agent unless the agent is a
financial institution insured by the Federal Deposit Insurance
Corporation. An agent shall settle with the savings bank at least
monthly.
(c) Subject to rules adopted under Subsection (e), the [The]
board shall [and the commissioner must] approve:
(1) the amount and form of the bond; and
(2) the sufficiency of the surety.
(d) The bond must provide that a cancellation by the surety
or the insured is not effective until the earlier of:
(1) the date the commissioner approves; or
(2) the 30th day after the date written notice of the
cancellation is given to the commissioner.
(e) The finance commission may adopt rules establishing the
amount and form of the bond and the sufficiency of the surety.
SECTION 5.06. Section 92.204, Finance Code, is amended to
read as follows:
Sec. 92.204. QUALIFIED THRIFT LENDER [QUALIFICATION UNDER
INTERNAL REVENUE CODE ASSET] TEST. (a) A savings bank must either:
[qualify under and continue to meet:
(1) the asset test of Section 7701(a)(19), Internal
Revenue Code of 1986 (26 U.S.C. Section 7701(a)(19)); or
[(2)] (1) qualify under and continue to meet the
qualified thrift lender test of Section 10(m), Home Owners' Loan
Act (12 U.S.C. Section 1467a(m)); or
(2) maintain more than 50 percent of its portfolio
assets in qualified thrift assets as defined in Subsection (b) of
this section on a monthly average basis in at least nine out of 12
months.
(b) For purposes of Subsection (a)(2) of this section, the
term "qualified thrift assets" shall mean:
(1) qualified thrift assets as defined and calculated
by 12 U.S.C. Section 1467a(m)(4)(C); and
(2) such other assets as are determined by the
commissioner, under rules adopted by the finance commission, to be
substantially equivalent to qualified thrift assets described by
Subsection (b)(1) or which further residential lending or community
development.
(c) [(b)] The commissioner may grant temporary or limited
exceptions to the requirements of this section as the commissioner
considers necessary.
SECTION 5.07. Section 92.207, Finance Code, is amended to
read as follows:
Sec. 92.207. LIMITATION ON ISSUANCE OF SECURITIES. A
savings bank may issue a form of stock, share, account, or
investment only as authorized by this subtitle or as permitted for
a national bank, federal savings and loan association, federal
savings bank, or state bank.
SECTION 5.08. Section 92.208, Finance Code, is amended to
read as follows:
Sec. 92.208. COMMON STOCK. (a) A savings bank may not
issue common stock before the common stock is fully paid for in
cash.
(b) A savings bank may not make a loan against the shares of
its outstanding common stock.
(c) A savings bank may not purchase, directly or indirectly,
its own issued common stock, except under a stock repurchase plan
approved in advance by the commissioner.
(d) A savings bank may not retire or redeem common stock
until:
(1) all liabilities of the savings bank are satisfied,
including all amounts due to holders of deposit accounts, unless:
(A) prior written permission is obtained from the
commissioner; and
(B) the retirement or redemption is authorized by
a majority vote of the savings bank's shareholders at an annual
meeting or a special meeting called for that purpose;
(2) the basis of the retirement or redemption is
approved by the commissioner; and
(3) the savings bank files written consent of the
Federal Deposit Insurance Corporation with the commissioner.
(e) Subsections (b) and (c) of this section also apply to
the securities of the savings bank's holding company and
affiliates.
SECTION 5.09. Section 92.211, Finance Code, is amended to
read as follows:
Sec. 92.211. DIVIDENDS ON CAPITAL STOCK. (a) The board of
a capital stock savings bank may declare and pay a dividend out of
current or retained income, in cash or additional stock, to the
holders of record of the stock outstanding on the date the dividend
is declared.
(b) Without the prior approval of the commissioner, no cash
dividend may be declared by the board of a savings bank that the
commissioner considers:
(1) to be in an unsafe condition; or
(2) to have total retained income on the date of the
dividend declaration to be less than zero.
SECTION 5.10. Section 92.252(b), Finance Code, is amended
to read as follows:
(b) The application to convert must:
(1) be filed in the office of the commissioner not
later than the 30th [10th] day after the date of the meeting; and
(2) include a copy of the minutes of the meeting, sworn
to by the secretary or an assistant secretary.
SECTION 5.11. Section 92.301(b), Finance Code, is amended
to read as follows:
(b) The application to convert must:
(1) be filed in the office of the commissioner not
later than the 30th [10th] day after the date of the meeting; and
(2) include a copy of the minutes of the meeting, sworn
to by the secretary or an assistant secretary.
SECTION 5.12. Section 92.351(a), Finance Code, is amended
to read as follows:
(a) A savings bank may reorganize, merge, or consolidate
with a corporation, another financial institution, or another
entity under a plan approved by the board.
SECTION 5.13. Chapter 92, Finance Code, is amended by
adding new Subchapter M to read as follows:
SUBCHAPTER M. LIMITED SAVINGS BANK
Sec. 92.601. APPLICATION TO ORGANIZE. (a) Five or more
adult residents of this state may apply to organize a savings bank
as a limited savings bank by submitting to the commissioner:
(1) an application to organize a limited savings bank
that is:
(A) in a form specified by the commissioner; and
(B) signed by each organizer; and
(2) the filing fee.
(b) An application must contain:
(1) two copies of the limited savings bank's
certificate of formation containing:
(A) the name of the savings bank;
(B) the location of the principal office; and
(C) the names and addresses of the initial
managers; and
(D) to the extent such provisions are not
inconsistent with this subtitle, the proper business of a savings
bank, or a rule adopted by the finance commission related to savings
banks, such other provisions as may be included in:
(i) the articles of organization of a
limited liability company organized under the Texas Limited
Liability Company Act, if the limited savings bank was organized
prior to January 1, 2006; or
(ii) the certificate of formation of a
limited liability company organized under Chapter 101 of the
Business Organization code if:
(a) the limited savings bank was
organized on or after January 1, 2006; or
(b) the organizers elect to include
such provisions, if the limited savings bank was organized prior to
January 1, 2006;
(2) two copies of the savings bank's company agreement
or by-laws;
(3) data sufficiently detailed and comprehensive in
nature to enable the commissioner to make findings under Section
92.058, including statements, exhibits, and maps;
(4) financial information about each applicant,
organizer, manager, officer, or member that the finance commission
requires by rule; and
(5) other information relating to the savings bank and
its operation that the finance commission requires by rule.
(c) Financial information described by Subsection (b) is
confidential and not subject to public disclosure unless the
commissioner finds that disclosure is necessary and in the public
interest.
(d) The statement of fact must be signed and sworn to.
(e) The provisions of Subchapter B, Chapter 92 of this title
shall apply to the organization of a limited savings bank except to
the extent such provisions are inconsistent with the provisions of
this section.
Sec. 92.602. LIABILITY OF MEMBERS AND MANAGERS. A member,
transferee of a member, or a manager of a limited savings bank is
not liable for a debt, obligation, or liability of the limited
savings bank, including a debt, obligation, or liability under a
judgment, decree, or order of court. A member or a manager of a
limited savings bank is not a proper party to a proceeding by or
against a limited savings bank unless the object of the proceeding
is to enforce a member's or manager's right against or liability to
a limited savings bank.
Sec. 92.603. CONTRIBUTIONS. A member of a limited savings
bank is obligated to make contributions as required in the company
agreement.
Sec. 92.604. MANAGERS OF A LIMITED SAVINGS BANK. (a)
Management of a limited savings bank shall be exercised by a board
of managers consisting of not less than five nor more than 21
persons.
(b) A manager must meet the qualifications for a director
under Section 92.153.
(c) The governing documents of a limited savings bank may
use "director" instead of "manager" and "board" instead of "board
of managers."
Sec. 92.605. WITHDRAWAL OR REDUCTION OF MEMBER'S
CONTRIBUTION. (a) A member may not receive from a limited savings
bank any part of the member's contribution except as may be provided
in a rule adopted by the finance commission regulating withdrawal
or reduction.
(b) In no event may a member receive any part of the member's
contribution if, after the withdrawal or reduction, the capital of
the savings bank would be reduced to less than the minimum capital
established for the incorporation or operation of a savings bank by
this subtitle or a rule adopted pursuant to authority granted by
this subtitle.
Sec. 92.606. COMPANY AGREEMENT OF LIMITED SAVINGS BANK.
(a) A limited savings bank shall adopt a company agreement which
shall contain provisions regulating the management and
organization of the limited savings bank which shall be subject to
the approval of the commissioner and which shall contain such
provisions as the finance commission may require by a rule adopted
under this subchapter.
(b) At the option of the limited savings bank, the term
"by-laws" may be substituted for the term "company agreement."
Sec. 92.607. DISSOLUTION. (a) A limited savings bank
organized under this chapter is dissolved on:
(1) the expiration of the period fixed for the
duration of the limited savings bank; or
(2) the occurrence of events specified in the articles
of organization, certificate of formation, or company agreement to
cause dissolution.
(b) A dissolution under this section is considered a
resolution to close the savings bank under Section 96.251.
Sec. 92.608. ALLOCATION OF PROFITS AND LOSSES. The profits
and losses of a limited savings bank may be allocated among the
members and among classes of members as provided by the company
agreement. Without the prior written approval of the commissioner
to use a different allocation method, the profits and losses must be
allocated according to the relative interests of the members in the
limited savings bank.
Sec. 92.609. DISTRIBUTIONS. Subject to rules adopted by
the finance commission, distributions of cash or other assets of a
limited savings bank may be made to the members as provided by the
company agreement. Without the prior written approval of the
commissioner to use a different distribution method, distributions
must be made to the members according to the relative interests of
the members as reflected in the governing documents of the limited
savings bank filed with and approved by the commissioner.
Sec. 92.610. AMENDMENT OF GOVERNING DOCUMENTS. (a) A
limited savings bank may amend its articles of organization or
certificate of formation by a majority vote of the members cast at
any annual meeting or a special meeting called for that purpose
unless the articles of organization or certificate of formation
should require a higher percentage.
(b) If provided in the governing documents, the company
agreement or by-laws of a limited savings bank may be amended by a
majority vote of the board of managers unless the governing
documents should require a higher percentage. In the absence of an
express provision in the governing documents, the company agreement
or by-laws may be amended by a majority vote of the members cast at
any annual meeting or special meeting called for that purpose.
(c) An amendment to the governing documents may not take
effect before it is filed with and approved by the commissioner.
Sec. 92.611. APPLICATION OF OTHER PROVISIONS TO LIMITED
SAVINGS BANKS; MISCELLANEOUS PROVISIONS. (a) All of the
provisions of Subtitle C apply to a savings bank organized as a
limited savings bank under this subchapter. In the event of a
conflict between this subchapter and any provision of Subtitle C,
the provisions of this subchapter shall control unless the finance
commission by rule orders that the provision of Subtitle C
controls.
(b) For purposes of provisions of this chapter other than
this subchapter, as the context requires:
(1) a manager is considered to be a director, and the
board of managers is considered to be the board of directors;
(2) a member is considered to be a shareholder; and
(3) a distribution is considered to be a dividend.
(c) When a provision of a statute or rule uses the term
"savings bank," the term shall include a savings bank organized as a
limited savings bank unless the context clearly requires that a
limited savings bank is not included within the term or the
provision contains express language excluding a limited savings
bank.
(d) The term "governing document" means a limited savings
bank's articles of organization, certificate of formation, company
agreement, or by-laws.
SECTION 5.14. Section 93.001(c), Finance Code, is amended
to read as follows:
(c) A savings bank may:
(1) sue and be sued in its corporate name;
(2) adopt and operate a reasonable bonus plan,
profit-sharing plan, stock bonus plan, stock option plan, pension
plan, or similar incentive plan for its directors, officer, or
employees, subject to any limitations under this subtitle or rules
adopted under this subtitle;
(3) make reasonable donations for the public welfare
or for a charitable, scientific, religious, or educational purpose;
(4) pledge its assets to secure deposits of public
money of the United States, if required by the United States,
including revenue and money the deposit of which is subject to
control or regulation of the United States;
(5) pledge its assets to secure deposits of public
money of any state or of a political corporation or political
subdivision of any state or of any other entity or organization
deemed to serve a public purpose according to rules adopted by the
finance commission.
(6) become a member of or deal with any corporation or
agency of the United States or this state, to the extent that the
corporation or agency assists in furthering the purposes or powers
of savings banks, and for that purpose may purchase stock or
securities of the corporation or agency or deposit money with the
corporation or agency and may comply with any other condition of
membership credit;
(7) become a member of a federal home loan bank or the
Federal Reserve System;
(8) hold title to any assets acquired because of the
collection or liquidation of a loan, investment, or discount and
may administer those assets as necessary;
(9) receive and repay any deposit or account in
accordance with this subtitle and rules of the finance commission;
and
(10) lend and invest its money as authorized by this
subtitle and rules of the finance commission.
SECTION 5.15. Section 93.008, Finance Code, is amended to
read as follows:
Sec. 93.008. POWERS RELATIVE TO OTHER FINANCIAL
INSTITUTIONS. (a) A savings bank may make a loan or investment or
engage in an activity permitted:
(1) under state law for a bank or savings and loan
association; or
(2) under federal law for a federal savings and loan
association, savings bank, or national bank if the financial
institution's principal office is located in this state.
(b) Notwithstanding any other law, as permitted by rules
adopted by the finance commission, a savings bank may perform an
act, own property, or offer a product or service that is at the time
permissible for a depository institution organized under the law of
another state within the United States.
SECTION 5.16. Section 94.201, Finance Code, is amended to
read as follows:
Sec. 94.201. REQUIRED INVESTMENTS. A savings bank shall
maintain in the savings bank's portfolio not less than 15 percent of
the savings bank's deposits from its local service area designated
under Section 94.202 in:
(1) first and second lien residential mortgage loans,
home equity loans, or foreclosed residential mortgage loans
originated in the savings bank's local service area;
(2) home improvement loans;
(3) interim residential construction loans;
(4) mortgage-backed securities secured by loans in the
savings bank's local service area; [and]
(5) loans for community reinvestment; and
(6) other loans made to customers in the savings bank's
local service area that meet the definition of qualified thrift
assets under Section 92.204.
SECTION 5.17. Section 96.503(a), Finance Code, is amended
to read as follows:
(a) Before March [February] 1 of each year, a savings bank
shall provide to the commissioner on a form to be prescribed and
furnished by the commissioner a written report of its affairs and
operations, including a complete statement of its financial
condition with a statement of income and expenses since its last
annual report under this section. The report must be signed by the
president, vice president, or secretary of the savings bank.
SECTION 5.18. Chapter 97, Finance Code, is amended by
designating Sections 97.001-97.007 as "Subchapter A. General
Provisions Applicable to Holding Companies" and adding new
Subchapter B to read as follows:
SUBCHAPTER B. MUTUAL HOLDING COMPANIES
Sec. 97.051. REORGANIZATION TO BECOME MUTUAL HOLDING
COMPANY. (a) Notwithstanding any other provision of law, any
savings bank may be reorganized in order to become a mutual holding
company by submitting to the commissioner an application for
approval of reorganization.
(b) An application for reorganization shall have been
approved by a majority vote of the members or shareholders of the
savings bank cast at an annual meeting or a special meeting called
to consider the reorganization.
Sec. 97.052. APPLICATION FOR APPROVAL OF REORGANIZATION.
The application for approval of reorganization shall contain:
(1) a brief statement summarizing a reorganization
plan;
(2) two copies of the proposed articles of
incorporation of the subsidiary savings bank acknowledged by the
incorporators of the subsidiary savings bank;
(3) two copies of the proposed by-laws of the savings
bank;
(4) a statement that the plan of reorganization was
advised, authorized, and approved by the savings bank in the manner
and by the vote required by its charter and the laws of this state;
and
(5) a statement of the manner of approval.
Sec. 97.053. PLAN OF REORGANIZATION. (a) The plan of
reorganization shall provide that:
(1) a subsidiary savings bank shall:
(A) be incorporated pursuant to Chapter 92 of
this subtitle; or
(B) upon prior approval of the commissioner,
shall be incorporated pursuant to Chapter 92 of this subtitle;
(2) the savings bank shall transfer a substantial part
of its assets to the subsidiary savings bank, and the subsidiary
savings bank shall assume a substantial part of the savings bank's
liabilities, including all depository liabilities;
(3) as a result of the reorganization of the savings
bank into a mutual holding company, the mutual holding company
shall hold more than 50 percent of the stock of the subsidiary
savings bank; and
(4) after transfer and assumption, persons with prior
corresponding rights as depositors or creditors against a savings
bank shall have the same rights with respect to the mutual holding
company and the subsidiary savings bank.
(b) The plan of reorganization shall set forth the necessary
corporate steps for the savings bank to reorganize into a mutual
holding company, including:
(1) all required charter amendments; and
(2) a description of the corporate management of the
reorganized mutual holding company.
(c) The plan of reorganization may contain any other
provision not inconsistent with law or finance commission rules.
ARTICLE 6. AMENDMENTS TO MORTGAGE BROKER LICENSE ACT
SECTION 6.01. Section 156.002(10) is amended to read as
follows:
(10) "Mortgage loan" means:
(A) a debt against real estate secured by a
first-lien security interest against one-to-four family
residential real estate created by a deed of trust, security deed,
or other security instrument;
(B) a lease for a term in excess of 180 days of
one-to-four family residential real estate that includes an option
to purchase where any portion of the lease payment is applied to the
purchase price; or
(C) an executory contract for the conveyance of
real property intended to be used as one-to-four family residential
real estate where the purchase price is payable in four or more
installments.
SECTION 6.02. Section 156.005, Finance Code, is amended to
read as follows:
Sec. 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless
prohibited by federal or state law, this chapter may not be
construed to prevent affiliated or controlled business
arrangements or loan origination services by or between mortgage
brokers and other professionals if the mortgage broker complies
with all applicable federal and state laws permitting those
arrangements or services.
SECTION 6.03. Section 156.104, Finance Code, is amended by
adding new Subsection (j) to read as follows:
(j) If the advisory committee takes a record vote on a
matter described by Subsection (h), and the matter is brought by the
commissioner to the finance commission for action by the finance
commission, the commissioner shall inform the finance commission
of:
(1) the result of the vote; and
(2) any additional information the commissioner deems
necessary to ensure the finance commission is sufficiently notified
of the advisory committee's recommendations.
SECTION 6.04. Section 156.201(c), Finance Code, is amended
to read as follows:
(c) Each mortgage broker licensed under this chapter is
responsible to the commissioner and members of the public for any
act or conduct performed under this chapter and for any act or
conduct performed in connection with a separate transaction that is
related to the origination of a mortgage loan by the mortgage broker
or a loan officer sponsored by or acting for the mortgage broker.
SECTION 6.05. Section 156.202, Finance Code, is amended to
read as follows:
Sec. 156.202. EXEMPTIONS. This chapter does not apply to:
(1) any of the following entities or an employee of any
of the following entities provided the employee is acting for the
benefit of the employer:
(A) a bank, savings bank, or savings and loan
association, or a subsidiary or an affiliate of a bank, savings
bank, or savings and loan association;
(B) a state or federal credit union, or a
subsidiary, affiliate, or credit union service organization of a
state or federal credit union;
(C) an insurance company licensed or authorized
to do business in this state under the Insurance Code;
(D) a mortgage banker registered under Chapter
157;
(E) an organization that qualifies for an
exemption from state franchise and sales tax as a 501(c)(3)
organization;
(F) a Farm Credit System institution; or
(G) a political subdivision of this state
involved in affordable home ownership programs;
(2) an individual who makes a mortgage loan from the
individual's own funds to a spouse, former spouse, or persons in the
lineal line of consanguinity of the individual lending the money;
(3) an owner of real property who makes a mortgage loan
to a purchaser of the property for all or part of the purchase price
of the real estate against which the mortgage is secured; or
(4) an individual who:
(A) makes a mortgage loan from the individual's
own funds;
(B) is not an authorized lender under Chapter
342, Finance Code, and;
(C) does not regularly engage in the business of
making or brokering mortgage loans.
SECTION 6.06. Section 156.203(d), Finance Code, is amended
to read as follows:
(d) An application fee under this section is not refundable
and may not be credited or applied to any other fee or indebtedness
owed by the person paying the fee.
SECTION 6.07. Section 156.204, Finance Code, is amended to
read as follows:
Sec. 156.204. QUALIFICATIONS. (a) To be eligible to be
licensed as a mortgage broker a person must:
(1) be an individual who is at least 18 years of age;
(2) be a citizen of the United States or a lawfully
admitted alien;
(3) maintain a physical office in this state and
designate that office in the application;
(4) provide the commissioner with satisfactory
evidence that the applicant satisfies one of the following:
(A) the person has received a bachelor's degree
in an area relating to finance, banking, or business administration
from an accredited college or university and has 18 months of
experience in the mortgage or lending field as evidenced by
documentary proof of full-time employment as a mortgage broker or
loan officer with a mortgage broker or a person exempt under Section
156.202;
(B) the person is licensed in this state as:
(i) an active real estate broker under
Chapter 1101, Occupations Code;
(ii) an active attorney; or
(iii) a local recording agent or insurance
solicitor or agent for a legal reserve life insurance company under
Chapter 21, Insurance Code, or holds an equivalent license under
Chapter 21, Insurance Code; or
(C) the person has three years of experience in
the mortgage lending field as evidenced by documentary proof of
full-time employment as a loan officer with a mortgage broker or a
person exempt under Section 156.202;
(5) demonstrate evidence of compliance with the
financial requirements of this chapter;
(6) [(5)] provide the commissioner with satisfactory
evidence of[: (A)] having passed an examination, offered by a
testing service or company approved by the finance commission, that
demonstrates knowledge of[: (i)] the mortgage industry[;] and
[(ii)] the role and responsibilities of a mortgage broker; [and (B)
compliance with the financial requirements of this chapter; and]
(7) [(6)] not have been convicted of a criminal
offense that the commissioner determines directly relates to the
occupation of a mortgage broker under Chapter 53, Occupations Code;
[(6) not have been convicted of a criminal offense that the
commissioner determines directly relates to the occupation of a
mortgage broker as provided by Chapter 53, Occupations Code;]
(8) [(7)] satisfy the commissioner as to the
individual's good moral character, including the individual's
honesty, trustworthiness, and integrity; and
(9) [(8)] not be in violation of this chapter, a rule
adopted under this chapter, or any order previously issued to the
individual by the commissioner.
(b) A mortgage broker may conduct business under a corporate
structure, partnership, or any other business form or as an
independent contractor for a corporation, partnership, or any other
business entity. Before conducting mortgage broker activities
under, through, or for a corporation, partnership, or other
business entity, a mortgage broker must notify the commissioner, in
writing, of any corporate name, partnership name, assumed name, or
any other name under, through, or for which the mortgage broker
conducts activities for which a license is required under this
chapter. The corporation, partnership, or other business entity
under, through, or for which the mortgage broker conducts business
is not required to be separately licensed as a mortgage broker
provided that all individuals who perform mortgage broker
activities are licensed as mortgage brokers or loan officers. The
commission shall require proof of compliance with this subsection
at the time the mortgage broker applies for and renews a license.
(c) To be eligible to be licensed as a loan officer a person
must:
(1) be an individual who is at least 18 years of age;
(2) be a citizen of the United States or a lawfully
admitted alien;
(3) designate in the application the name of the
mortgage broker sponsoring the loan officer;
(4) provide the commissioner with satisfactory
evidence that the applicant satisfies one of the following:
(A) the person meets one of the requirements
described by subsection (a)(4);
(B) the person has successfully completed 30 [15]
hours of education courses approved by the commissioner under this
section;
(C) the person has 18 months of experience as a
loan officer as evidenced by documentary proof of full-time
employment as a loan officer with a mortgage broker or a person
exempt under Section 156.202; or
(D) for applications received prior to January 1,
2000, the mortgage broker that will sponsor the applicant provides
a certification under oath that the applicant has been provided
necessary and appropriate education and training regarding all
applicable state and federal law and regulations relating to
mortgage loans;
(5) not have been convicted of a criminal offense that
the commissioner determines directly relates to the occupation of a
loan officer as provided by Chapter 53, Occupations Code;
[(5) not have been convicted of a criminal offense
that the commissioner determines directly relates to the occupation
of a loan officer as provided by Chapter 53, Occupations Code; and]
(6) satisfy the commissioner as to the individual's
good moral character, including the individual's honesty,
trustworthiness, and integrity; [and]
(7) [(6)] provide the commissioner with satisfactory
evidence of having passed an examination, offered by a testing
service or company approved by the finance commission, that
demonstrates knowledge of[: (A)] the mortgage industry[;] and
[(B)] the role and responsibilities of a loan officer; and
(8) [(7)] not be in violation of this chapter, a rule
adopted under this chapter, or any order previously issued to the
individual by the commissioner.
(d) For the purposes of Subsections (a)(7) [(6)] and (c)(5),
a person is considered convicted if a sentence is imposed on the
person, the person receives community supervision, including
deferred adjudication community supervision, or the court defers
final disposition of the person's case.
SECTION 6.08. Section 156.205, Finance Code, is amended to
read as follows:
Sec. 156.205. FINANCIAL REQUIREMENTS FOR A MORTGAGE BROKER.
(a) A mortgage broker must furnish to the commissioner a surety
bond in an amount of not less than $50,000. [In this section, "net
assets" means the difference between total assets and total
liabilities, as determined by generally accepted accounting
principles.]
(b) [A mortgage broker must maintain net assets of at least
$25,000 or a surety bond in the amount of at least $50,000.] The
term of the surety bond must coincide with the term of the license.
The commission may adopt rules establishing the terms and
conditions of the surety bond and the qualifications of the surety.
(c) The commissioner shall require proof of compliance with
this section at the time the mortgage broker applies for or renews a
license.
SECTION 6.09. Section 156.208, Finance Code, is amended by
amending Subsection (e) and adding new Subsection (i) to read as
follows:
(e) A renewal fee is not refundable and may not be credited
or applied to any other fee or indebtedness owed by the person
paying the fee.
(i) The commissioner may deny the renewal of a mortgage
broker license or a loan officer license if:
(1) the mortgage broker or loan officer is in violation
of this chapter, a rule adopted under this chapter, or any order
previously issued to the individual by the commissioner; or
(2) the mortgage broker or loan officer is in default
in the payment of any administrative penalty, fee, charge, or other
indebtedness owed under this title.
SECTION 6.10. Section 156.2081, Finance Code, is amended to
read as follows:
Sec. 156.2081. RENEWAL AFTER EXPIRATION; NOTICE. (a) A
person whose license has expired may not engage in activities that
require a license until the license has been renewed.
(b) A person whose license has been expired for 90 days or
less but who is otherwise eligible to renew a license may renew the
license by paying to the commissioner a renewal fee that is equal to
1-1/2 times the normally required renewal fee.
(c) A person whose license has been expired for 91 days or
more may not renew the license. The person may obtain a new license
by complying with the requirements and procedures for obtaining an
original license. [more than 90 days but less than one year but who
is otherwise eligible to renew a license may renew the license by
paying to the commissioner a renewal fee that is equal to two times
the normally required renewal fee.
(d) A person whose license has been expired for one year or
more may not renew the license. The person may obtain a new license
by complying with the requirements and procedures for obtaining an
original license.
(e)] (d) A person who was licensed in this state, moved to
another state, and is currently licensed and has been in practice in
the other state for the two years preceding the date of application
may obtain a new license by paying to the commissioner a fee that is
equal to two times the normally required renewal fee for the
license.
(e) [(f)] Not later than the 60th [30th] day before the date
a person's license is scheduled to expire, the commissioner shall
send written notice of the impending expiration to the person at the
person's last known address according to the records of the Savings
and Loan Department.
SECTION 6.11. Section 156.209, Finance Code, is amended by
amending Subsection (c) and adding new Subsections (f) and (g) to
read as follows:
(c) The designated hearings officer shall set the time and
place for a hearing requested under Subsection (b) not later than
the 90th [30th] day after the date on which the appeal is received.
The hearings officer shall provide at least 10 days' notice of the
hearing to the applicant or person requesting the renewal. The time
of the hearing may be continued periodically with the consent of the
applicant or person requesting the renewal. After the hearing, the
commissioner shall enter an order from the findings of fact,
conclusions of law, and recommendations of the hearing officer.
(f) A person who requests a hearing under this Section shall
be required to pay a deposit for costs in an amount to be determined
by the commissioner but not to exceed $500 to secure the payment of
the costs of the hearing. The entirety of the deposit shall be
refunded to the person if the person prevails in the contested case
hearing. If the person does not prevail, any portion of the deposit
in excess of the costs of the hearing assessed against that person
shall be refundable.
(g) A person whose application for a license has been denied
is not eligible to be licensed for a period of two years from the
date the denial becomes final, or a shorter period determined by the
commissioner after evaluating the specific circumstances of the
person's subsequent application. The finance commission may adopt
rules to provide for conditions for which the commissioner may
shorten the time of disqualification.
SECTION 6.12. Section 156.211(c), Finance Code, is amended
to read as follows:
(c) A fee under this section is not refundable and may not be
credited or applied to any other fee or indebtedness owed by the
person paying the fee.
SECTION 6.13. Section 156.301, Finance Code, is amended by
adding new Subsection (g) to read as follows:
(g) The commissioner may share information gathered during
an investigation or inspection with any state or federal agency.
SECTION 6.14. Chapter 156, Finance Code, is amended by
adding new Section 156.3011 to read as follows:
Sec. 156.3011. ISSUANCE AND ENFORCEMENT OF SUBPOENAS. (a)
During an investigation, the commissioner may issue a subpoena that
is addressed to a peace officer of this state or other person
authorized by law to serve citation or perfect service. The
subpoena may require a person to give a deposition or produce
documents or both.
(b) If a person disobeys a subpoena or if a person appearing
in a deposition in connection with the investigation refuses to
testify, the commissioner may petition a district court in Travis
County to issue an order requiring the person to obey the subpoena,
testify, or produce documents relating to the matter. The court
shall promptly set an application to enforce a subpoena issued
under Subsection (a) for hearing and shall cause notice of the
application and the hearing to be served upon the person to whom the
subpoena is directed.
SECTION 6.15. Section 156.303(a), Finance Code, is amended
by amending paragraphs (1) and (4) as follows:
(1) obtained a license, including a renewal of a
license, under this chapter through a false or fraudulent
representation or made a material misrepresentation in an
application for a license or for the renewal of a license under this
chapter;
(4) entered a plea of guilty or nolo contendere to, or
is convicted of, a criminal offense which is a felony or which
involves fraud or moral turpitude in a court of this or another
state or in a federal court. For purposes of this Subsection, a
person is considered convicted if a sentence is imposed on the
person, the person receives community supervision, including
deferred adjudication community supervision, or the court defers
final disposition of the person's case. [failed to notify the
commissioner not later than the 30th day after the date of the final
conviction if the person, in a court of this or another state or in a
federal court, has been convicted of or entered a plea of guilty or
nolo contendere to a felony or a criminal offense involving fraud.]
SECTION 6.16. Section 156.303, Finance Code, is amended by
adding new Subsections (f), (g), and (h) to read as follows:
(f) If a person fails to pay an administrative penalty which
has become final or fails to comply with an order of the
commissioner which has become final, then in addition to any other
remedy provided under law, and cumulative of any remedy provided by
this Chapter, the commissioner upon not less than 10 days notice to
the person may without a prior hearing suspend the person's
mortgage broker license or loan officer license. The suspension
shall continue until the person has complied with the cease and
desist order or paid the administrative penalty. During the period
of suspension, the person shall not be eligible to originate a
mortgage loan, and all compensation received by the person during
the period of suspension shall be subject to forfeiture as provided
by Section 156.406(b).
(g) An order of suspension under Subsection (f) may be
appealed. An appeal shall be a contested case governed by Chapter
2001, Government Code. A hearing of an appeal of an order of
suspension issued under Subsection (f) shall be held not later than
15 days following the receipt of the notice of appeal. The
appellant shall be provided at least three days' notice of the time
and place of the hearing.
(h) An order revoking the license of a mortgage broker or
loan officer may provide that the person is prohibited, without
obtaining prior written consent of the commissioner, from:
(1) engaging in the business of originating or making
of mortgage loans;
(2) being an employee, officer, director, manager,
shareholder, member, agent, contractor, or processor of a mortgage
broker or loan officer; or
(3) otherwise affiliating with a person for the
purpose of engaging in the business of originating or making
mortgage loans.
SECTION 6.17. Chapter 156, Finance Code, is amended by
adding new Section 156.305 to read as follows:
Sec. 156.305. RESTITUTION. The commissioner may order a
person to make restitution for any amount received by that person in
violation of this chapter. A mortgage broker may be required to
make restitution for any amount received by a sponsored loan
officer in violation of this chapter.
SECTION 6.18. Section 156.406(c), Finance Code, is amended
to read as follows:
(c) If the commissioner has reasonable cause to believe that
a person who is not licensed or exempt under this chapter has
engaged, or is about to engage, in an act or practice for which a
license is required under this chapter, the commissioner may issue
without notice and hearing an order to cease and desist from
continuing a particular action or an order to take affirmative
action, or both, to enforce compliance with this chapter. The order
shall contain a reasonably detailed statements of the facts on
which the order is made. The order may assess an administrative
penalty in an amount not to exceed $1,000 per day per violation, and
the order may require a person to pay to a mortgage applicant any
compensation received by the person from the applicant in violation
of this chapter. If a person against whom the order is made
requests a hearing, the commissioner shall set and give notice of a
hearing before the commissioner or a hearings officer. The hearing
shall be governed by Chapter 2001, Government Code. An order under
this subsection becomes final unless the person to whom the order is
issued requests a hearing not later than 30 days after the date the
order is issued. [Based on the findings of fact, conclusions of
law, and recommendations of the hearings officer, the commissioner
by order may find a violation has occurred or not occurred.]
SECTION 6.19. Section 156.501(b), Finance Code, is amended
to read as follows:
(b) The fund shall be used to reimburse aggrieved persons to
whom a court awards actual damages because of certain acts
committed by a mortgage broker or loan officer who was licensed
under this chapter when the act was committed. The use of the fund
is limited to an act that constitutes a violation of Section
156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13), or
(16) or 156.304. Payments from the fund may not be made to a lender
who makes a mortgage loan originated by the mortgage broker or loan
officer or who acquires a mortgage loan originated by the mortgage
broker or loan officer.
ARTICLE 7. MISCELLANEOUS PROVISIONS
SECTION 7.01. Section 304.003(c), Finance Code, is amended
to read as follows:
(c) The postjudgment interest rate is:
(1) the prime rate as published by the Board of
Governors of the Federal Reserve System [Federal Reserve Bank of
New York] on the date of computation;
(2) five percent a year if the prime rate as published
by the Board of Governors of the Federal Reserve System [Federal
Reserve Bank of New York] described by Subdivision (1) is less than
five percent; or
(3) 15 percent a year if the prime rate as published by
the Board of Governors of the Federal Reserve System [Federal
Reserve Bank of New York] described by Subdivision (1) is more than
15 percent.
Section 7.02. REPORT TO THE LEGISLATURE. No later than
December 31, 2006, the finance commission and the credit union
department shall:
(1) compare state laws related to financial
institutions with applicable federal laws;
(2) determine which state laws may be preempted by
federal law, rule, or order;
(3) determine which state laws may be invalidated by
state or federal court ruling; and
(4) report their findings to the legislature, with
recommended statutory changes..
SECTION 7.03. REPEALERS. Sections 96.052, 345.151,
345.152, and 345.154, Finance Code, are repealed.
ARTICLE 8. EFFECTIVE DATE
SECTION 8.01. This Act takes effect September 1, 2005.