80R11924 E

By: Solomons H.B. No. 1716

Substitute the following for H.B. No. 1716:

By: Solomons C.S.H.B. No. 1716

A BILL TO BE ENTITLED

AN ACT

relating to the registration of a registered financial services company and the authority of its exclusive agents to act as mortgage brokers.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 156.002, Finance Code, is amended by adding Subdivision (11) to read as follows:

(11) "Registered financial services company" means a person registered under Section 156.214.

SECTION 2. Section 156.202, Finance Code, is amended to read as follows:

Sec. 156.202. EXEMPTIONS. The following persons are exempt from this [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; or

(5) an individual who is an exclusive agent of a registered financial services company under a written agreement prohibiting the individual from soliciting, processing, negotiating, or placing a mortgage loan with a person other than the registered financial services company or an affiliate of that company.

SECTION 3. Subchapter C, Chapter 156, Finance Code, is amended by adding Section 156.214 to read as follows:

Sec. 156.214. REGISTERED FINANCIAL SERVICES COMPANY. (a) A registered financial services company may perform the services of a mortgage broker as if the company were licensed as a mortgage broker under this chapter, through individuals who are the exclusive agents of the registered financial services company.

(b) To be eligible to register as a registered financial services company, a person must:

(1) be a depository institution exempt from this chapter under Section 156.202(1)(A) or (B) and chartered and regulated by the Office of Thrift Supervision or the Office of the Comptroller of the Currency, or be a subsidiary or affiliate of the institution;

(2) provide the commissioner with satisfactory evidence of an undertaking of accountability in a form acceptable to the commissioner, supported by a surety bond equal to $1 million to cover the person's responsibility for mortgage broker activities of each exclusive agent;

(3) provide a business plan satisfactory to the commissioner that sets forth the person's plan to provide education to its exclusive agents, handle consumer complaints relating to its exclusive agents, and supervise the mortgage broker activities of its exclusive agents;

(4) pay an annual registration fee of the lesser of:

(A) one-half of the license fee for a loan officer under Section 156.203(c)(1), multiplied by the number of exclusive agents under contract to act for the person in this state; or

(B) $200,000; and

(5) designate an officer of the person to be responsible for the activities of the exclusive agents.

(c) If the commissioner determines that a person has met the requirements of Subsection (b), the commissioner shall issue a registration to the person. The registration is valid for one year and may be renewed on or before its expiration date. A person may renew an expired registration in the same manner as a person may renew an expired license under Section 156.2081(b).

(d) A registered financial services company is subject to Subchapters D and E as if the company were licensed as a mortgage broker.

(e) No person may be an exclusive agent of a registered financial services company without the prior consent of the commissioner if the individual has:

(1) been convicted of a criminal offense involving dishonesty, breach of trust, or money laundering; or pled guilty or nolo contendere in connection with a prosecution for an offense described in this subdivision; or agreed to enter into a pretrial diversion or similar program in connection with a prosecution for an offense described in this subdivision; or

(2) been the subject of a revocation or suspension of any professional license in this state or any other jurisdiction.

(f) Prior to the registered financial services company shall submit to the commissioner such information as the commissioner may require relating to the person together with a fingerprint imprint of the person. The commissioner shall obtain criminal history record information as provided in Section 156.206(b). The commissioner may assess a fee in an amount determined by the finance commission to cover the cost of the criminal background check. This section does not apply to a person who is licensed as a mortgage broker or loan officer under Chapter 156 at the time he becomes an exclusive agent of a registered financial services company.

(g) The commissioner shall notify the person and the registered financial services company of his determination as to whether or not the person is eligible to be an exclusive agent under Subsection (a). A person who is determined to be ineligible may appeal the decision of the commissioner in the same manner as an appeal may be made under Section 156.209.

SECTION 4. This Act takes effect September 1, 2007.