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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of mortgage brokers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter C, Chapter 156, Finance Code, is |
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amended by adding Sections 156.216 and 156.217 to read as follows: |
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Sec. 156.216. MORTGAGE BROKER DUTIES. (a) A mortgage broker |
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owes a fiduciary duty to a mortgage applicant in the origination of |
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a mortgage loan. The exercise of this duty includes: |
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(1) ensuring that any mortgage loan offered is |
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affordable and meets the mortgage applicant's purposes, as |
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determined by considering factors including: |
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(A) the applicant's circumstances; |
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(B) the purpose of the loan, including the reason |
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why the applicant has applied for the loan; and |
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(C) the applicant's ability to repay; |
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(2) making reasonable efforts to secure a loan that is |
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suitable to the mortgage applicant considering all of the |
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circumstances, including interest rates, charges, and repayment |
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terms of the loan and the loan options for which the applicant |
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qualifies; and |
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(3) offering the mortgage applicant the most favorable |
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terms available to a person having the applicant's qualifications. |
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(b) A mortgage applicant's statement of ability to repay a |
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loan is not conclusive evidence of the applicant's ability to repay |
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the loan. A mortgage broker must evaluate other reliable, |
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objective evidence of affordability and ability to repay. |
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(c) The duties of a mortgage broker may not be waived or |
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disclaimed unless otherwise provided by law. |
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Sec. 156.217. PROHIBITED PRACTICES. (a) A mortgage broker |
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may not recommend or make a mortgage loan that contains a provision |
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for a prepayment penalty. |
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(b) A mortgage broker may not receive any yield-spread |
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premium from a lender for processing and originating a mortgage |
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loan. |
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(c) A mortgage broker may not recommend to a mortgage |
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applicant an interest rate, charge, principal amount, or prepayment |
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term that is not suitable to the mortgage applicant considering all |
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of the applicant's circumstances, including the characteristics of |
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the property that secures or will secure the mortgage loan and the |
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loan terms for which the mortgage applicant qualifies. |
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(d) A mortgage broker may not: |
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(1) mischaracterize: |
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(A) a mortgage applicant's credit history; or |
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(B) the mortgage loans available to an applicant; |
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(2) discourage a mortgage applicant from seeking a |
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mortgage loan from another creditor or with another mortgage |
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broker, if the mortgage broker is unable to offer or recommend a |
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suitable mortgage loan to the applicant; |
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(3) misrepresent the material facts or knowingly make |
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a false promise likely to induce an applicant to obtain a mortgage |
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loan, or pursue a course of misrepresentation through an agent or |
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otherwise; |
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(4) misrepresent to or conceal from a mortgage |
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applicant material factors or terms of a mortgage loan transaction; |
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(5) fail to disburse funds in accordance with an |
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agreement; |
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(6) engage in a transaction, practice, or course of |
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business that operates a fraud on a person or violates Subchapter E, |
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Chapter 17, Business & Commerce Code; |
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(7) fraudulently or deceitfully advertise a mortgage |
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loan or misrepresent the terms or charges incidental to a mortgage |
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loan in an advertisement; |
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(8) recommend or encourage default on an existing loan |
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or other debt before and in connection with the closing or planned |
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closing of a mortgage loan that refinances all or a portion of that |
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existing loan or debt; |
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(9) knowingly engage in the practice of making a home |
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loan to a mortgage applicant who refinances an existing loan if the |
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new loan does not have a reasonable, tangible net benefit to the |
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mortgage applicant considering all of the circumstances, including |
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the terms of the new and refinanced loans, the cost of the new loan, |
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and the mortgage applicant's circumstances; and |
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(10) influence or attempt to influence through direct |
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or indirect means the outcome of a real estate appraisal sought in |
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connection with a mortgage loan, or otherwise engage in a practice |
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or course of business that induces or attempts to induce a real |
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estate appraiser to violate the Uniform Standards of Professional |
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Appraisal Practice in connection with a mortgage loan. |
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(e) This section does not prohibit a mortgage broker from |
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providing a mortgage applicant with accurate, unbiased, or general |
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information about consumer home loans, underwriting standards, |
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methods of improving credit history, or other matters relevant to a |
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mortgage applicant. |
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SECTION 2. This Act takes effect September 1, 2009. |