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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of residential mortgage loan servicers; |
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providing an administrative penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle E, Title 3, Finance Code, is amended by |
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adding Chapter 158 to read as follows: |
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CHAPTER 158. RESIDENTIAL MORTGAGE LOAN SERVICERS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 158.001. SHORT TITLE. This chapter may be cited as the |
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Residential Mortgage Loan Servicer Registration Act. |
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Sec. 158.002. DEFINITIONS. In this chapter: |
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(1) "Commissioner" means the savings and mortgage |
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lending commissioner. |
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(2) "Finance commission" means the Finance Commission |
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of Texas. |
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(3) "Person" means an individual, corporation, |
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company, limited liability company, partnership, or association. |
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(4) "Registrant" means a person registered under this |
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chapter. |
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(5) "Residential mortgage loan" means a loan primarily |
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for personal, family, or household use that is secured by a |
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mortgage, deed of trust, or other equivalent consensual security |
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interest on a dwelling or on residential real estate. |
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(6) "Residential mortgage loan servicer" means a |
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person who: |
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(A) receives scheduled payments from a borrower |
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under the terms of a residential mortgage loan, including amounts |
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for escrow accounts; and |
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(B) makes the payments of principal and interest |
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to the owner of the loan or other third party and makes any other |
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payments with respect to the amounts received from the borrower as |
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may be required under the terms of the servicing loan document or |
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servicing contract. |
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(7) "Residential real estate" means real property |
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located in this state on which a dwelling designed for occupancy for |
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one to four families is constructed or intended to be constructed. |
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Sec. 158.003. PURPOSE; RULES. (a) The purpose of this |
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chapter is to provide regulatory authority to ensure that |
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residential mortgage loan servicers registered under this chapter |
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comply with federal and state laws, rules, and regulations. |
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(b) The finance commission may adopt and enforce rules |
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necessary for the purposes of or to ensure compliance with this |
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chapter. |
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(c) The finance commission shall consult with the |
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commissioner when proposing and adopting rules under this chapter. |
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[Sections 158.004-158.050 reserved for expansion] |
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SUBCHAPTER B. REGISTRATION OF RESIDENTIAL MORTGAGE LOAN SERVICERS |
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Sec. 158.051. REGISTRATION REQUIRED. A person may not act |
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as a residential mortgage loan servicer, directly or indirectly, |
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for a residential mortgage loan secured by a lien on residential |
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real estate in this state unless the person is registered under this |
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chapter or is exempt under Section 158.052. |
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Sec. 158.052. EXEMPTIONS; APPLICABILITY. (a) This |
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chapter does not require registration by: |
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(1) a federal or state depository institution, or a |
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subsidiary or affiliate of a federal or state depository |
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institution; |
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(2) a person registered under Chapter 157; |
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(3) a person licensed under Chapter 342 or regulated |
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under Chapter 343, if the person does not act as a residential |
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mortgage loan servicer servicing first-lien secured loans; or |
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(4) a person making a residential mortgage loan with |
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the person's own funds, or to secure all or a portion of the |
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purchase price of real property sold by that person. |
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(b) This chapter applies only to a residential mortgage loan |
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servicer that services at least one residential mortgage loan. |
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(c) Nothing in this chapter permits a person who is not |
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otherwise exempt from this chapter to act as a residential mortgage |
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loan originator, as defined by Section 180.002, without obtaining a |
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license under the applicable provisions of law. |
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Sec. 158.053. APPLICATION FOR REGISTRATION; FEE. (a) To |
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register under this chapter, a residential mortgage loan servicer |
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shall file with the commissioner an application for registration |
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that must: |
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(1) be in writing; |
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(2) be under oath; |
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(3) be in the form prescribed by the commissioner; and |
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(4) contain: |
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(A) the name and the address of the principal |
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place of business of the applicant; and |
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(B) the name, title, and address of the person |
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authorized by the applicant to respond to complaints. |
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(b) At the time of making application, the applicant shall |
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pay to the commissioner a registration fee in an amount not to |
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exceed $500 as determined by the finance commission. |
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Sec. 158.054. UPDATE OF REGISTRATION. A registrant shall |
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notify the commissioner of a change in any of the information |
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provided in the registration application not later than the 30th |
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day after the date the information changes. |
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Sec. 158.055. BOND. (a) Before approval of the |
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registration, an applicant for registration under this chapter |
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shall file with the commissioner, and shall keep in force while the |
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registration remains in effect, a surety bond meeting the |
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requirements of this section or, if a surety bond is not available |
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to the applicant from a surety company authorized to do business in |
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this state, other collateral of like kind as determined by the |
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commissioner. |
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(b) The bond must be: |
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(1) in an amount not to exceed $200,000, except as |
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provided by Subsection (c); and |
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(2) payable to the commissioner. |
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(c) This subsection applies only to an applicant who |
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services only residential mortgage loans secured by unimproved |
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residential real estate or services only residential mortgage loans |
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secured by foreclosed property with a dwelling, or both. If sales |
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of the property described by this subsection do not exceed $1 |
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million annually, the bond for an applicant described by this |
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section must be in an amount not to exceed $25,000. |
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(d) If a registrant fails to comply with a final order of the |
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commissioner, the commissioner may make a claim on the bond to |
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recover and pay a consumer the amount to which the consumer was |
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entitled under the commissioner's order. |
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(e) When an action is commenced on a registrant's bond, the |
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commissioner may require the filing of a new acceptable bond. |
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Immediately on recovery on any action on the bond, the registrant |
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shall file a new bond. |
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(f) The bond procedures established by this section are |
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created to specifically exclude the participation of registrants in |
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the recovery fund established under Chapter 156. |
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(g) The finance commission may adopt rules establishing the |
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terms and conditions of the surety bond and the qualifications of |
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the surety. |
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Sec. 158.056. APPROVAL OF REGISTRATION. The commissioner |
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shall approve an application for registration under this chapter on |
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the applicant's payment of the required fees and the commissioner's |
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approval of the surety bond. |
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Sec. 158.057. NOTICE OF CHANGE OF REGISTRANT'S CONDITION. |
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(a) A registrant shall notify the commissioner in writing not |
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later than the 10th day after: |
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(1) the filing for bankruptcy or reorganization of the |
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registrant; |
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(2) the filing of a criminal indictment related in any |
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manner to the registrant's activities; or |
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(3) the receipt of notification of the issuance of a |
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final order to cease and desist, a final order of the suspension or |
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revocation of a license or registration, or another final formal or |
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informal regulatory action taken against the registrant in this or |
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another state. |
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(b) The notification required by Subsection (a)(3) must |
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include the reasons for a final regulatory action described by that |
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subdivision. |
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Sec. 158.058. RENEWAL OF REGISTRATION. (a) On or before |
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December 31 of each year, a registrant shall renew its registration |
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for the next calendar year and shall pay to the commissioner a |
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renewal fee in an amount not to exceed $500 as determined by the |
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finance commission. To renew a registration, a registrant must |
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continue to meet all standards for registration provided by this |
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chapter. |
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(b) If a registrant fails to file a renewal and pay the |
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renewal fee on or before December 31 of a calendar year, the |
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registrant's registration is considered expired at that time and |
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the registrant: |
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(1) must reapply for registration as provided by |
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Section 158.053; and |
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(2) may not conduct business as a residential mortgage |
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loan servicer until the registration is approved. |
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(c) The commissioner may refuse to renew a registration if |
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the registrant: |
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(1) has failed to pay any fees or penalties imposed |
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under this chapter; |
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(2) has failed to provide the surety bond required |
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under this chapter; or |
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(3) is not in compliance with any final order of the |
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commissioner. |
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Sec. 158.059. REVOCATION OF REGISTRATION. The commissioner |
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may, after notice and hearing, revoke a registration under this |
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chapter if: |
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(1) the registrant fails or refuses to comply with the |
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commissioner's written request for a response to a complaint; |
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(2) the commissioner determines that the registrant |
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has engaged in an intentional course of conduct to violate federal |
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or state law or has engaged in an intentional course of conduct that |
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constitutes fraudulent, deceptive, or dishonest dealings; or |
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(3) the registrant is not in compliance with any final |
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order of the commissioner. |
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Sec. 158.060. APPEAL OF CERTAIN COMMISSIONER ACTIONS. The |
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denial, nonrenewal, or revocation by the commissioner of a |
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registration under this chapter and the appeal of that action are |
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governed by Chapter 2001, Government Code. |
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[Sections 158.061-158.100 reserved for expansion] |
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SUBCHAPTER C. INVESTIGATIONS, COMPLAINTS, AND ACTIONS AGAINST |
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REGISTRANT |
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Sec. 158.101. DISCLOSURE STATEMENT. A registrant shall |
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provide to the borrower of each residential mortgage loan the |
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following notice not later than the 30th day after the registrant |
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commences servicing the loan: |
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"COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD |
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BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, |
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______________________________ (street address of the Department |
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of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS |
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AVAILABLE AT _______________ (telephone number of the Department of |
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Savings and Mortgage Lending's toll-free consumer hotline)." |
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Sec. 158.102. INVESTIGATION OF COMPLAINTS AGAINST |
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REGISTRANT; SURCHARGE. (a) On receipt of a signed written |
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complaint concerning a registrant by the Department of Savings and |
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Mortgage Lending, the commissioner or the commissioner's designee: |
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(1) shall notify the representative designated by the |
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registrant in the registration application in writing of the |
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complaint and provide a copy of the complaint to the |
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representative; |
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(2) may conduct an investigation with authority to |
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access, receive, and use in the investigation any books, accounts, |
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records, files, documents, information, or other evidence; and |
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(3) may request that the registrant provide |
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documentary and other evidence considered by the commissioner |
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necessary to effectively evaluate the complaint, including |
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correspondence, loan documents, and disclosures. |
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(b) A registrant shall promptly provide any evidence |
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requested by the commissioner. |
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(c) Information obtained by the commissioner during an |
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investigation is confidential unless disclosure of the information |
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is permitted or required by other law or court order. The |
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commissioner may share information gathered during an |
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investigation with any state or federal agency. |
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(d) In addition to the registration fee, the finance |
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commission by rule may impose a complaint investigation fee on a |
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registrant based on the costs incurred by the Department of Savings |
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and Mortgage Lending resulting from the investigation of complaints |
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against the registrant. |
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Sec. 158.103. ACTION ON COMPLAINT. (a) If, after |
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conducting an investigation, the commissioner determines that the |
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registrant has violated this chapter or another applicable law, the |
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commissioner may do one or more of the following: |
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(1) issue an order to the registrant to resolve the |
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complaint by paying to the consumer the damages to which the |
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consumer would be entitled under law; or |
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(2) order the registrant to cease and desist from the |
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actions found to be in violation of law. |
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(b) A registrant may appeal an order issued under this |
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section. The appeal is a contested case governed by Chapter 2001, |
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Government Code. |
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Sec. 158.104. MULTI-STATE EXAMINATION AUTHORITY. To ensure |
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that residential mortgage loan servicers to whom this chapter |
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applies operate in this state in compliance with this chapter and |
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with other law in accordance with this chapter, the commissioner or |
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the commissioner's designee may participate in multi-state |
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mortgage examinations as scheduled by the Conference of State Bank |
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Supervisors Multi-State Mortgage Committee in accordance with the |
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Conference of State Bank Supervisors protocol for such |
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examinations. |
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Sec. 158.105. CEASE AND DESIST ORDER. (a) If the |
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commissioner has reasonable cause to believe that a person who is |
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not registered or exempt under this chapter has engaged, or is about |
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to engage, in an act or practice for which registration is required |
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under this chapter, the commissioner may issue without notice and |
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hearing an order to cease and desist from continuing a particular |
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action or an order to take affirmative action, or both, to enforce |
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compliance with this chapter. |
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(b) An order issued under Subsection (a) must contain a |
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reasonably detailed statement of the facts on which the order is |
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issued. |
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(c) If, not later than the 30th day after the date an order |
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is issued under this section, the person against whom the order is |
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made requests a hearing, the commissioner shall set and give notice |
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of a hearing before the commissioner or a hearings officer. The |
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hearing shall be governed by Chapter 2001, Government Code. |
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(d) If a hearing is not requested under Subsection (c) not |
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later than the 30th day after the date the order is issued, the |
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order is considered final and not appealable. |
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(e) The commissioner, after giving notice, may impose |
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against a person who violates a cease and desist order an |
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administrative penalty in an amount not to exceed $2,500 for each |
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day of the violation. In addition to any other remedy provided by |
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law, the commissioner may institute in district court a suit for |
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injunctive relief and to collect the administrative penalty. A |
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bond is not required of the commissioner with respect to injunctive |
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relief granted under this subsection. |
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Sec. 158.106. RESTITUTION. The commissioner may order a |
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residential mortgage loan servicer to pay to a complainant any |
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compensation received by the servicer in a violation cited by the |
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commissioner in a final order. |
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SECTION 2. Subdivision (4), Section 157.002, Finance Code, |
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is amended to read as follows: |
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(4) "Mortgage banker" means a person who: |
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(A) accepts an application for a residential |
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mortgage loan, [or] makes a residential mortgage loan, or services |
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residential mortgage loans; and |
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(B) is an approved or authorized: |
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(i) mortgagee with direct endorsement |
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underwriting authority granted by the United States Department of |
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Housing and Urban Development; |
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(ii) seller or servicer of the Federal |
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National Mortgage Association or the Federal Home Loan Mortgage |
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Corporation; or |
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(iii) issuer for the Government National |
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Mortgage Association. |
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SECTION 3. Section 157.003, Finance Code, is amended by |
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adding Subsection (f) to read as follows: |
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(f) A mortgage banker that services residential mortgage |
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loans must indicate in its registration that it acts as a |
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residential mortgage loan servicer. |
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SECTION 4. Section 157.007, Finance Code, is amended to |
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read as follows: |
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Sec. 157.007. DISCLOSURE STATEMENT. (a) A mortgage banker |
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shall include the following notice to a residential mortgage loan |
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applicant with an application for a residential mortgage loan: |
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"COMPLAINTS REGARDING MORTGAGE BANKERS SHOULD BE SENT TO THE |
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DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, |
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______________________________ (street address of the Department |
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of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS |
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AVAILABLE AT _______________ (telephone number of the Department of |
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Savings and Mortgage Lending's toll-free consumer hotline)." |
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(b) A mortgage banker that indicates in its registration |
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that it acts as a residential mortgage loan servicer shall provide |
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to the borrower of each residential mortgage loan it services the |
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following notice not later than the 30th day after the date the |
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mortgage banker commences servicing the loan: |
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"COMPLAINTS REGARDING THE SERVICING OF YOUR MORTGAGE SHOULD |
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BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, |
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______________________________ (street address of the Department |
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of Savings and Mortgage Lending). A TOLL-FREE CONSUMER HOTLINE IS |
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AVAILABLE AT _______________ (telephone number of the Department of |
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Savings and Mortgage Lending's toll-free consumer hotline)." |
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SECTION 5. Chapter 157, Finance Code, is amended by adding |
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Section 157.0211 to read as follows: |
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Sec. 157.0211. MULTI-STATE EXAMINATION AUTHORITY OF |
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RESIDENTIAL MORTGAGE LOAN SERVICER. To ensure that mortgage |
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bankers that act as residential mortgage loan servicers operate in |
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this state in compliance with this chapter and with other law in |
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accordance with this chapter, the commissioner or the |
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commissioner's designee may participate in multi-state mortgage |
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examinations as scheduled by the Conference of State Bank |
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Supervisors Multi-State Mortgage Committee in accordance with the |
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Conference of State Bank Supervisors protocol for such |
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examinations. |
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SECTION 6. This Act takes effect September 1, 2011. |
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