FINANCE CODE
CHAPTER 156. MORTGAGE BROKERS
SUBCHAPTER A. GENERAL PROVISIONS
§ 156.001. SHORT TITLE. This chapter may be cited as
the Mortgage Broker License Act.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.002. DEFINITIONS. In this chapter:
(1) "Commissioner" means the savings and loan
commissioner.
(2) "Disciplinary action" means an order by the
commissioner that requires one or more of the following:
(A) suspension or revocation of a license under
this chapter;
(B) probation of a suspension or revocation of a
license under this chapter on terms and conditions that the
commissioner determines appropriate;
(C) a reprimand of a person licensed under this
chapter; or
(D) an administrative penalty imposed on a person
licensed under this chapter under Section 156.302.
(3) "Finance commission" means the Finance Commission
of Texas.
(4) "Fund" means the mortgage broker recovery fund
established by the commissioner under Subchapter F.
(5) "Loan officer" means an individual sponsored by a
licensed mortgage broker for the purposes of performing the acts of
a mortgage broker. The term does not include:
(A) an individual who performs only clerical
functions such as delivering a loan application to a mortgage
broker or mortgage banker or gathering information related to a
mortgage loan application on behalf of the prospective borrower,
mortgage broker, or mortgage banker; or
(B) an individual who performs functions of a
loan processor.
(6) "Loan processor" means an individual who works
under the instruction of a loan officer or mortgage broker and
performs only clerical functions such as gathering information,
requesting information, word processing, sending correspondence,
or assembling files.
(7) "Mortgage applicant" means a person who is
solicited to use or who uses a mortgage broker to obtain a mortgage
loan.
(8) "Mortgage banker" means a person who is:
(A) approved or authorized by the United States
Department of Housing and Urban Development as a mortgagee with
direct endorsement underwriting authority;
(B) an approved seller or servicer of the Federal
National Mortgage Association;
(C) an approved seller or servicer of the Federal
Home Loan Mortgage Association; or
(D) an approved issuer for the Governmental
National Mortgage Association.
(9) "Mortgage broker" means a person who receives an
application from a prospective borrower for the purposes of making
a mortgage loan from that person's own funds or from the funds of
another person. The term does not include:
(A) a person who performs only clerical functions
such as delivering a loan application to a mortgage broker or
mortgage banker or gathering information related to a mortgage loan
application on behalf of the prospective borrower, mortgage broker,
or mortgage banker; or
(B) a person who performs functions of a loan
processor.
(10) "Mortgage loan" means 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.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.003. SECONDARY MARKET TRANSACTIONS. This chapter
does not prohibit a mortgage broker from receiving compensation
from a party other than the mortgage applicant for the sale,
transfer, assignment, or release of rights on the closing of a
mortgage transaction.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.004. DISCLOSURE TO APPLICANT. At the time an
applicant submits an application to a mortgage broker, the mortgage
broker shall provide to the applicant a disclosure that specifies
the nature of the relationship between applicant and broker, the
duties the broker has to the applicant, and how the mortgage broker
will be compensated. The finance commission, by rule, shall
promulgate a standard disclosure form to be used by the mortgage
broker.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 85, eff. Sept. 1,
2001.
§ 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless
prohibited by federal 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 laws permitting those arrangements or services.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
SUBCHAPTER B. ADMINISTRATION PROVISIONS
§ 156.101. ADMINISTRATION OF CHAPTER. (a) The
commissioner shall administer this chapter.
(b) The commissioner may hire employees as necessary to
administer this chapter. The salaries of the employees shall be set
by the commissioner in amounts not to exceed the amounts set by the
General Appropriations Act.
(c) The commissioner may employ a general counsel,
attorneys, investigators, and support staff to administer and
enforce this chapter.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.102. RULEMAKING AUTHORITY. (a) The finance
commission may adopt and enforce rules necessary for the intent of
or to ensure compliance with this chapter.
(b) The finance commission may adopt rules to prohibit
false, misleading, or deceptive practices by mortgage brokers and
loan officers but may not adopt any other rules restricting
competitive bidding or advertising by mortgage brokers or loan
officers. When adopting rules under this subsection, the finance
commission may not restrict:
(1) the use of any medium for an advertisement;
(2) the personal appearance of or voice of a person in
an advertisement;
(3) the size or duration of an advertisement; or
(4) a mortgage broker's or loan officer's
advertisement under a trade name.
(c) The finance commission may adopt rules regarding books
and records that a person licensed under this chapter is required to
keep, including the location at which the books and records must be
kept.
(d) The finance commission shall consult with the mortgage
broker advisory committee when proposing and adopting rules under
this chapter.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 86, eff. Sept. 1,
2001.
§ 156.103. POWERS OF COMMISSIONER. (a) In addition to
any other action, proceeding, or remedy authorized by law, the
commissioner may institute an action in the commissioner's name to
enjoin a violation of this chapter or a rule adopted under this
chapter. To sustain an action filed under this subsection, it is
not necessary to allege or prove that an adequate remedy at law does
not exist or that substantial or irreparable damage would result
from a continued violation of this chapter.
(b) The commissioner is not required to provide an appeal
bond in any action or proceeding to enforce this chapter.
(c) The commissioner may authorize specific employees to
conduct hearings and make recommendations for final decisions in
contested cases.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.104. MORTGAGE BROKER ADVISORY
COMMITTEE. (a) The mortgage broker advisory committee is created
to advise and assist the commissioner.
(b) The advisory committee is composed of six members to be
appointed as follows:
(1) the commissioner shall appoint four members, each
of whom:
(A) must hold a mortgage broker license;
(B) is actively engaged in the business of
brokering loans at the time of appointment; and
(C) has been primarily engaged in the business of
brokering mortgage loans for at least two years before the member's
appointment; and
(2) the Texas Real Estate Commission shall appoint two
members, each of whom must hold a real estate broker or salesperson
license.
(c) Appointments to the advisory committee shall be made
without regard to the sex, race, color, age, disability, religion,
or national origin of the appointees.
(d) The members of the advisory committee serve for a
staggered three-year term, with the terms of two members expiring
February 1 of each year.
(e) The advisory committee shall meet at least twice a year
at the call of the commissioner.
(f) The commissioner may remove a member of the advisory
committee if:
(1) the member does not have at the time of appointment
the qualifications required by Subsection (b); or
(2) the commissioner determines that the member cannot
discharge the member's duties for a substantial part of the term for
which the member is appointed.
(g) In the event of a vacancy during a term, the appointing
entity or official shall fill the vacancy for the unexpired part of
the term with a person who meets the qualifications of the vacated
position.
(h) In addition to other powers and duties delegated to it
by the commissioner, the advisory committee shall advise the
finance commission and commissioner with respect to:
(1) the proposal and adoption of rules relating to:
(A) the licensing of mortgage brokers and loan
officers;
(B) the education and experience requirements
for licensing mortgage brokers and loan officers;
(C) conduct and ethics of mortgage brokers and
loan officers;
(D) continuing education for licensed mortgage
brokers and loan officers and the types of courses acceptable as
continuing education courses under this chapter; and
(E) the granting or denying of an application or
request for renewal for a mortgage broker license or loan officer
license;
(2) the form of or format for any applications or other
documents under this chapter; and
(3) the interpretation, implementation, and
enforcement of this chapter.
(i) Each member of the advisory committee is entitled to a
per diem allowance and to reimbursement of travel expenses
necessarily incurred in performing functions as a member of the
committee, subject to any applicable limitation in the General
Appropriations Act.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 87, eff. Sept. 1,
2001.
§ 156.105. STANDARD FORMS. (a) The finance
commission, by rule, shall adopt one or more standard forms for use
by a mortgage broker or loan officer in representing that an
applicant for a mortgage loan is preapproved or has prequalified
for the loan.
(b) The finance commission shall adopt rules requiring a
mortgage broker or loan officer licensed under this chapter to use
the forms adopted by the finance commission under Subsection (a).
Added by Acts 2001, 77th Leg., ch. 407, § 1, eff. Sept. 1, 2001.
SUBCHAPTER C. MORTGAGE BROKER LICENSE AND LOAN OFFICER LICENSE
§ 156.201. LICENSES REQUIRED. (a) A person may not act
in the capacity of, engage in the business of, or advertise or hold
that person out as engaging in or conducting the business of a
mortgage broker in this state unless the person holds an active
mortgage broker license or is exempt under Section 156.202.
(b) An individual may not act or attempt to act as a loan
officer unless the individual at the time is:
(1) licensed under this chapter;
(2) sponsored by a licensed mortgage broker and acting
for the mortgage broker; or
(3) exempt under Section 156.202.
(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 by the mortgage broker
or a loan officer sponsored by or acting for the mortgage broker.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 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;
(C) an insurance company licensed or authorized
to do business in this state under the Insurance Code;
(D) a mortgage banker;
(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.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 5, § 1, eff. Sept. 1, 2001;
Acts 2003, 78th Leg., ch. 135, § 1, eff. Sept. 1, 2003.
§ 156.203. APPLICATION FOR A LICENSE; FEES. (a) An
application for a mortgage broker or loan officer license must be:
(1) in writing;
(2) under oath; and
(3) on the form prescribed by the commissioner.
(b) An application for a mortgage broker license must be
accompanied by:
(1) an application fee in an amount determined by the
commissioner not to exceed $375; and
(2) a recovery fund fee as provided by Section
156.502.
(c) An application for a loan officer license must be
accompanied by:
(1) an application fee in an amount determined by the
commissioner not to exceed $175; and
(2) a recovery fund fee as provided by Section
156.502.
(d) An application fee under this section is not refundable.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 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;
Text of subsec. (a)(5) as amended by Acts 2003, 78th Leg., ch. 170,
§ 1
(5) demonstrate evidence of compliance with the
financial requirements of this chapter;
Text of subsec. (a)(5) as amended by Acts 2003, 78th Leg., ch. 171,
§ 1
(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
Text of subsec. (a)(6) as amended by Acts 2003, 78th Leg., ch. 170,
§ 1
(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;
Text of subsec. (a)(6) as amended by Acts 2003, 78th Leg., ch. 171,
§ 1
(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.
(7) satisfy the commissioner as to the individual's
good moral character, including the individual's honesty,
trustworthiness, and integrity; and
(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
commissioner 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 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;
Text of subsec. (c)(5) as amended by Acts 2003, 78th Leg., ch. 170,
§ 1
(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;
Text of subsec. (c)(5) as amended by Acts 2003, 78th Leg., ch. 171,
§ 1
(5) not have been convicted of a criminal offense that
the commissioner determines directly relates to the occupation of a
loan officer under Chapter 53, Occupations Code; and
Text of subsec. (c)(6) as added by Acts 2003, 78th Leg., ch. 170,
§ 1
(6) satisfy the commissioner as to the individual's
good moral character, including the individual's honesty,
trustworthiness, and integrity; and
Text of subsec. (c)(6) as added by Acts 2003, 78th Leg., ch. 171,
§ 1
(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.
(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)(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.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 1420, § 14.746, eff. Sept.
1, 2001; Acts 2003, 78th Leg., ch. 170, § 1, eff. Sept. 1, 2003;
Acts 2003, 78th Leg., ch. 171, § 1, eff. Sept. 1, 2003; Acts
2003, 78th Leg., ch. 1276, § 14A.771, eff. Sept. 1, 2003.
§ 156.205. FINANCIAL REQUIREMENTS FOR A MORTGAGE
BROKER. (a) In this section, "net assets" means the difference
between total assets and total liabilities, as determined by
generally acceptable 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.
(c) The commissioner shall require proof of compliance with
this section at the time the mortgage broker applies for or renews a
license.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.206. CRIMINAL BACKGROUND CHECK. (a) On receipt
of an application for a mortgage broker license or a loan officer
license, the commissioner shall conduct a criminal background check
of the applicant.
(b) The commissioner shall obtain criminal history record
information on an applicant that is maintained by the Department of
Public Safety and shall obtain criminal history record information
from the Federal Bureau of Investigation on each applicant. Each
applicant must submit with the application fingerprint and other
information necessary to implement this section. The commissioner
may submit the fingerprint and other information to the Federal
Bureau of Investigation, and the Department of Public Safety is
designated to be the recipient of the criminal history record
information. The commissioner may also obtain criminal history
record information from any court or any local, state, or national
governmental agency.
(c) The commissioner shall keep confidential any criminal
background information obtained under this subsection and may not
release or disclose the information unless:
(1) the information is a public record at the time the
commissioner obtains the information; or
(2) the commissioner releases the information:
(A) under order from a court;
(B) with the permission of the applicant;
(C) to a person through whom the applicant is
conducting or will conduct business; or
(D) to a governmental agency.
(d) Notwithstanding Subsection (c), criminal history record
information obtained from the Federal Bureau of Investigation may
be released or disclosed only to a governmental entity or as
authorized by federal statute, federal rule, or federal executive
order.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 337, § 5, eff. Sept. 1,
2001; Acts 2001, 77th Leg., ch. 407, § 2, eff. Sept. 1, 2001;
Acts 2001, 77th Leg., ch. 867, § 88, eff. Sept. 1, 2001; Acts
2003, 78th Leg., ch. 173, § 1, 2, eff. Sept. 1, 2003; Acts 2003,
78th Leg., ch. 296, § 11, 12, eff. Sept. 1, 2003.
§ 156.207. ISSUANCE OF LICENSE CERTIFICATE; PROVISIONAL
LICENSE. (a) The commissioner shall issue a license certificate
to an applicant for a mortgage broker license if the commissioner
finds that the applicant meets all requirements and conditions for
the license.
(b) When an applicant for a loan officer license has met all
requirements and conditions for the license, the commissioner shall
issue a license certificate to the mortgage broker sponsoring the
loan officer.
(c) In accordance with any rules adopted by the finance
commission under this subsection, the commissioner may issue a
provisional license to an applicant if a significant delay is
necessary to process the application, review information related to
the application, or obtain information related to the application.
If the commissioner has not received criminal history record
information from the Federal Bureau of Investigation before the
61st day after the date the commissioner requested the information,
the commissioner shall issue a provisional license to the
applicant, if the applicant otherwise meets all requirements and
conditions for a license. If the commissioner has not received
criminal history record information from the Federal Bureau of
Investigation before the 181st day after the date the commissioner
requested the information, the provisional status of the license
ends and, except as provided by Subsection (d), the license is
subject to the provisions of this chapter and other law applicable
to a license issued to an applicant who meets all requirements and
conditions for a license under this chapter.
(d) The commissioner may revoke a license issued under
Subsection (c), regardless of whether the license is provisional,
on a ground listed under Section 156.303 or on any ground that the
commissioner could have denied issuance of the license on the
application.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 337, § 6, eff. Sept. 1,
2001; Acts 2001, 77th Leg., ch. 867, § 89, eff. Sept. 1, 2001.
§ 156.2071. PERSON LICENSED IN OTHER
JURISDICTION. (a) The commissioner may waive any prerequisite to
obtaining a license for an applicant after reviewing the
applicant's credentials and determining that the applicant holds a
license issued by another jurisdiction that has licensing
requirements substantially equivalent to those of this state.
(b) The commissioner may issue a provisional license to an
applicant currently licensed in another jurisdiction who seeks a
license in this state and who:
(1) has been licensed in good standing as a mortgage
broker or loan officer for at least two years in another
jurisdiction, including a foreign country, that has licensing
requirements substantially equivalent to the requirements of this
chapter;
(2) has passed a national or other examination
recognized by the commissioner relating to mortgage brokers or loan
officers; and
(3) is sponsored by a person licensed under this
chapter with whom the provisional license holder will practice
during the time the person holds a provisional license.
(c) The commissioner may waive the requirement of
Subsection (b)(3) for an applicant if the commissioner determines
that compliance with that subsection would be a hardship to the
applicant.
(d) A provisional license under this section is valid until
the date the commissioner approves or denies the provisional
license holder's application for a license. The commissioner shall
issue a license under this chapter to the provisional license
holder if:
(1) the provisional license holder is eligible to be
licensed under Subsection (a); or
(2) the commissioner verifies that the provisional
license holder meets the academic and experience requirements for a
license under this chapter and the provisional license holder
satisfies any other licensing requirements under this chapter.
(e) The commissioner must approve or deny a provisional
license holder's application for a license not later than the 180th
day after the date the provisional license is issued.
(f) The finance commission may establish a fee for
provisional licenses under this section in an amount reasonable and
necessary to cover the cost of issuing the license.
Added by Acts 2001, 77th Leg., ch. 337, § 7, eff. Sept. 1, 2001.
§ 156.208. RENEWALS. (a) A mortgage broker license
issued under this chapter is valid for two years and may be renewed
on or before its expiration date if the mortgage broker:
(1) pays to the commissioner a renewal fee in an amount
determined by the commissioner not to exceed $375 and a recovery
fund fee provided by Section 156.502;
(2) has not been convicted of a criminal offense the
commissioner determines is directly related to the occupation of a
mortgage broker as provided by Chapter 53, Occupations Code; and
(3) provides the commissioner with satisfactory
evidence that the mortgage broker:
(A) has attended, during the term of the current
license, 15 hours of continuing education courses that the
commissioner, in accordance with the rules adopted by the finance
commission under this section, has approved as continuing education
courses; or
(B) maintains an active license in this state as:
(i) a real estate broker;
(ii) a real estate salesperson;
(iii) an attorney; or
(iv) a local recording agent or insurance
solicitor or agent for a legal reserve life insurance company under
Chapter 21, Insurance Code, or an equivalent license under Chapter
21, Insurance Code.
(b) A loan officer license issued under this chapter is
valid for two years and may be renewed on or before its expiration
date if the loan officer:
(1) pays to the commissioner a renewal fee in an amount
determined by the commissioner not to exceed $175 and a recovery
fund fee provided by Section 156.502;
(2) has not been convicted of a criminal offense the
commissioner determines is directly related to the occupation of a
loan officer as provided by Chapter 53, Occupations Code; and
(3) provides the commissioner with satisfactory
evidence that the loan officer:
(A) has attended, during the term of the current
license, 15 hours of continuing education courses that the
commissioner, in accordance with the rules adopted by the finance
commission under this section, has approved as continuing education
courses, including courses provided by or through the licensed
mortgage broker with whom the loan officer is associated after
submission to and approval by the commission; or
(B) maintains an active license in this state as:
(i) a real estate broker;
(ii) a real estate salesperson;
(iii) an attorney; or
(iv) a local recording agent or insurance
solicitor or agent for a legal reserve life insurance company under
Chapter 21, Insurance Code, or an equivalent license under Chapter
21, Insurance Code.
(c) The commissioner may require mortgage brokers or loan
officers to submit requests for renewal on a form prescribed by the
commissioner.
(d) On receipt of a request for a renewal of a license issued
under this subchapter, the commissioner may conduct a criminal
background check under Section 156.206.
(e) A renewal fee is not refundable.
(f) The finance commission by rule may adopt a system under
which licenses expire on a date or dates other than December 31. If
a system is adopted under this subsection, dates relating to
expiration and issuance of licenses shall be adjusted accordingly.
For the biennium in which the license expiration date is changed,
license fees shall be prorated on a monthly basis so that each
license holder pays only that portion of the license fee that is
allocable to the number of months during which the license is valid.
On renewal of the license on the new expiration date, the total
license renewal fee is payable.
(g) The finance commission shall adopt rules related to the
approval of courses for continuing education credit under this
section that provide for the acceptance of continuing education
courses that are related to finance, financial consulting, lending,
real estate contracts, discrimination laws, deceptive trade
practices, real property conveyances, and other topics that are
relevant to mortgage brokers and that are acceptable as continuing
education courses to other professional licensing agencies.
(h) For the purposes of Subsections (a)(2) and (b)(2), 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.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 90, eff. Sept. 1,
2001; Acts 2001, 77th Leg., ch. 1420, § 14.747, eff. Sept. 1,
2001; Acts 2003, 78th Leg., ch. 170, § 2, eff. Sept. 1, 2003.
§ 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 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) 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.
(f) Not later than the 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.
Added by Acts 2001, 77th Leg., ch. 337, § 8, eff. Sept. 1, 2001.
§ 156.209. DENIAL OF APPLICATIONS AND
RENEWALS. (a) If the commissioner declines or fails to issue or
renew a license, the commissioner shall promptly give written
notice to the applicant or the person requesting the renewal that
the application or renewal, as appropriate, was denied.
(b) Before the applicant or person requesting the renewal
may appeal to a district court as provided by Section 156.401, the
applicant or person must file with the commissioner, not later than
the 10th day after the date on which notice under Subsection (a) is
received, an appeal of the ruling requesting a time and place for a
hearing before a hearings officer designated by the commissioner.
(c) The designated hearings officer shall set the time and
place for a hearing requested under Subsection (b) not later than
the 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 hearings officer.
(d) If an applicant or person requesting the renewal fails
to request a hearing under this section, the commissioner's refusal
to issue or renew a license is final and may not be subject to review
by the courts.
(e) A hearing held under this section is governed by Chapter
2001, Government Code. An appeal of a final order issued under this
section may be made in accordance with Section 156.401.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.210. PROBATIONARY LICENSE. The commissioner may
issue a probationary license. The finance commission by rule shall
adopt reasonable terms and conditions for a probationary license.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 91, eff. Sept. 1,
2001.
§ 156.211. CHANGE OF ADDRESS OR SPONSORSHIP;
MODIFICATION OF LICENSE. (a) Before the 10th day preceding the
effective date of an address change, a mortgage broker shall notify
the commissioner in writing of the new address accompanied by a
change of address fee of $25. A new license certificate must be
obtained before the mortgage broker may conduct business at the new
location.
(b) A loan officer may act only for the mortgage broker
sponsoring the loan officer. A loan officer may be sponsored by
only one mortgage broker at a time. When the sponsorship of a loan
officer is terminated, the loan officer and the mortgage broker
shall immediately notify the commissioner and the mortgage broker
shall return the loan officer license to the commissioner. The loan
officer's license then becomes inactive. The loan officer license
may be activated if, before the license expires, a mortgage broker
files a request, accompanied by a $25 fee, notifying the
commissioner that the mortgage broker will sponsor the loan officer
and will assume responsibility for the actions of the loan officer.
(c) A fee under this section is not refundable.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.212. MAINTENANCE AND LOCATION OF OFFICES; DISPLAY
OF LICENSE CERTIFICATES. (a) Each mortgage broker licensed under
this chapter shall maintain a physical office in this state. The
address of the office shall be designated on the license
certificate.
(b) If a mortgage broker maintains more than one place of
business in this state, the mortgage broker shall apply for, pay a
fee of $50 for, and obtain an additional license certificate to be
known as a branch office license for each additional office to be
maintained by the mortgage broker.
(c) The license certificate of a mortgage broker shall be at
all times prominently displayed in the mortgage broker's place of
business. The branch office certificate shall be at all times
prominently displayed in the mortgage broker's branch office.
(d) A loan officer license certificate shall be at all times
prominently displayed in the office of the mortgage broker for whom
the loan officer primarily conducts business.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.213. ANNUAL REPORT.
Text of section as added by Acts 2001, 77th Leg., ch. 337, § 9
(a) Each licensed mortgage broker shall file an annual
report with the Savings and Loan Department. The report must
include:
(1) data on loan originations in this state for the
mortgage broker;
(2) information on each loan officer sponsored by the
mortgage broker; and
(3) any other information required by finance
commission rule.
(b) Trade information, including information used to
determine statistical entries in the report related to loan
origination volume, is confidential and may not be disclosed by the
Savings and Loan Department.
Added by Acts 2001, 77th Leg., ch. 337, § 9, eff. Sept. 1, 2001.
For text of section as added by Acts 2001, 77th Leg., ch. 407, §
3, see § 156.213, post.
§ 156.213. ANNUAL REPORT.
Text of section as added by Acts 2001, 77th Leg., ch. 407, § 3
(a) Each licensed mortgage broker shall file an annual
report with the commissioner on a form prescribed by the
commissioner. The report must include:
(1) data on loan origination in this state for the
mortgage broker and each loan officer sponsored by the mortgage
broker; and
(2) any other information required by the
commissioner.
(b) Information contained in the annual report related to
loan origination volume or other trade information is confidential
and may not be disclosed by the commissioner or any other employee
of the Savings and Loan Department.
Added by Acts 2001, 77th Leg., ch. 407, § 3, eff. Sept. 1, 2001.
For text of section as added by Acts 2001, 77th Leg., ch. 337, §
9, see § 156.213, ante.
SUBCHAPTER D. LICENSE REVOCATION AND SUSPENSION AND OTHER ACTIONS
AGAINST LICENSE HOLDER
§ 156.301. INSPECTIONS; INVESTIGATIONS. (a) The
commissioner may conduct inspections of a person licensed under
this chapter as the commissioner determines necessary to determine
whether the person is complying with this chapter and applicable
rules. The inspections may include inspection of the books,
records, documents, operations, and facilities of the person and
access to any documents required under rules adopted under this
chapter. The commissioner may share evidence of criminal activity
gathered during an inspection or investigation with any state or
federal law enforcement agency.
(b) On the signed written complaint of a person, the
commissioner shall investigate the actions and records of a person
licensed under this chapter if the complaint, or the complaint and
documentary or other evidence presented in connection with the
complaint, provides reasonable cause. The commissioner, before
commencing an investigation, shall notify a mortgage broker or loan
officer in writing of the complaint and that the commissioner
intends to investigate the matter.
(c) For reasonable cause, the commissioner at any time may
investigate a person licensed under this chapter to determine
whether the person is complying with this chapter and applicable
rules.
(d) The commissioner may conduct an undercover or covert
investigation only if the commissioner, after due consideration of
the circumstances, determines that the investigation is necessary
to prevent immediate harm and to carry out the purposes of this
chapter.
(e) The finance commission by rule shall provide guidelines
to govern an inspection or an investigation, including rules to:
(1) determine the information and records to which the
commissioner may demand access during an inspection or an
investigation; and
(2) establish what constitutes reasonable cause for an
investigation.
(f) Information obtained by the commissioner during an
inspection or an investigation is confidential unless disclosure of
the information is permitted or required by other law.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 337, § 10, eff. Sept. 1,
2001.
§ 156.302. ADMINISTRATIVE PENALTY. (a) The
commissioner may impose an administrative penalty on a person
licensed under this chapter who violates this chapter or a rule or
order adopted under this chapter.
(b) The amount of the penalty may not exceed $2,500, and
each day a violation continues or occurs is a separate violation for
the purpose of imposing a penalty. The amount shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
(2) the history of previous violations;
(3) the amount necessary to deter a future violation;
(4) efforts to correct the violation; and
(5) any other matter that justice may require.
(c) 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.
(d) The attorney general may sue to collect the penalty.
(e) An appeal of an administrative penalty under this
section is considered to be a contested case under Chapter 2001,
Government Code.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 337, § 11, eff. Sept. 1,
2001; Acts 2001, 77th Leg., ch. 407, § 4, eff. Sept. 1, 2001.
§ 156.303. DISCIPLINARY ACTION; CEASE AND DESIST
ORDER. (a) The commissioner may order disciplinary action
against a licensed mortgage broker or a licensed loan officer when
the commissioner, after a hearing, has determined that the person:
(1) obtained a license under this chapter through a
false or fraudulent representation or made a material
misrepresentation in an application for a license under this
chapter;
(2) published or caused to be published an
advertisement related to the business of a mortgage broker or loan
officer that:
(A) is misleading;
(B) is likely to deceive the public;
(C) in any manner tends to create a misleading
impression;
(D) fails to identify as a mortgage broker or
loan officer the person causing the advertisement to be published;
or
(E) violates federal or state law;
(3) while performing an act for which a license under
this chapter is required, engaged in conduct that constitutes
improper, fraudulent, or dishonest dealings;
(4) 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;
(5) failed to use a fee collected in advance of closing
of a mortgage loan for a purpose for which the fee was paid;
(6) charged or received, directly or indirectly, a fee
for assisting a mortgage applicant in obtaining a mortgage loan
before all of the services that the person agreed to perform for the
mortgage applicant are completed, and the proceeds of the mortgage
loan have been disbursed to or on behalf of the mortgage applicant,
except as provided by Section 156.304;
(7) failed within a reasonable time to honor a check
issued to the commissioner after the commissioner has mailed a
request for payment by certified mail to the person's last known
business address as reflected by the commissioner's records;
(8) paid compensation to a person who is not licensed
or exempt under this chapter for acts for which a license under this
chapter is required;
(9) induced or attempted to induce a party to a
contract to breach the contract so the person may make a mortgage
loan;
(10) published or circulated an unjustified or
unwarranted threat of legal proceedings in matters related to the
person's actions or services as a mortgage broker or loan officer,
as applicable;
(11) established an association, by employment or
otherwise, with a person not licensed or exempt under this chapter
who was expected or required to act as a mortgage broker or loan
officer;
(12) aided, abetted, or conspired with a person to
circumvent the requirements of this chapter;
(13) acted in the dual capacity of a mortgage broker or
loan officer and real estate broker, salesperson, or attorney in a
transaction without the knowledge and written consent of the
mortgage applicant or in violation of applicable requirements under
federal law;
(14) discriminated against a prospective borrower on
the basis of race, color, religion, sex, national origin, ancestry,
familial status, or a disability;
(15) failed or refused on demand to:
(A) produce a document, book, or record
concerning a mortgage loan transaction conducted by the mortgage
broker or loan officer for inspection by the commissioner or the
commissioner's authorized personnel or representative;
(B) give the commissioner or the commissioner's
authorized personnel or representative free access to the books or
records relating to the person's business kept by an officer,
agent, or employee of the person or any business entity through
which the person conducts mortgage brokerage activities, including
a subsidiary or holding company affiliate; or
(C) provide information requested by the
commissioner as a result of a formal or informal complaint made to
the commissioner;
(16) failed without just cause to surrender, on
demand, a copy of a document or other instrument coming into the
person's possession that was provided to the person by another
person making the demand or that the person making the demand is
under law entitled to receive; or
(17) disregarded or violated this chapter, a rule
adopted by the finance commission under this chapter, or an order
issued by the commissioner under this chapter.
(b) In addition to disciplinary action by the commissioner
authorized under Subsection (a), the commissioner, if the
commissioner has reasonable cause to believe that a person licensed
under this chapter has or is about to violate this section, 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.
(c) An order issued under Subsection (b) must contain a
reasonably detailed statement of the facts on which the order is
made. 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.
(d) If a hearing is not requested under Subsection (c) not
later than the 30th day after the date on which an order is made, the
order is considered final and not appealable.
(e) 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 the 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 the administrative penalty. A
bond is not required of the commissioner with respect to injunctive
relief granted under this subsection. A penalty collected under
this subsection shall be deposited in the fund.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 92, eff. Sept. 1,
2001; Acts 2003, 78th Leg., ch. 170, § 3, eff. Sept. 1, 2003.
§ 156.304. FEE ASSESSMENT AND DISCLOSURE. (a) Before
the completion of all services to be performed, a mortgage broker
may charge and receive, unless prohibited by law, the following
fees for services in assisting a mortgage applicant to obtain a
mortgage:
(1) a fee to obtain a credit report;
(2) a fee for the appraisal of the real estate;
(3) a fee for processing a mortgage application;
(4) a fee for taking a mortgage application;
(5) a fee for automated underwriting;
(6) a fee for a courier service;
(7) a fee to issue a loan commitment; or
(8) subject to Subsection (b), a fee for locking in an
interest rate.
(b) A mortgage broker or loan officer may not charge or
receive a fee for locking in an interest rate unless there is a
written agreement signed by the mortgage applicant and mortgage
broker that contains a statement of whether the fee to lock in the
interest rate is refundable and, if so, the terms and conditions
necessary to obtain the refund.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
SUBCHAPTER E. HEARINGS; JUDICIAL REVIEW; CIVIL ACTIONS;
UNLICENSED ACTIVITY
§ 156.401. HEARINGS AND JUDICIAL REVIEW. (a) The
commissioner may employ an enforcement staff to investigate and
prosecute complaints made against persons licensed under this
chapter. The commissioner may employ a hearings officer to conduct
hearings under this section.
(b) If the commissioner proposes to suspend or revoke a
license issued under this chapter or if the commissioner refuses to
issue or renew a license to an applicant for a license or person
requesting a renewal of a license under this chapter, the applicant
or license holder is entitled to a hearing before the commissioner
or a hearings officer who shall make a proposal for decision to the
commissioner. The commissioner or hearings officer shall prescribe
the time and place of the hearing. The hearing is governed by
Chapter 2001, Government Code.
(c) The commissioner or hearings officer may issue
subpoenas for the attendance of witnesses and the production of
records or documents. Process issued by the commissioner or
hearings officer may extend to all parts of the state and may be
served by any person designated by the commissioner or hearings
officer.
(d) An individual aggrieved by a ruling, order, or decision
of the commissioner has the right to appeal to a district court in
the county in which the hearing was held. An appeal under this
subsection is governed by Chapter 2001, Government Code.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.402. CIVIL ACTIONS AND INJUNCTIVE RELIEF. (a) A
mortgage applicant injured by a violation of this chapter may bring
an action for recovery of actual monetary damages and reasonable
attorney's fees and court costs.
(b) The commissioner, the attorney general, or a mortgage
applicant may bring an action to enjoin a violation of this chapter.
(c) A remedy provided by this section is in addition to any
other remedy provided by law.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.403. BURDEN OF PROOF TO ESTABLISH AN
EXEMPTION. The burden of proving an exemption in a proceeding or
action brought under this chapter is on the person claiming the
benefit of the exemption.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.404. RELIANCE ON WRITTEN NOTICES FROM
COMMISSIONER. A person does not violate this chapter with respect
to an action taken or omission made in reliance on a written notice,
written interpretation, or written report from the commissioner,
unless a subsequent amendment to this chapter or a rule adopted
under this chapter affects the commissioner's notice,
interpretation, or report.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.405. COMPLETION OF MORTGAGE BROKER
SERVICES. (a) On disbursement of mortgage proceeds to or on
behalf of the mortgage applicant, the mortgage broker and loan
officer who assisted the mortgage applicant in obtaining the
mortgage loan are considered to have completed the performance of
the mortgage broker's and loan officer's services for the mortgage
applicant and owe no additional duties or obligations to the
mortgage applicant with respect to the mortgage loan.
(b) This section does not limit or preclude the liability of
a mortgage broker or loan officer for:
(1) failing to comply with this chapter or a rule
adopted under this chapter;
(2) failing to comply with a provision of or duty
arising under an agreement with a mortgage applicant or lender
under this chapter; or
(3) violating any other state or federal law.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.406. UNLICENSED ACTIVITY. (a) A person who is
not exempt under this chapter and who acts as a mortgage broker or
loan officer without first obtaining a license required under this
chapter commits an offense. An offense under this subsection is a
Class B misdemeanor. A second or subsequent conviction for an
offense under this subsection shall be punished as a Class A
misdemeanor.
(b) A person who received money, or the equivalent of money,
as a fee or profit because of or in consequence of the person acting
as a mortgage broker or loan officer without an active license or
being exempt under this chapter is liable for damages in an amount
that is not less than the amount of the fee or profit received and
not to exceed three times the amount of the fee or profit received,
as may be determined by the court. An aggrieved person may recover
damages under this subsection in a court.
(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 statement of the facts on which
the order is made. 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.
(d) If a hearing has not been requested under Subsection (c)
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 a 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 the
administrative penalty. A bond is not required of the commissioner
with respect to injunctive relief granted under this section. A
penalty collected under this subsection shall be deposited in the
fund.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
SUBCHAPTER F. MORTGAGE BROKER RECOVERY FUND
§ 156.501. MORTGAGE BROKER RECOVERY FUND. (a) The
commissioner shall establish and maintain a mortgage broker
recovery fund as provided by this subchapter. The amounts received
by the commissioner for deposit in the fund shall be held by the
commissioner in trust for carrying out the purposes of the fund.
(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.
(c) Amounts in the fund may be invested and reinvested in
the same manner as funds of the Texas State Employees Retirement
System, and the interest from these investments shall be deposited
to the credit of the fund. An investment may not be made under this
subsection if the investment will impair the necessary liquidity
required to satisfy judgment payments awarded under this
subchapter.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.502. FUNDING. (a) On an application for an
original license or for renewal of a license issued under this
chapter, the applicant, in addition to paying the original
application fee or renewal fee, shall pay a $20 fee. The fee shall
be deposited in the fund.
(b) If the balance remaining in the fund at the end of a
calendar year after 2010 is less than $500,000, each mortgage
broker and loan officer licensed under this chapter, on the next
renewal of the license, shall pay, in addition to any other required
fees, the lesser of a $10 fee or a pro rata share of the amount
necessary to bring the fund to $1 million. The fee shall be
deposited in the fund.
(c) If the balance remaining in the mortgage broker recovery
fund at the end of a calendar year is more than the greater of $3.5
million or the total amount of claims paid from the fund during the
previous four fiscal years, the amount of money in excess of the
greater amount shall be transferred to the general revenue fund.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.503. STATUTE OF LIMITATIONS. An action for a
judgment that subsequently results in an order for collection from
the fund may not be instituted after the second anniversary of the
date on which the cause of action accrues.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.504. PROCEDURE FOR RECOVERY. (a) An aggrieved
person who recovers against a mortgage broker or loan officer
licensed under this chapter a valid court judgment for conduct
described by Section 156.501 that occurred on or after January 1,
2000, after final judgment has been entered, execution returned
nulla bona, and a judgment lien perfected, may file a verified claim
in the court in which the judgment was entered and, on 20 days'
written notice to the commissioner and to the judgment debtor, may
apply to the court for an order directing payment from the fund of
any unpaid judgment amount, subject to Section 156.503.
(b) On the hearing on the application, the aggrieved person
is required to show:
(1) that the judgment is based on facts allowing
recovery under Section 156.501;
(2) that the person is not a spouse of the debtor, or
the personal representative of the spouse, and that the person is
not licensed as a mortgage broker or loan officer under this chapter
who is seeking to recover any compensation in the transaction or
transactions for which the application for payment is made;
(3) that based on the best available information, the
judgment debtor lacks sufficient attachable assets in this state or
any other state to satisfy the judgment and the surety bond required
by Section 156.205 is not sufficient to satisfy the judgment; and
(4) the amount that may be realized from the sale of
property or other assets liable to be sold or applied in
satisfaction of the judgment and the balance remaining due on the
judgment after application of the amount that may be realized.
(c) A recovery on the judgment against a single defendant
made before payment from the fund shall be applied first by the
creditor to actual damages.
(d) The court shall make an order directed to the
commissioner requiring payment from the fund of the amount the
court finds to be payable on the claim, pursuant to and in
accordance with the limitations contained in this subchapter, if
the court is satisfied, on the hearing, of the truth of all matters
required to be shown by the aggrieved person under Subsection (b)
and that the aggrieved person has satisfied all of the requirements
of this section.
(e) When the commissioner receives notice of entry of a
final judgment and a hearing is scheduled under this section, the
commissioner may notify the attorney general of the commissioner's
desire to enter an appearance, file a response, appear at the court
hearing, defend the action, or to take any other appropriate
action. In taking any action described by this subsection, the
commissioner and the attorney general shall act only to protect the
fund from spurious or unjust claims or to ensure compliance with the
requirements for recovery under this subchapter.
(f) The commissioner may relitigate any issue material and
relevant in the hearing on the application that was determined in
the underlying action on which the judgment in favor of the
applicant was based.
(g) If the court finds that the aggregate amount of claims
against a licensed mortgage broker or loan officer exceeds the
limits contained in Section 156.505, the court shall reduce
proportionately the amount the court finds payable on the claim.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.505. RECOVERY LIMITS. (a) A person entitled to
receive payment out of the fund is entitled to receive
reimbursement of actual, out-of-pocket damages, reasonable
attorney's fees, and court costs as determined by the court as
provided by this section.
(b) A payment from the fund may be made only pursuant to a
court order as provided by Section 156.504. A payment for claims:
(1) arising out of the same transaction, including
attorney's fees, interest, and court costs, is limited in the
aggregate to $25,000, regardless of the number of claimants; and
(2) based on judgments against a single person
licensed as a mortgage broker or loan officer under this chapter is
limited in the aggregate to $50,000 until the fund has been
reimbursed for all amounts paid.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.506. REVOCATION OF LICENSE FOR PAYMENT FROM
FUND. (a) The commissioner may revoke a license issued under this
chapter on proof that the commissioner has made a payment from the
fund of any amount toward satisfaction of a judgment against a
person licensed as a mortgage broker or loan officer under this
chapter.
(b) The commissioner may probate an order revoking a license
under this section.
(c) A person on whose behalf payment was made from the fund
is not eligible to receive a new license under this chapter until
the person has repaid in full, plus interest at the current legal
rate, the amount paid from the fund on the person's behalf.
(d) This section does not limit the authority of the
commissioner to take disciplinary action against a mortgage broker
or loan officer for a violation of this chapter or the rules adopted
by the finance commission under this chapter. The repayment in full
to the fund of all obligations of a mortgage broker or loan officer
does not nullify or modify the effect of any other disciplinary
proceeding brought under this chapter.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 867, § 93, eff. Sept. 1,
2001.
§ 156.507. SUBROGATION. When the commissioner has paid
a judgment creditor an amount from the fund as directed by the
court, the commissioner is subrogated to all of the rights of the
judgment creditor to the extent of the amount paid. The judgment
creditor shall assign all of the creditor's right, title, and
interest in the judgment up to the amount paid by the commissioner,
and that amount has priority for repayment in the event of any
subsequent recovery on the judgment. Any amount, including
interest, recovered by the commissioner on the judgment shall be
deposited to the credit of the fund.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
§ 156.508. FAILURE TO COMPLY WITH SUBCHAPTER. The
failure of an aggrieved person to comply with a provision of this
subchapter relating to the fund constitutes a waiver of any rights
under this subchapter.
Added by Acts 1999, 76th Leg., ch. 1254, § 2, eff. Sept. 1, 1999.
