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2009 Texas Code
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
CHAPTER 156. MORTGAGE BROKERS

FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE E. OTHER FINANCIAL BUSINESSES

CHAPTER 156. MORTGAGE BROKERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 156.001. SHORT TITLE. This chapter may be cited as the

Mortgage Broker License Act.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Sec. 156.002. DEFINITIONS. In this chapter:

(1) "Commissioner" means the savings and mortgage lending

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;

(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;

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 security interest against one-to-four family residential real

estate created by a deed of trust, security deed, or other

security instrument.

(11) "Registered financial services company" means a person

registered under Section 156.214.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

228, Sec. 1, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 1, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 6.052, eff. September 1, 2007.

Sec. 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, Sec. 2, eff. Sept. 1,

1999.

Sec. 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, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 85, eff.

Sept. 1, 2001.

Sec. 156.005. AFFILIATED BUSINESS ARRANGEMENTS. Unless

prohibited by federal or state law, this chapter may not be

construed to prevent affiliated or controlled business

arrangements or loan origination services by or between mortgage

brokers and other professionals if the mortgage broker complies

with all applicable federal and state laws permitting those

arrangements or services.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.01, eff. September 1, 2005.

SUBCHAPTER B. ADMINISTRATION PROVISIONS

Sec. 156.101. ADMINISTRATION OF CHAPTER.

Text of subsection as amended by Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 4

(a) Except as provided by Subsection (a-2), the commissioner

shall administer this chapter.

Text of subsection as amended by Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 28

(a) The commissioner shall administer and enforce this chapter.

(a-1) The commissioner shall perform all duties relating to the

issuance and renewal of licenses under Section 156.2015 for

employees of credit union subsidiary organizations who act as

residential mortgage loan originators.

(a-2) The credit union commissioner is responsible for:

(1) the examination, inspection, or investigation of employees

of credit union subsidiary organizations who are licensed to act

as residential mortgage loan originators under this chapter; and

(2) the enforcement of compliance by employees of credit union

subsidiary organizations described by Subdivision (1) with the

applicable requirements of this chapter and Chapter 180.

(b) Repealed by Acts 2009, 81st Leg., R.S., Ch. 1317, Sec.

28(i), eff. September 1, 2009.

(d) The commissioner shall participate in the Nationwide

Mortgage Licensing System and Registry as provided by Chapter

180.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 4, eff. June 19, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 1, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 28(g), eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 28(i), eff. September 1, 2009.

Sec. 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, except as provided by

Section 15.4024 with respect to employees of credit union

subsidiary organizations subject to regulation under Section

156.2015.

(a-1) The finance commission may adopt rules under this chapter

as required to carry out the intentions of the federal Secure and

Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.

110-289).

(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.

(b-1) The finance commission on the commissioner's

recommendation may adopt rules to promote a fair and orderly

administration of the fund consistent with the purposes of

Subchapter F.

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 commissioner

when proposing and adopting rules under this chapter.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 86, eff.

Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.02, eff. September 1, 2005.

Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 5, eff. June 19, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 2, eff. September 1, 2009.

Sec. 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.

hearings and make recommendations for final decisions in

contested cases.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Sec. 156.104. MORTGAGE INDUSTRY ADVISORY COMMITTEE. (a) The

mortgage industry advisory committee is created to advise and

assist the commissioner.

(b) The advisory committee is composed of six members appointed

by the commissioner. Each of the members must be:

(1) under the regulatory authority of the department;

(2) actively engaged in the business of originating, brokering,

or funding residential mortgage loans at the time of

appointment; and

(3) primarily engaged in the business of originating, brokering,

or funding residential mortgage loans for at least two years

before the member's appointment.

(b-1) The members of the committee must include:

(1) three individuals licensed as residential mortgage loan

originators under this chapter, one of whom must hold an active

real estate broker or salesperson license issued under Chapter

1101, Occupations Code; and

(2) three individuals licensed as residential mortgage loan

originators under Chapter 157, one of whom must hold an active

real estate broker or salesperson license issued under Chapter

1101, Occupations Code.

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

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; and

(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.

(j) The advisory committee shall take a record vote on any

matter described by Subsection (h)(1). The commissioner shall

inform the finance commission of:

(1) the result of the vote; and

(2) any additional information the commissioner considers

necessary to ensure the finance commission is sufficiently

notified of the advisory committee's recommendations.

(k) A record vote taken by the advisory committee under

Subsection (j) is only a recommendation and does not supersede

the rulemaking authority of the finance commission under this

subchapter.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 87, eff.

Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.03, eff. September 1, 2005.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 3, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 4, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 5, eff. April 1, 2010.

Sec. 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, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER C. MORTGAGE BROKER LICENSE AND LOAN OFFICER LICENSE

Sec. 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 and sponsored by a licensed

mortgage broker and acting for the mortgage broker; or

(2) exempt under Section 156.202.

responsible to the commissioner and members of the public for any

act or conduct performed by the mortgage broker or a loan officer

sponsored by or acting for the mortgage broker in connection

with:

(1) the origination of a mortgage loan; or

(2) a transaction that is related to the origination of a

mortgage loan in which the mortgage broker knew or should have

known of the transaction.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.04, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 2, eff. September 1, 2007.

Sec. 156.2011. PROVISIONAL LOAN OFFICER LICENSE. (a) An

applicant for a loan officer license may be issued a provisional

loan officer license as provided by this section only if the

applicant:

(1) during the 20 months immediately preceding the application,

has at least 18 months of experience as a loan officer employed

by a person exempt from this chapter under Section 156.202; and

(2) meets the qualifications for a loan officer license, other

than the educational and examination requirements.

(b) The commissioner shall use best efforts to issue the

provisional loan officer license on or before the later of:

(1) the 10th business day after the date of receipt of a

completed application; or

(2) the second business day after the date of receipt of the

criminal background information required under Section 156.206

demonstrating that the applicant has no pending criminal charges

and has not been convicted of a criminal offense.

convicted as provided by Section 156.204(d).

(d) A provisional loan officer license is valid for 90 days

after the date the license is issued, except as provided by

Subsection (e).

(e) The commissioner may revoke a provisional loan officer

license if the commissioner discovers that the applicant has made

a misrepresentation relating to the applicant's qualifications

for a loan officer license, has violated this chapter, or does

not meet the qualifications for a provisional loan officer

license. The revocation of a provisional loan officer license is

not subject to appeal.

(f) The finance commission by rule may impose a fee not to

exceed $100 for an expedited issuance of a provisional loan

officer license. The fee is nonrefundable and is in addition to

the fee for the application for a regular loan officer license.

Added by Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 3, eff. September 1, 2007.

Sec. 156.2015. RESIDENTIAL MORTGAGE LOAN ORIGINATION ACTIVITIES.

(a) In this section, "credit union subsidiary organization,"

"Nationwide Mortgage Licensing System and Registry," and

"residential mortgage loan originator" have the meanings assigned

by Section 180.002.

(b) An individual required to be licensed under this chapter may

not act as a residential mortgage loan originator unless:

(1) the individual's license under this chapter otherwise

authorizes the individual to act as a residential mortgage loan

originator;

(2) the individual is enrolled with the Nationwide Mortgage

Licensing System and Registry as required by Section 180.052; and

(3) the individual complies with other applicable requirements

of Chapter 180 and rules adopted under that chapter.

not act as a residential mortgage loan originator unless the

employee:

(1) is licensed under this chapter;

(2) is enrolled with the Nationwide Mortgage Licensing System

and Registry as required by Section 180.052; and

(3) complies with other applicable requirements of Chapter 180

and rules adopted under that chapter.

(d) The finance commission may adopt rules under this chapter as

required to carry out the intentions of the federal Secure and

Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.

110-289).

Added by Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 6, eff. June 19, 2009.

Sec. 156.202. EXEMPTIONS. (a) The following persons are exempt

from this chapter:

(1) any of the following entities or an employee of any of the

following entities provided the employee is acting for the

benefit of the employer:

(A) a bank, savings bank, or savings and loan association, or a

subsidiary or an affiliate of a bank, savings bank, or savings

and loan association;

(B) a state or federal credit union, or a subsidiary, affiliate,

or credit union service organization of a state or federal credit

union;

in this state under the Insurance Code;

(D) a mortgage banker registered under Chapter 157;

(E) an organization that qualifies for an exemption from state

franchise and sales tax as a 501(c)(3) organization;

(F) a Farm Credit System institution; or

(G) a political subdivision of this state involved in affordable

home ownership programs;

(2) an individual who makes a mortgage loan from the

individual's own funds to a spouse, former spouse, or persons in

the lineal line of consanguinity of the individual lending the

money;

(3) an owner of real property who in any 12-consecutive-month

period makes no more than five mortgage loans to purchasers of

the property for all or part of the purchase price of the real

estate against which the mortgage is secured;

(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

brokering mortgage loans; or

(5) an individual who is an exclusive agent of a registered

financial services company under a written agreement prohibiting

the individual from soliciting, processing, negotiating, or

placing a mortgage loan with a person other than the registered

financial services company or an affiliate of that company.

(b) An exclusive agent described by Subsection (a)(5) is

considered an employee of the registered financial services

company for purposes of this chapter.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 5, Sec. 1, eff. Sept.

1, 2001; Acts 2003, 78th Leg., ch. 135, Sec. 1, eff. Sept. 1,

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.05, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

228, Sec. 2, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 4, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 6, eff. September 1, 2009.

Sec. 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.

accompanied by:

(1) an application fee in an amount determined by the

commissioner not to exceed $275; and

(2) a recovery fund fee as provided by Section 156.502.

(d) An application fee under this section is not refundable and

may not be credited or applied to any other fee or indebtedness

owed by the person paying the fee.

(e) In addition to the disciplinary action by the commissioner

authorized under Section 156.303(a)(7), the commissioner may

collect a fee in an amount not to exceed $50 for any returned

check or credit card charge back.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.06, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 5, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 7, eff. September 1, 2009.

For expiration of Subsections (c) and (f), see Subsection (f).

Sec. 156.204. QUALIFICATIONS. (a) To be eligible to be

licensed as a mortgage broker as an individual, the individual

must:

(1) be 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 individual 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 licensed

loan officer with a mortgage broker or an individual exempt under

Section 156.202;

(B) the individual is licensed in this state as:

(i) an active real estate broker under Chapter 1101, Occupations

Code;

(ii) an active attorney; or

(iii) an active general lines insurance agent or a limited lines

insurance agent, or holds an equivalent insurance license under

the Insurance Code; or

lending field as evidenced by documentary proof of full-time

employment as a licensed loan officer with a mortgage broker or

an individual exempt under Section 156.202;

(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;

(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;

(7) satisfy the commissioner as to the individual's good moral

character, including the individual's honesty, trustworthiness,

and integrity;

(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; and

(9) provide the commissioner with satisfactory evidence that:

(A) if the individual has not been previously licensed as a

mortgage broker or a loan officer under this subchapter, the

individual has completed 90 hours of education courses approved

by the commissioner under this section; or

(B) if the individual has not been previously licensed as a

mortgage broker under this subchapter but has been licensed as a

loan officer under this subchapter, the individual has

successfully completed an additional 30 hours of education

courses approved by the commissioner under this section.

(b) A corporation, limited liability company, or limited

partnership may not act as a mortgage broker unless the entity

obtains a mortgage broker license. To be eligible for a mortgage

broker license the entity must designate an individual licensed

as a mortgage broker as its designated representative and pay an

application fee in an amount to be determined by the commissioner

not to exceed $175. The designated representative must be:

(1) if the entity is a corporation, an officer of the

corporation;

(2) if the entity is a limited liability company, a manager of

the limited liability company; or

(3) if the entity is a limited partnership:

(A) an individual who is a general partner;

(B) an officer of a general partner that is a corporation; or

company.

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 has successfully completed at least 60 hours of

education courses approved by the commissioner;

(B) the person has successfully completed 30 hours of education

courses approved by the commissioner under this section if the

applicant:

(i) has 18 months or more of experience as a mortgage loan

officer as evidenced by documentary proof of full-time employment

as a mortgage loan officer with a person exempt under Section

156.202; or

(ii) is a person who meets the qualifications under Subsection

(a)(4)(B); or

under this chapter;

(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;

(6) satisfy the commissioner as to the individual's good moral

character, including the individual's honesty, trustworthiness,

and integrity;

(7) provide the commissioner with satisfactory evidence of

having passed an examination, offered by a testing service or

company approved by the finance commission, that demonstrates

knowledge of:

(A) the mortgage industry; and

(B) the role and responsibilities of a loan officer; and

(8) not be in violation of this chapter, a rule adopted under

this chapter, or any order previously issued to the individual by

the commissioner.

Text of subsection effective on January 01, 2011

(c-1) 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 has successfully completed at least 60 hours of

education courses approved by the commissioner;

(B) the person has successfully completed 30 hours of education

courses approved by the commissioner under this section if the

applicant has 18 months or more of experience as a residential

mortgage loan originator as evidenced by documentary proof of

full-time employment; or

loan originator under Chapter 157 and has held that license for a

minimum of one year;

(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;

(6) satisfy the commissioner as to the individual's good moral

character, including the individual's honesty, trustworthiness,

and integrity;

(7) provide the commissioner with satisfactory evidence of

having passed an examination, offered by a testing service or

company approved by the finance commission, that demonstrates

knowledge of:

(A) the mortgage industry; and

(B) the role and responsibilities of a loan officer; and

(8) 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.

(e) The education courses required for a mortgage broker or loan

officer license under Subsection (a)(9) or (c)(4) must cover

ethics, the Real Estate Settlement Procedures Act of 1974 (12

U.S.C. Section 2601 et seq.), the Truth in Lending Act (15 U.S.C.

Section 1601 et seq.), the Equal Credit Opportunity Act (15

U.S.C. Section 1691 et seq.), and the provisions of this chapter.

(f) Subsection (c) and this subsection expire January 1, 2011.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 14.746,

eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 170, Sec. 1, eff.

Sept. 1, 2003; Acts 2003, 78th Leg., ch. 171, Sec. 1, eff. Sept.

1, 2003; Acts 2003, 78th Leg., ch. 1276, Sec. 14A.771, eff. Sept.

1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 7.001, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

859, Sec. 1, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.07, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 6, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 8, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 9, eff. January 1, 2011.

Sec. 156.205. FINANCIAL REQUIREMENTS. Financial requirements

for holding a mortgage broker or loan officer license shall be

met through participation in the fund.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.08, eff. September 1, 2005.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 10, eff. September 1, 2009.

Sec. 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.

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;

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, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 337, Sec. 5, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 407, Sec. 2, eff. Sept.

1, 2001; Acts 2001, 77th Leg., ch. 867, Sec. 88, eff. Sept. 1,

2001; Acts 2003, 78th Leg., ch. 173, Sec. 1, 2, eff. Sept. 1,

2003; Acts 2003, 78th Leg., ch. 296, Sec. 11, 12, eff. Sept. 1,

2003.

Sec. 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.

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, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 337, Sec. 6, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 867, Sec. 89, eff. Sept.

1, 2001.

Sec. 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.

(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, Sec. 7, eff. Sept. 1,

2001.

For expiration of Subsections (a), (b), and (l), see Subsection

(l).

Sec. 156.208. RENEWALS. (a) A mortgage broker license issued

under this chapter is valid for a term of not more than 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) an active general lines insurance agent or a limited lines

insurance agent, or holds an equivalent insurance license under

the Insurance Code.

Text of subsection effective on January 01, 2011

(a-1) A mortgage broker license issued under this chapter is

valid for a term of not more than 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 has attended, during the term of the current

license, continuing education courses in accordance with the

applicable requirements of Chapter 180.

(b) A loan officer license issued under this chapter is valid

for a term of not more than 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 $275 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) an active general lines insurance agent or a limited lines

insurance agent, or holds an equivalent insurance license under

the Insurance Code.

Text of subsection effective on January 01, 2011

(b-1) A loan officer license issued under this chapter is valid

for a term of not more than 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 $275 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 has attended, during the term of the current

license, continuing education courses in accordance with the

applicable requirements of Chapter 180.

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 and may not be credited or

applied to any other fee or indebtedness owed by the person

paying the fee.

(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 or related trade associations. The finance commission

may approve any education course approved by the Texas Real

Estate Commission, the Mortgage Bankers Association of America,

or the National Association of Mortgage Brokers.

(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.

(i) The finance commission shall adopt a rule that requires a

mortgage broker or loan officer to attend, during the term of the

current license, not less than eight hours of continuing

education courses related to residential mortgage lending before

renewing a license under this section.

(j) The commissioner may deny the renewal of a mortgage broker

license or a loan officer license if:

(1) the mortgage broker or loan officer is in violation of this

chapter, a rule adopted under this chapter, or any order

previously issued to the individual by the commissioner;

(2) the mortgage broker or loan officer is in default in the

payment of any administrative penalty, fee, charge, or other

indebtedness owed under this title;

(3) during the current term of the license, the commissioner

becomes aware of any fact that would have been grounds for denial

of an original license if the fact had been known by the

commissioner on the date the license was granted; or

(4) the mortgage broker or loan officer is in default on a

student loan administered by the Texas Guaranteed Student Loan

Corporation, pursuant to Section 57.491, Education Code.

(k) In addition to the disciplinary action by the commissioner

authorized under Section 156.303(a)(7), the commissioner may

collect a fee in an amount not to exceed $50 for any returned

check or credit card charge back.

(l) Subsections (a) and (b) and this subsection expire January

1, 2011.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 90, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 14.747, eff.

Sept. 1, 2001; Acts 2003, 78th Leg., ch. 170, Sec. 2, eff. Sept.

1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

859, Sec. 2, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.09, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 7, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 11, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 12, eff. January 1, 2011.

Sec. 156.2081. RENEWAL AFTER EXPIRATION; NOTICE. (a) A person

whose license has expired may not engage in activities that

require a license until the license has been renewed.

(b) A person whose license has been expired for 90 days or less

but who is otherwise eligible to renew a license may renew the

license by paying to the commissioner a renewal fee that is equal

to 1-1/2 times the normally required renewal fee.

may not renew the license. The person may obtain a new license

by complying with the requirements and procedures for obtaining

an original license.

(d) A person who was licensed in this state, moved to another

state, and is currently licensed and has been in practice in the

other state for the two years preceding the date of application

may obtain a new license by paying to the commissioner a fee that

is equal to two times the normally required renewal fee for the

license.

(e) Not later than the 60th 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

Department of Savings and Mortgage Lending.

Added by Acts 2001, 77th Leg., ch. 337, Sec. 8, eff. Sept. 1,

2001.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.10, eff. September 1, 2005.

Sec. 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.

for a hearing requested under Subsection (b) not later than the

90th 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.

(f) A person who requests a hearing under this section shall be

required to pay a deposit to secure the payment of the costs of

the hearing in an amount to be determined by the commissioner not

to exceed $500. The entire deposit shall be refunded to the

person if the person prevails in the contested case hearing. If

the person does not prevail, any portion of the deposit in excess

of the costs of the hearing assessed against that person shall be

refundable.

(g) A person whose application for a license has been denied is

not eligible to be licensed for a period of two years after the

date the denial becomes final, or a shorter period determined by

the commissioner after evaluating the specific circumstances of

the person's subsequent application. The finance commission may

adopt rules to provide conditions for which the commissioner may

shorten the time of disqualification.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.11, eff. September 1, 2005.

Sec. 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, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 91, eff.

Sept. 1, 2001.

Sec. 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.

(b-1) Not later than the 10th day before a mortgage broker

begins doing business under an assumed name, the mortgage broker

shall file with the commissioner a copy of an assumed name

certificate for each assumed name under which the mortgage broker

intends to conduct business and pay a $25 registration fee for

each assumed name. A loan officer may not conduct business under

any assumed name that is not the registered assumed name of the

sponsoring mortgage broker.

(b-2) A person licensed under this chapter must notify the

commissioner not later than the 10th day after the date of any

change of the person's name and pay to the commissioner a change

of name fee of $25 for the issuance of an amended license

certificate.

(b-3) A business entity licensed under this chapter shall notify

the commissioner of any change of its designated representative.

The commissioner may charge a fee of $25 for each change of a

designated representative.

credited or applied to any other fee or indebtedness owed by the

person paying the fee.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.12, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 8, eff. September 1, 2007.

Sec. 156.212. MAINTENANCE AND LOCATION OF OFFICES. (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.

eff. September 1, 2009.

(d) Repealed by Acts 2009, 81st Leg., R.S., Ch. 1317, Sec. 29,

eff. September 1, 2009.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 13, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 29, eff. September 1, 2009.

Text of section as added by Acts 2001, 77th Leg., ch. 337, Sec. 9

Sec. 156.213. ANNUAL REPORT. (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, Sec. 9, eff. Sept. 1,

2001.

Text of section as added by Acts 2001, 77th Leg., ch. 407, Sec. 3

Sec. 156.213. ANNUAL REPORT. (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, Sec. 3, eff. Sept. 1,

2001.

Sec. 156.214. REGISTERED FINANCIAL SERVICES COMPANY. (a) A

registered financial services company may perform the services of

a mortgage broker as if the company were licensed as a mortgage

broker under this chapter, through individuals who are the

exclusive agents of the registered financial services company.

(b) To be eligible to register as a registered financial

services company, a person must:

(1) be a depository institution exempt from this chapter under

Section 156.202(1)(A) or (B) and chartered and regulated by the

Office of Thrift Supervision or the Office of the Comptroller of

the Currency, or be a subsidiary of the institution;

(2) provide the commissioner with satisfactory evidence of an

undertaking of accountability in a form acceptable to the

commissioner, supported by a surety bond equal to $1 million to

cover the person's responsibility for mortgage broker activities

of each exclusive agent;

(3) provide a business plan satisfactory to the commissioner

that sets forth the person's plan to provide education to its

exclusive agents, handle consumer complaints relating to its

exclusive agents, and supervise the mortgage origination

activities of its exclusive agents;

(4) pay an annual registration fee in an amount determined as

follows:

(A) if the registered financial services company has 2,000 or

fewer exclusive agents acting in this state, an amount equal to

the lesser of:

(i) one-half of the license fee for a loan officer under Section

156.203(c)(1), multiplied by the number of exclusive agents under

contract to act for the person in this state; or

(ii) $200,000;

(B) if the registered financial services company has at least

2,001 but not more than 2,500 exclusive agents acting in this

state, $225,000;

2,501 but not more than 3,000 exclusive agents acting in this

state, $250,000;

(D) if the registered financial services company has at least

3,001 but not more than 5,000 exclusive agents acting in this

state, $300,000; or

(E) if the registered financial services company has at least

5,001 exclusive agents acting in this state, $350,000; and

(5) designate an officer of the person to be responsible for the

activities of the exclusive agents.

requirements of Subsection (b), the commissioner shall issue a

registration to the person. The registration is valid for one

year and may be renewed on or before its expiration date. A

person may renew an expired registration in the same manner as a

person may renew an expired license under Section 156.2081(b).

(d) A registered financial services company is subject to

Subchapters D and E as if the company were licensed as a mortgage

broker.

(e) No person may be an exclusive agent of a registered

financial services company without the prior consent of the

commissioner if the individual has:

(1) been convicted of a criminal offense involving dishonesty,

breach of trust, or money laundering; or pled guilty or nolo

contendere in connection with a prosecution for an offense

described in this subdivision; or agreed to enter into a pretrial

diversion or similar program in connection with a prosecution for

an offense described in this subdivision; or

(2) been the subject of a revocation or suspension of any

professional license in this state or any other jurisdiction.

(f) Prior to permitting an exclusive agent to solicit, process,

negotiate, or place a mortgage loan, the registered financial

services company shall submit to the commissioner such

information as the commissioner may require relating to the

exclusive agent, and the exclusive agent must have enrolled with

the Nationwide Mortgage Licensing System and Registry as a

registered residential mortgage loan originator and provided to

the commissioner the exclusive agent's unique identifier. In

this subsection, "Nationwide Mortgage Licensing System and

Registry," "residential mortgage loan originator," and "unique

identifier" have the meanings assigned by Section 180.002.

(g) The commissioner shall notify the person and the registered

financial services company of his determination as to whether or

not the person is eligible to be an exclusive agent under

Subsection (a). A person who is determined to be ineligible may

appeal the decision of the commissioner in the same manner as an

appeal may be made under Section 156.209.

Added by Acts 2007, 80th Leg., R.S., Ch.

228, Sec. 3, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 7, eff. June 19, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 14, eff. September 1, 2009.

Sec. 156.215. APPROVAL OF COURSES. (a) The finance commission

may adopt rules establishing:

(1) minimum standards for courses, approved course providers,

and approved course instructors; and

(2) a fee not to exceed $200 for the review and approval of each

course not provided and approved by a duly organized trade

association the purpose of which is primarily to represent

residential mortgage originators.

(b) An approval is for up to two years.

Added by Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 9, eff. September 1, 2007.

Renumbered from Finance Code, Section 156.214 by Acts 2009, 81st

Leg., R.S., Ch.

87, Sec. 27.001(16), eff. September 1, 2009.

SUBCHAPTER D. LICENSE REVOCATION AND SUSPENSION AND OTHER ACTIONS

AGAINST LICENSE HOLDER

Sec. 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.

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.

(g) The commissioner may share information gathered during an

investigation or inspection with any state or federal agency.

(h) The commissioner may require reimbursement in an amount not

to exceed $325 for each examiner a day for on-site examination or

investigation of a mortgage broker if records are located out of

state or if the review is considered necessary beyond the routine

examination process.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 337, Sec. 10, eff.

Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.13, eff. September 1, 2005.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 15, eff. September 1, 2009.

Sec. 156.3011. ISSUANCE AND ENFORCEMENT OF SUBPOENA. (a)

During an investigation, the commissioner may issue a subpoena

that is addressed to a peace officer of this state or other

person authorized by law to serve citation or perfect service.

The subpoena may require a person to give a deposition, produce

documents, or both.

(b) If a person disobeys a subpoena or if a person appearing in

a deposition in connection with the investigation refuses to

testify, the commissioner may petition a district court in Travis

County to issue an order requiring the person to obey the

subpoena, testify, or produce documents relating to the matter.

The court shall promptly set an application to enforce a subpoena

issued under Subsection (a) for hearing and shall cause notice of

the application and the hearing to be served upon the person to

whom the subpoena is directed.

Added by Acts 2005, 79th Leg., Ch.

1018, Sec. 6.14, eff. September 1, 2005.

Sec. 156.302. ADMINISTRATIVE PENALTY. (a) The commissioner,

after notice and opportunity for hearing, 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.

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, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 337, Sec. 11, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 407, Sec. 4, eff. Sept.

1, 2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 16, eff. September 1, 2009.

Sec. 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 notice and opportunity for hearing, has determined that the

person:

(1) obtained a license, including a renewal of a license, under

this chapter through a false or fraudulent representation or made

a material misrepresentation in an application for a license or

for the renewal of a license under this chapter;

(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;

(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) entered a plea of guilty or nolo contendere to, or is

convicted of, a criminal offense that is a felony or that

involves fraud or moral turpitude in a court of this or another

state or in a federal court;

(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

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;

(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; or

(18) provided false information to the commissioner during the

course of an investigation or inspection.

(a-1) The commissioner may also order disciplinary action after

notice and opportunity for hearing against a licensed mortgage

broker or a licensed loan officer if the commissioner becomes

aware during the term of the license of any fact that would have

been grounds for denial of an original license if the fact had

been known by the commissioner on the date the license was

issued.

(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.

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 and an opportunity for

hearing, 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.

(f) For purposes of Subsection (a), 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.

(g) If a person fails to pay an administrative penalty that has

become final or fails to comply with an order of the commissioner

that has become final, in addition to any other remedy provided

under law the commissioner, on not less than 10 days' notice to

the person, may without a prior hearing suspend the person's

mortgage broker license or loan officer license. The suspension

shall continue until the person has complied with the order or

paid the administrative penalty. During the period of

suspension, the person may not originate a mortgage loan and all

compensation received by the person during the period of

suspension is subject to forfeiture as provided by Section

156.406(b).

(h) An order of suspension under Subsection (g) may be appealed.

An appeal is a contested case governed by Chapter 2001,

Government Code. A hearing of an appeal of an order of

suspension issued under Subsection (g) shall be held not later

than the 30th day after the date of receipt of the notice of

appeal. The appellant shall be provided at least three days'

notice of the time and place of the hearing.

(i) An order revoking the license of a mortgage broker or loan

officer may provide that the person is prohibited, without

obtaining prior written consent of the commissioner, from:

(1) engaging in the business of originating or making mortgage

loans;

(2) being an employee, officer, director, manager, shareholder,

member, agent, contractor, or processor of a mortgage broker or

loan officer; or

(3) otherwise affiliating with a person for the purpose of

engaging in the business of originating or making mortgage loans.

(j) The commissioner may, on not less than 10 days' notice to

the person, suspend a person's license without a prior hearing

under this chapter if an indictment or information is filed or

returned alleging that the person committed a criminal offense

involving fraud, theft, or dishonesty. The suspension continues

until the criminal case is dismissed or the person is acquitted.

A person may appeal the suspension in accordance with Subsection

(h).

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 92, eff.

Sept. 1, 2001; Acts 2003, 78th Leg., ch. 170, Sec. 3, eff. Sept.

1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.15, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

905, Sec. 10, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 17, eff. September 1, 2009.

Sec. 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, Sec. 2, eff. Sept. 1,

1999.

Sec. 156.305. RESTITUTION. The commissioner may order a person

to make restitution for any amount received by that person in

violation of this chapter. A mortgage broker may be required to

make restitution for any amount received by a sponsored loan

officer in violation of this chapter.

Added by Acts 2005, 79th Leg., Ch.

1018, Sec. 6.16, eff. September 1, 2005.

SUBCHAPTER E. HEARINGS; JUDICIAL REVIEW; CIVIL ACTIONS;

UNLICENSED ACTIVITY

Sec. 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. The commissioner may

collect and deposit any court costs collected pursuant to a final

order.

(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.

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, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 18, eff. September 1, 2009.

Sec. 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.

other remedy provided by law.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Sec. 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, Sec. 2, eff. Sept. 1,

1999.

Sec. 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, Sec. 2, eff. Sept. 1,

1999.

Sec. 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, Sec. 2, eff. Sept. 1,

1999.

Sec. 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.

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. The order may assess an

administrative penalty in an amount not to exceed $1,000 per day

for each violation and may require a person to pay to a mortgage

applicant any compensation received by the person from the

applicant in violation of this chapter. If a person against whom

the order is made requests a hearing, the commissioner shall set

and give notice of a hearing before the commissioner or a

hearings officer. The hearing shall be governed by Chapter 2001,

Government Code. An order under this subsection becomes final

unless the person to whom the order is issued requests a hearing

not later than the 30th day after the date the order is issued.

(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, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.17, eff. September 1, 2005.

SUBCHAPTER F. MORTGAGE BROKER RECOVERY FUND

Sec. 156.501. MORTGAGE BROKER RECOVERY FUND. (a) The

commissioner shall establish, administer, 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) Subject to this subsection, the fund shall be used to

reimburse residential mortgage loan applicants for actual damages

incurred because of 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 reimbursement for

out-of-pocket losses caused by an act by a mortgage broker or

loan officer that constitutes a violation of Section

156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13),

or (16) or 156.304. Payments from the fund may not be made to a

lender who makes a mortgage loan originated by the mortgage

broker or loan officer or who acquires a mortgage loan originated

by the mortgage broker or loan officer.

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.

(d) The fund may be used at the discretion of the commissioner

to reimburse expenses incurred to secure and destroy residential

mortgage loan documents that have been abandoned by a current or

former individual or entity under the regulatory authority of the

department.

(e) Payments from the fund shall be reduced by the amount of any

recovery from the mortgage broker or loan officer or from any

surety, insurer, or other person or entity making restitution to

the applicant on behalf of the mortgage broker or loan officer.

(f) The commissioner, as manager of the fund, is entitled to

reimbursement for reasonable and necessary costs and expenses

incurred in the management of the fund, including costs and

expenses incurred with regard to applications filed under Section

156.504.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 6.18, eff. September 1, 2005.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 19, eff. September 1, 2009.

Sec. 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 fee in an amount determined by the

commissioner, not to exceed $20. The fee shall be deposited in

the fund.

(b) If the balance remaining in the fund at the end of a

calendar year is more than $3.5 million, the amount of money in

excess of that amount shall be available to the commissioner to

offset the expenses of participating in and sharing information

with the Nationwide Mortgage Licensing System and Registry in

accordance with Chapter 180.

eff. September 1, 2009.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 20, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 21, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 29, eff. September 1, 2009.

Sec. 156.503. STATUTE OF LIMITATIONS. (a) An application for

the recovery of actual damages from the fund under Section

156.504 may not be filed after the second anniversary of the date

of the alleged act or omission causing the actual damages or the

date the act or omission should reasonably have been discovered.

(b) This section does not apply to a subrogation claim brought

by the commissioner for recovery of money paid out of the fund.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 22, eff. September 1, 2009.

Sec. 156.504. PROCEDURE FOR RECOVERY. (a) To recover from the

fund, a residential mortgage loan applicant must file a written

sworn application with the commissioner in the form prescribed by

the commissioner, subject to Section 156.503. A person who

knowingly makes a false statement in connection with applying for

money out of the fund may be subject to criminal prosecution

under Section 37.10, Penal Code.

(b) The residential mortgage loan applicant is required to show:

(1) that the applicant's claim is based on facts allowing

recovery under Section 156.501; and

(2) that the applicant:

(A) is not a spouse of the licensed mortgage broker or loan

officer;

(B) is not a child, parent, grandchild, grandparent, or sibling,

including relationships by adoption, of the licensed mortgage

broker or loan officer;

mortgage broker or loan officer or a current or former employer,

employee, or associate of the licensed mortgage broker or loan

officer;

(D) is not a person who has aided, abetted, or participated

other than as a victim with the licensed mortgage broker or loan

officer in any activity that is illegal under Section

156.303(a)(2), (3), (5), (6), (8), (9), (10), (11), (12), (13),

or (16) or Section 156.304 or is not the personal representative

of a licensed mortgage broker or loan officer; and

(E) 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.

staff shall:

(1) notify each appropriate license holder and the issuer of any

surety bond issued in connection with their licenses; and

(2) investigate the application and issue a preliminary

determination, giving the applicant, the license holder, and any

surety an opportunity to resolve the matter by agreement or to

dispute the preliminary determination.

(d) If the preliminary determination under Subsection (c)(2) is

not otherwise resolved by agreement and is not disputed by

written notice to the commissioner before the 31st day after the

notification date, the preliminary determination automatically

becomes final and the commissioner shall make payment from the

fund, subject to the limits of Section 156.505.

(e) If the preliminary determination under Subsection (c)(2) is

disputed by the applicant, the license holder, or any surety by

written notice to the commissioner before the 31st day after the

notification date, the matter shall be set for a hearing governed

by Chapter 2001, Government Code, and the hearing rules of the

finance commission.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 23, eff. September 1, 2009.

Sec. 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 as provided by

this section.

(b) A payment from the fund may be made as provided by Section

156.504 and this section. A payment for claims:

(1) arising out of the same transaction, including interest, is

limited in the aggregate to $25,000, regardless of the number of

claimants; and

(2) against a single person licensed as a mortgage broker or

loan officer under this chapter arising out of separate

transactions, including interest, is limited in the aggregate to

$50,000 until the fund has been reimbursed for all amounts paid.

(b)(1) and (2) that exceed the amounts available under the fund,

the commissioner shall prorate recovery based on the amount of

damage suffered by each claimant.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 24, eff. September 1, 2009.

Sec. 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 claim against a mortgage

broker or loan officer under this chapter.

(a-1) The commissioner may seek to collect from a mortgage

broker or loan officer the amount paid from the fund on behalf of

the mortgage broker or loan officer and any costs associated with

investigating and processing the claim against the fund or with

collection of reimbursement for payments from the fund, plus

interest at the current legal rate until the amount has been

repaid in full. Any amount, including interest, recovered by the

commissioner shall be deposited to the credit of the fund.

(b) The commissioner may probate an order revoking a license

under this section.

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 and

any costs associated with investigating and processing the claim

against the fund or with collection of reimbursement for payments

from the fund.

(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, Sec. 2, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 93, eff.

Sept. 1, 2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 25, eff. September 1, 2009.

Sec. 156.507. SUBROGATION. When the commissioner has paid an

applicant an amount from the fund under Section 156.504, the

commissioner is subrogated to all of the rights of the applicant

to the extent of the amount paid. The applicant shall assign all

of the applicant's right, title, and interest in any subsequent

judgment against the license holder, up to the amount paid by the

commissioner. Any amount, including interest, recovered by the

commissioner on the assignment shall be deposited to the credit

of the fund.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 26, eff. September 1, 2009.

Sec. 156.508. FAILURE TO COMPLY WITH SUBCHAPTER OR RULE ADOPTED

BY THE FINANCE COMMISSION. The failure of an applicant under

Section 156.504 to comply with a provision of this subchapter

relating to the fund or with a rule adopted by the finance

commission relating to the fund constitutes a waiver of any

rights under this subchapter.

Added by Acts 1999, 76th Leg., ch. 1254, Sec. 2, eff. Sept. 1,

1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1317, Sec. 27, eff. September 1, 2009.

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2009 Texas Code FINANCE CODE TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES CHAPTER 156. MORTGAGE BROKERS

2009 Texas Code
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
CHAPTER 156. MORTGAGE BROKERS