Texas legislature has passed House Bill 2783 ammending the Mortgage Broker Licensing Act to require company licensing, to allow for expedited provisional loan officer licensing, to increase the loan officer license fee from $100 to $275, and to clarify the 5 or less exemption for unlicensed companies or individuals. Company licensing will be required by January of 2008.
HB 2783: Relating to the regulation of certain persons involved in mortgage lending. The specific general changes are:
The definition of “mortgage loan” in the Mortgage Broker Licensing Act (MBLAct) has been changed to “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.” Note that “first lien” has been omitted from the initial definition found in the MBLAct.
An individual may not act or attempt to act as a loan officer unless the individual is licensed under the MBLAct and sponsored by a licensed mortgage broker and acting for the mortgage broker; or is exempt under Section 156.202.
NEW EXPEDITED PROVISIONAL LICENSE AMENDMENT:
An applicant for a loan officer license may be issued a provisional loan officer license as provided by this section only if the applicant:
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 the MBLAct under Section 156.202; and
Meets the qualifications for a loan officer license other than fulfilling the educational and examination requirements at the time of the application submission; and
Has had NO criminal charges and has not been convicted of a criminal offense. For purposes of this section a person is considered convicted as provided by Section 156.204 (d) of the MBLAct; and
Submitted a COMPLETE and ACCURATE application the first submission (if not, the application will then be transferred to normal processing with no fee refund); and
In addition to the regular non-refundable licensing and other fees for a regular loan officer’s license, pays an additional non-refundable fee not to exceed $100 (a rule will be proposed to the Finance Commission relating to this additional fee).
If the above is strictly adhered to, the Commissioner shall use best efforts to expedite the issuance of 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 “clean” criminal background report. Provisional licenses are valid for 90 days to allow time for the applicant to complete the educational requirements and to pass the required examination. It is imperative that these requirements are met within that 90 day timeline. The Commissioner may revoke a provisional loan officer license if it is discovered that the applicant has misrepresented the applicant’s qualification for this type license, has violated this chapter, or does not meet the qualifications for a provisional loan officer license. This revocation is NOT SUBJECT TO AN APPEAL and fees are not refundable.
HB 2783 further clarifies a license exemption with additional language regarding 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, or an individual who makes a mortgage loan from the individual’s own funds, is not an authorized lender under Chapter 342 of the Texas Finance Code, and does not regularly engage in the business of making or brokering mortgage loans.
The maximum loan officer license fee (not inclusive of any other required fees charged) has been increased by $100 to $275.
The existing requirements and amended changes for license qualification are as follows:
Mortgage Broker must:
*Be at least 18 years of age
*U.S. citizen or legally admitted alien
*Maintain a physical office in the state of Texas
*Must prove one or more of the following:
*Have a bachelors degree from a 4 year accredited college or university in a related field, AND 18 months experience as a full-time mortgage broker or licensed loan officer with a licensed, sponsoring mortgage broker or an exempt person under section 156.202,
Active, licensed real estate broker under Chapter 1101, Texas Occupations Code,
Active, licensed attorney, or
A local recording agent or insurance solicitor or agent for a legal reserve life insurance company under Chapter 21, Insurance Code, or holds the equivalent license under Chapter 21, Insurance Code,
36 months of experience with full-time employment as a licensed loan officer with a licensed, sponsoring mortgage broker or an exempt person under section 156.202.
*Provide proof of passing the required examination
*Fully comply with the tangible and non-exempt “net worth” requirement of $25,000
*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
*Satisfy the Commissioner as t the individual’s honesty, trustworthiness, and integrity
*Not be in violation of this chapter, a rule adopted under this chapter or any other order previously issued to the individual by the Commissioner
*Provide evidence that:
If the person has not been previously licensed as a mortgage broker or a loan officer under this subchapter, the person has completed 90 classroom hours of educational courses approved by the Commissioner
If the person has not been previously licensed as a mortgage
broker under this subchapter but has been licensed as a loan officer under this subchapter the person has successfully completed an additional 30 classroom hours of education courses approved by the Commissioner under this section.
If the broker has a company, it is now (as of January 2008) required be licensed as well for a fee of $175.
Loan Officer must:
Be at least 18 years of age
Be a U.S. citizen or legally admitted alien
Designate the name of the sponsoring broker
Must prove one or more of the following:
The person has received a bachelor’s degree from a 4 year accredited college or university in a related field AND has 18 months of experience in the mortgage lending field with full-time employment as a licensed mortgage broker or licensed loan officer with a licensed mortgage broker or a person exempt under section 156.202
The person is licensed in Texas as:
An active real estate broker under Chapter 1101, Texas Occupations Code,
An active, licensed attorney,
A local recording agent or insurance solicitor or agent for a legal reserve life insurance company under Chapter 21, Insurance Code or holds an equivalent license under Chapter 21, Insurance Code
The person has three years of experience in the mortgage lending field with full-time employment as a licensed loan officer with a license sponsoring mortgage broker or a person exempt under Section 156.202
Has successfully completed 60 classroom hours of education courses approved by the Commissioner.
The person has 18 months experience as a loan officer with full-time employment as a loan officer with a person exempt under Section 156.202 AND has successfully completed 30 classroom hours of education courses approved by the Commissioner
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
Satisfy the Commissioner as to the individual’s good moral character, including the individual’s honesty, trustworthiness, and integrity
Provide proof of passing the required examination
Not be in violation of this chapter, a rule adopted under this chapter, or any other order previously issued to the individual by the Commissioner.
The required topics for complying with the initial licensing education requirements for mortgage brokers as well as loan officers must now cover ethics, RESPA, TILA, ECOA and the MBLAct.
During the term of any outstanding license, if the Commissioner becomes aware of any fact, not previously known to the Commissioner, that would have been grounds for denial of an original license, he may deny the renewal of a license.
If a broker operates with a company name, those companies now have to licensed. No one (mortgage broker or loan officer) can be individually licensed without their companies licensed (if they have one). In order for the company entity to become licensed, the entity must designate an individual licensed as a mortgage broker as its designated representative and pay an application fee in an amount not to exceed $175. That designated representative must the sole proprietor if the company is a sole proprietorship, be an officer of the corporation if it is a corporation, a manager of the limited liability company if it is a limited liability company, or if the company is a limited partnership the designated representative must be a general partner, an officer of a general partner that is a corporation, or a manager of a general partner that is a limited liability company.
Not later than the 10th day before a mortgage broker begins doing business under an assumed name, the 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 broker.
Licensees must notify the Commissioner not later than the 10th day after the date of any change of the person’s name and pay a fee of $25 for the name change and issuance of an amended license certificate.
A business entity licensed under this chapter shall notify the Commissioner of any change of its designated representative and pay $25.00 for each change.
Regarding approved education, the Finance Commission may adopt rules establishing:
Minimum standards for courses, approved course providers and approved course instructors, and
A fee charged for each course not to exceed $200 for the review and approval of each course not provided and approved by a duly organized trade association, whose primarily purpose is that of representing residential mortgage originators. This approval is valid for a maximum of up to two years but may be less.
Additional disciplinary action authority is granted to the Commissioner against a licensee when after a hearing, it has been determined that the licensee provided false information to the Commissioner during the course of an investigation or inspection.
On notice and opportunity for a hearing, the Commissioner may suspend a person’s license 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, after which a final determination will be made.
A mortgage broker is now not required to be licensed to originate second lien loans under the Finance Code Chapter 342.051 if and as long as, the broker and his/her company are duly licensed with the TDSML. This does not pertain to mortgage bankers now licensed by the Office of Consumer Credit Commissioner (OCCC) under Chapter 342.051. They will continue to be licensed by and under the jurisdiction and authority of the OCCC. Second liens originated by brokers licensed with the TDSML will now be reviewed during scheduled examinations/inspections by the TDSML and not the OCCC.
Effective 9/1/07 (NOTE: Company licensing requirement effective January 2008).