TITLE 7. BANKING AND SECURITIES

PART 4. DEPARTMENT OF SAVINGS AND MORTGAGE LENDING

CHAPTER 51. DEPARTMENT ADMINISTRATION

The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (SML), adopts rule changes in Chapter 51: repeals in Subchapter A (§§51.1 - 51.4), Subchapter D (§§51.300 - 51.304), Subchapter E (§§51.400 - 51.405), and Subchapter F (§§51.500 - 51.506); amendments in Subchapter B (§51.100) and Subchapter C (§51.200); and new rules in Subchapter A (§§51.1 - 51.5). The commission's proposal was published in the May 9, 2025, issue of the Texas Register (50 TexReg 2735). The rules are adopted without changes to the published text and will not be republished.

Explanation of and Justification for the Rules

The adopted rules are the product of SML's rule review of 7 TAC Chapter 51, Department Administration, conducted in accordance with Government Code §2001.039. The preexisting rules in Chapter 51 establish various requirements concerning SML's administrative processes and procedures.

Changes Concerning the Reorganization of Chapter 51

SML has determined it should reorganize its rules in 7 TAC Chapter 51 by relocating the preexisting rules in Subchapter E, Mortgage Grant Fund, to Chapter 52, a vacant chapter. SML has further determined it should relocate the preexisting rules in Subchapter D, Recovery Fund, and Subchapter F, Mortgage Grant Fund: Recovery Claims for Unlicensed Activity, to Chapter 53, a vacant chapter. The adopted rules effectuate these changes.

Changes Concerning Consumer Complaints (Subchapter A)

The preexisting rules in Chapter 51, Subchapter A, Complaints, govern SML's administration of Finance Code §13.011, requiring SML to maintain a system to act on consumer complaints, and establish processes and procedures used by SML to process those complaints. The adopted rules: in §51.1, Purpose, clarify the purpose of the rules in Subchapter A; in §51.2, Definitions, adopt new definitions for "Consumer Responsiveness Unit," "respondent," and "SML," and eliminate the definition for "Department"; in §51.3, Computation of Time, clarify how time periods measured in calendar days are computed; in §51.4, Processing Inquiries and Complaints, clarify SML's processes and procedures for processing inquiries and complaints, reduce the time period during which a complainant is allowed to request reconsideration of the disposition of their complaint from 90 days to 60 days, establish a four-year limitations period to file a complaint, and clarify that SML will make reasonable efforts to resolve a complaint within 120 days after the date the complaint is received instead of within 90 days after the date the complaint investigation is complete.

Changes Concerning Hearings and Appeals (Subchapter B)

The preexisting rules in Chapter 51, Subchapter B, Hearings and Appeals, establish procedural requirements for contested cases and augment the commission's rules in 7 TAC Chapter 9, Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings. The adopted rules: in §51.100, Appeals, Hearings, and Informal Settlement Conferences, clarify that the rules of the State Office of Administrative Hearings (SOAH) apply to contested cases referred to SOAH, and clarify that an appeal for judicial review must be brought in a district court in Travis County, Texas.

Changes Concerning Advisory Committees (Subchapter C)

The preexisting rules in Chapter 51, Subchapter C, Advisory Committees, govern advisory committees created by SML under Finance Code §13.018, allowing SML to appoint advisory committees to assist in discharging its duties. SML has one advisory committee created under Finance Code §13.018 - the Mortgage Grant Advisory Committee (MGAC) - to assist in administering the mortgage grant fund grant program under Finance Code Chapter 156, Subchapter G. The adopted rules: in §51.200, Advisory Committees, change the date on which advisory committees created under Finance Code §13.018 are abolished from September 1, 2031 to September 1, 2030, to align more closely with SML's schedule for rule review, list the MGAC as an advisory committee subject to the rule, and remove references to the mortgage industry advisory committee created under Finance Code §156.104 which is not subject to the rule since it is not created under Finance Code §13.018.

Other Modernization and Update Changes

The adopted rules make changes to modernize and update the rules including: adding and replacing language for clarity and to improve readability; removing unnecessary or duplicative provisions; and updating terminology.

Summary of Public Comments

Publication of the commission's proposal recited a deadline of 30 days to receive public comments. No comments were received.

SUBCHAPTER A. COMPLAINTS

7 TAC §§51.1 - 51.4

Statutory Authority

The rules are adopted under the authority of: Government Code §2001.004(1), requiring a state agency to adopt rules of practice stating the nature and requirements of all available formal and informal procedures; Finance Code §96.002(a), authorizing the commission to adopt rules necessary to supervise and regulate Texas-chartered savings banks and to protect public investment in Texas-chartered savings banks; Finance Code §156.102(a), authorizing the commission to adopt rules necessary for the intent of or to ensure compliance with Finance Code Chapter 156, the Residential Mortgage Loan Company Licensing and Registration Act; Finance Code §157.0023(a), authorizing the commission to adopt rules necessary to implement or fulfill the purposes of Finance Code Chapter 157, the Mortgage Banker Registration and Residential Mortgage Loan Originator License Act; Finance Code §158.003(b), authorizing the commission to adopt and enforce rules necessary for the purposes of or to ensure compliance with Finance Code Chapter 158, the Residential Mortgage Loan Servicer Registration Act; Finance Code §159.108, authorizing the commission to adopt and enforce rules necessary for the intent of or to ensure compliance with Finance Code Chapter 159, Subchapter C; Finance Code §180.004(b), authorizing the commission to implement rules necessary to comply with Finance Code Chapter 180, the Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act); and Finance Code §180.061(5), authorizing the commission to adopt rules establishing requirements for investigation and examination authority for purposes of investigating a violation or complaint arising under the Texas SAFE Act. The rules are also adopted under the authority of, and to implement, Finance Code §§11.307, 13.011, 156.301, 157.0022, 157.009, 157.021, 157.026, 158.059, and 158.102.

The adopted rules affect the statutes in Finance Code: Title 3, Subtitles B and C; and Chapters 13, 156, 157, 158, 159, and 180.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502087

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

7 TAC §§51.1 - 51.5

Statutory Authority

The adopted rules affect the statutes in Finance Code: Title 3, Subtitles B and C; and Chapters 13, 156, 157, 158, 159, and 180.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502088

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

SUBCHAPTER B. HEARINGS AND APPEALS

7 TAC §51.100

Statutory Authority

The rule is adopted under the authority of Government Code: §2001.004(1), requiring a state agency to adopt rules of practice stating the nature and requirements of all available formal and informal procedures; and §2009.051(c), authorizing a state agency to adopt alternative dispute resolution procedures by rule. The rule is also adopted under the authority of, and to implement, Finance Code §§13.017, 66.107, 96.107, 156.209, 156.302, 156.303, 156.401, 156.406, 156.504, 157.009, 157.010, 157.017, 157.023, 157.024, 157.026, 157.031, 158.059, 158.105, 158.059, 159.301, and 180.202.

The adopted rule affects the statutes in Finance Code Title 3, Subtitles B and C; and Chapters 13, 156, 157, 158, 159, and 180.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502089

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

SUBCHAPTER C. ADVISORY COMMITTEES

7 TAC §51.200

Statutory Authority

The rule is adopted under the authority of Government Code §2110.008, authorizing a state agency that has established an advisory committee to designate, by rule, the date on which the committee will be automatically abolished. The rule is also adopted under the authority of, and to implement, Finance Code §13.018.

The adopted rule affects Finance Code §13.018.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502090

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

SUBCHAPTER D. RECOVERY FUND

7 TAC §§51.300 - 51.304

Statutory Authority

The adopted rules affect the statutes in Finance Code Chapter 156, Subchapter F.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502091

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

SUBCHAPTER E. MORTGAGE GRANT FUND

7 TAC §§51.400 - 51.405

Statutory Authority

The adopted rules affect the statutes in Finance Code Chapter 156, Subchapter G.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502092

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

SUBCHAPTER F. MORTGAGE GRANT FUND: RECOVERY CLAIMS FOR UNLICENSED ACTIVITY

7 TAC §§51.500 - 51.506

Statutory Authority

The adopted rules affect the statutes in Finance Code Chapter 156, Subchapter G.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502093

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

CHAPTER 52. MORTGAGE GRANT FUND

7 TAC §§52.1 - 52.6

The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (SML), adopts new rules in Chapter 52: §§52.1 - 52.6. The commission's proposal was published in the May 9, 2025, issue of the Texas Register (50 TexReg 2741). The rules are adopted without changes to the published text and will not be republished.

Explanation of and Justification for the Rules

Changes Concerning the Reorganization of Chapter 51

SML has determined it should reorganize its rules in 7 TAC Chapter 51 by relocating the preexisting rules in Subchapter E, Mortgage Grant Fund, to Chapter 52, a vacant chapter. The adopted rules effectuate this change.

Changes Concerning the Mortgage Grant Fund

The preexisting rules in Chapter 51, Subchapter E, Mortgage Grant Fund, govern SML's administration of the mortgage grant fund under Finance Code Chapter 156, Subchapter G, which provides grants for financial education relating to mortgage loans. The adopted rules: in §52.2, Definitions, adopt a new definition for "SML" and eliminate the definition for "Department"; in §52.4, Grant Coordinator, clarify that the SML commissioner may designate one or more SML employees to act on behalf of the grant coordinator when the grant coordinator is not available, and clarify that the grant coordinator may appear at hearings and judicial proceedings related to the mortgage grant fund; in §52.6, Grant Program, remove provisions related to disbursements from the mortgage grant fund made for the purpose of Finance Code §156.554(b)(3) as being unrelated to the grant program that is the subject of the rule, clarify that a political subdivision of this state is eligible to receive a grant, and clarify that a residential mortgage loan servicer registered with SML that is a nonprofit organization is eligible to receive a grant, and eliminate the requirement for grantees to make a longitudinal report after the grant cycle is completed.

Other Modernization and Update Changes

Summary of Public Comments

Publication of the commission's proposal recited a deadline of 30 days to receive public comments. No comments were received.

Statutory Authority

The adopted rules affect the statutes in Finance Code Chapter 156, Subchapter G.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502095

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535

CHAPTER 53. RECOVERY CLAIMS

7 TAC §§53.1 - 53.12

The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (SML), adopts new rules in Chapter 53: §§53.1 - 53.12. The commission's proposal was published in the May 9, 2025, issue of the Texas Register (50 TexReg 2743). The rules are adopted without changes to the published text and will not be republished.

Explanation of and Justification for the Rules

Changes Concerning the Reorganization of Chapter 51

SML has determined it should reorganize its rules in 7 TAC Chapter 51 by relocating the preexisting rules in Subchapter D, Recovery Fund, and Subchapter F, Mortgage Grant Fund: Recovery Claims for Unlicensed Activity, to Chapter 53, a vacant chapter. The adopted rules effectuate this change.

Changes Concerning Recovery Claims

The preexisting rules in Chapter 51, Subchapter D, Recovery Fund, govern SML's administration of Finance Code §13.016 and Chapter 156, Subchapter F, Recovery Fund, which creates a recovery fund that allows for claims to compensate persons for actual, out-of-pocket damages incurred because of violations committed by an individual licensed by SML as a residential mortgage loan originator under Finance Code Chapter 157. The preexisting rules in Chapter 51, Subchapter F, Mortgage Grant Fund: Recovery Claims for Unlicensed Activity, govern SML's administration of Finance Code §156.555, allowing for claims to be made against the Mortgage Grant Fund created under Finance Code Chapter 156, Subchapter G, Mortgage Grant Fund, to compensate persons for actual, out-of-pocket damages incurred because of fraud committed by an individual who acted as a residential mortgage loan originator but did not hold a residential mortgage loan originator license under Finance Code Chapter 157. The adopted rules: in §53.2, Definitions, adopt new definitions for "Consumer Responsiveness Unit," "recovery claim," and "SML," and eliminate the definition for "Department"; in §53.3, Submitting a Claim, clarify where a claim application should be sent, clarify that, if a claimant submits a scanned copy of the claim application, the claimant must maintain the original application and send it by mail to SML on request, and clarify that a claim application that is incomplete may be deemed withdrawn after notice is sent to the claimant and the claimant fails to provide the additional information within 30 days; in §53.4, Investigating the Claim, clarify that claims are generally investigated in the same manner as a complaint, and that, if the claim relates a pending complaint, the investigator may investigate the claim and the complaint simultaneously, and, if the claim relates to a closed complaint, the investigator may adopt the findings of that complaint investigation; in §53.5, Resolution by Agreement, clarify where notice to SML of a claim being resolved by the parties should be sent, and that, upon resolution of a claim by the parties, SML may consider the claim withdrawn or hold the claim in abatement pending satisfaction of the agreement; in §53.6, Preliminary Determination; Requests for Appeal, clarify where an appeal of SML's preliminary determination of the claim should be sent; in §53.7, Administrative Hearings, clarify that, at an administrative hearing on a recovery claim, SML will present its preliminary determination and then allow the claimant to present their claim and the respondent to contest or defend against the claim, and clarify that the claimant has the burden of proving they are entitled to recovery; in §53.12, Recoverable Damages, clarify the types of damages that a claimant may recover.

Other Modernization and Update Changes

Summary of Public Comments

Publication of the commission's proposal recited a deadline of 30 days to receive public comments. No comments were received.

Statutory Authority

The adopted rules affect the statutes in Finance Code Chapter 156, Subchapters F and G.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 20, 2025.

TRD-202502096

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Effective date: July 10, 2025

Proposal publication date: May 9, 2025

For further information, please call: (512) 475-1535