PART 1. FINANCE COMMISSION OF TEXAS
CHAPTER 2. RESIDENTIAL MORTGAGE LOAN ORIGINATORS REGULATED BY THE OFFICE OF CONSUMER CREDIT COMMISSIONER
The Finance Commission of Texas (commission) adopts amendments to §2.106 (relating to Denial, Suspension, or Revocation Based on Criminal History) and §2.202 (relating to Maintaining Contact Information), in 7 TAC, Chapter 2, concerning Residential Mortgage Loan Originators Regulated by the Office of Consumer Credit Commissioner.
The commission adopts the amendments to §2.106 and §2.202 without changes to the proposed text as published in the May 6, 2022, issue of the Texas Register (47 TexReg 2621). The rules will not be republished.
The commission received no official comments on the proposed amendments.
The rules in 7 TAC Chapter 2 govern residential mortgage loan originators (RMLOs) regulated by the OCCC. In general, the purpose of the amendments to 7 TAC Chapter 2 is to implement changes resulting from the commission's review of the chapter under Texas Government Code, §2001.039. Notice of the review of 7 TAC Chapter 2 was published in the Texas Register on February 4, 2022 (47 TexReg 541). The commission received no comments in response to that notice.
The OCCC distributed an early precomment draft of proposed changes to interested stakeholders for review, and then held a stakeholder meeting and webinar regarding the rule changes. The OCCC received no informal precomments on the rule text draft.
Amendments to §2.106 specify that the OCCC will receive criminal history information about an RMLO applicant through the NMLS system. Under Texas Finance Code, §180.055(a), the OCCC is authorized to consider an RMLO applicant's criminal history in determining whether to issue a license. Under Texas Finance Code, §180.054, RMLO applicants are required to submit fingerprints to NMLS, and the OCCC is authorized to use NMLS as a channeling agent for obtaining criminal history information. The amendments to §2.106(a) clarify that the OCCC receives criminal history information through NMLS.
Amendments to §2.202 specify requirements for RMLOs to maintain current contact information. Currently, §2.202 requires an RMLO to notify the OCCC if there is a change to the RMLO's address, name, or employer. Adopted subsection (a) specifies a 30-day deadline for providing updated information, similar to other OCCC rules that contain a 30-day deadline for licensees to provide updated contact information. Adopted subsection (b) explains that it is a best practice for RMLOs to regularly review contact information on file with the OCCC to ensure that it is current and correct, similar to other OCCC rules specifying this as a best practice. The OCCC requires current and correct information about RMLO licensees in order to carry out its responsibilities under Texas Finance Code, Chapter 180.
SUBCHAPTER A. APPLICATION PROCEDURES
The rule amendments are adopted under Texas Finance Code, §180.061, which authorizes the commission to adopt rules relating to criminal background checks for RMLOs, as well as rules relating to amending an RMLO license. In addition, Texas Finance Code, §180.004 authorizes the commission to implement rules to comply with Texas Finance Code, Chapter 180.
The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 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 24, 2022.
TRD-202202354
Matthew Nance
Deputy General Counsel, Office of Consumer Credit Commissioner
Finance Commission of Texas
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 936-7660
The rule amendments are adopted under Texas Finance Code, §180.061, which authorizes the commission to adopt rules relating to criminal background checks for RMLOs, as well as rules relating to amending an RMLO license. In addition, Texas Finance Code, §180.004 authorizes the commission to implement rules to comply with Texas Finance Code, Chapter 180.
The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 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 24, 2022.
TRD-202202355
Matthew Nance
Deputy General Counsel, Office of Consumer Credit Commissioner
Finance Commission of Texas
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 936-7660
CHAPTER 51. CHARTER APPLICATIONS
The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (department), adopts the repeal of all preexisting rules in 7 TAC Chapter 51, as follows: §§51.1 - 51.15. The commission further adopts new rules in 7 TAC Chapter 51, as follows: §§51.1 - 51.4, 51.100, 51.200, 51.300 - 51.304, 51.400 - 51.405, and 51.500 - 51.506. The commission's proposal was published in the May 6, 2022, issue of the Texas Register (47 TexReg 2622). The following rules are adopted with changes to the published text and are republished to reflect such changes: §§51.1, 51.2, 51.100, 51.300, 51.301, 51.400, 51.401, 51.403, 51.500, and 51.501. The changes regulate no new parties and affect no new subjects of regulation. As a result, the rules will not be republished as proposed rules for comment. The remaining rules in the proposal are adopted without changes to the proposed text as published in the Texas Register and will not be republished.
Explanation of and Justification for the Rules
Changes Concerning the Relocation (Swapping) of 7 TAC Chapters 51 and 52
The department's preexisting rules in 7 TAC Chapters 51, 53, 57, 61, 64, 65, 67, 69, 71, and 73 implement Finance Code Title 3, Subtitle B, Savings and Loan Associations, and affect savings and loan associations regulated by the department. The department's preexisting rules in 7 TAC Chapter 52, Department Administration, concern the administrative processes and procedures of the Department, and are therefore located among the rule chapters concerning savings and loan associations which may tend to create confusion for the reader. The department further asserts that 7 TAC Chapter 51 - the first rule chapter assigned to the department - is a more appropriate chapter for the department's rules concerning its administrative processes and procedures to reside. As a result, the department has determined it should relocate the preexisting rules in 7 TAC Chapters 51 and 52 by essentially swapping the rules in such chapters. Specifically, the adopted rules: (i) repeal the preexisting rules in 7 TAC Chapter 51 and insert new rules largely patterned after the preexisting rules in 7 TAC Chapter 52; and (ii) rename 7 TAC Chapter 51 to reflect the new rules inserted in such chapter.
Changes concerning Complaint Processing Rules
The department receives, analyzes, and investigates complaints from consumers concerning the persons it regulates. The adopted rules make changes to the department's preexisting rules in 7 TAC Chapter 52, Subchapter A, Complaint Processing, including: (i) changes to preexisting §52.10, Definitions, to: add definitions for the terms "Commissioner" and "Department"; and clarify that the department will attempt to collect appropriate information to facilitate analysis or investigation of a complaint but will not treat such complaint as an inquiry for failure to include all such information; (ii) changes to preexisting §52.11, Complaint Processing, to: clarify that a person filing a complaint who wishes to remain anonymous must request such treatment; clarify that an inquiry concerning a person or activity the department does not regulate will be referred to the appropriate regulatory authority, if known; clarify that a complaint may not be forwarded to the entity or individual that is the subject of the complaint if notice of the complaint would jeopardize analysis or investigation of the complaint by the department; and clarify when the department provides status updates to the complainant concerning their complaint (no less often than quarterly); and (iii) changes to preexisting §52.12, Complaint Resolution and Disposition, to: clarify the department's process to close a complaint if it is outside the department's jurisdiction; clarify that, if an enforcement action is deemed to be warranted in order to address the complaint, the party to such action will be notified of the complaint being closed through such enforcement action and will not receive a separate notice; and establish a time limit of ninety days for a complainant to appeal the department's disposition of their complaint, and clarify that the department will provide written notice to the complainant of the results of a timely appeal request.
Changes concerning the Mortgage Grant Fund grant program
Finance Code Chapter 156, Subchapter G requires the department's commissioner to administer the mortgage grant fund. The primary purpose of the mortgage grant fund is to promote financial education relating to mortgage loans and to support other statewide financial education, activities, and programs. The adopted rules make changes to the department's preexisting rule at 7 TAC §52.205, Grant Program, to properly align the rule's provisions concerning the grant program's programmatic schedule with the department's plans for the inaugural grant cycle to occur in calendar year 2023.
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 for the rules recited a deadline of 30 days to receive public comments, or June 5, 2022. A public hearing in accordance with Government Code §2001.029 was not required. No comments were received.
Statutory Authority
The rule repeals are adopted under the authority of: Finance Code §11.302(a), authorizing the commission to adopt rules applicable to Texas-chartered savings associations (savings and loan associations); Finance Code §62.001, authorizing the commission to adopt rules concerning the information required in an application for a savings and loan association charter; and Finance Code §66.002(3), authorizing the commission to adopt rules concerning the procedures for processing, hearing, and deciding applications filed with the department's commissioner relating to the operation of a savings and loan association.
The adopted rule repeals affect the statutes contained in Finance Code Title 3, Subtitle B.
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 24, 2022.
TRD-202202374
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
SUBCHAPTER A. COMPLAINTS
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, 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, 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, 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, 158.059, and 158.102.
The adopted rules affect the statutes contained in Finance Code: Title 3, Subtitles B and C; and Chapters 13, 156, 157, 158, 159, and 180.
§51.1.Definitions.
The following terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.
(1) "Commissioner" means the Savings and Mortgage Lending Commissioner appointed under Finance Code Chapter 13.
(2) "Complainant" means a person who files a complaint with the Department.
(3) "Complaint" means a signed, written communication received by the Department's division for consumer assistance that expresses dissatisfaction with a transaction or alleges wrongful conduct. The Department will collect the following items and information regarding a complaint, if available:
(A) the complainant's name and contact information;
(B) the name of the entity or individual against whom the complaint is submitted;
(C) the date and place of the alleged misconduct, violation, or transaction;
(D) a description of the facts or conduct alleged to violate applicable statutes or rules; and
(E) any written documentation supporting the complaint.
(4) "Department" means the Department of Savings and Mortgage Lending.
(5) "Inquiry" means a written communication received by the Department's division for consumer assistance that is not a complaint.
§51.2.Complaint Processing.
(a) Complaints and inquiries filed with the Department are generally considered public information, unless a specific statutory exception applies.
(b) The Department, at the request of the complainant, will make a good faith effort to protect the complainant's identity to the extent possible.
(c) The Department will determine if a complaint or inquiry relates to an activity that the Department regulates, and:
(1) if the Department does not regulate the activity that is the subject of the complaint or inquiry, the Department will close the complaint or inquiry and refer the person making the complaint or inquiry to the appropriate regulatory authority, if known; or
(2) if the Department regulates the activity that is the subject of a complaint, the Department will send a copy or a summary of the complaint and appropriate supporting documentation to the entity or individual that is the subject of the complaint to request a response, unless notice of the complaint would jeopardize analysis or investigation of the complaint or the Commissioner or his or her designee otherwise determines an undercover or covert investigation is warranted.
(d) A regulated entity or individual that receives a complaint forwarded by the Department must respond within 14 calendar days from the date the request was sent by the Department, unless an extension of time is granted. If an extension of time is granted, the regulated entity or individual must respond by the deadline recited in or otherwise created by the extension of time.
(e) The Department will prioritize complaints for purposes of determining the order in which complaints are investigated, taking into account the seriousness of the allegations made in a complaint and the length of time a complaint has been pending.
(f) The Department will monitor how long each complaint is open, and will make all reasonable efforts to resolve complaints within 90 calendar days of receipt of actionable information. The Department will notify the complainant of his or her complaint status at least quarterly until final disposition, unless such notice would jeopardize an ongoing complaint analysis or investigation.
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 24, 2022.
TRD-202202375
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
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 Government Code §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.
The adopted rule affects the statutes contained in Finance Code: Title 3, Subtitles B and C; and Chapters 13, 156, 157, 158, 159, and 180.
§51.100.Appeals, Hearings, and Informal Settlement Conferences.
(a) Alternative Resolution of Appeal. If legal or enforcement staff determines an enforcement action that has been appealed may be resolved without a hearing, legal or enforcement staff may pursue settlement through negotiation, mediation, agreed order, consent order, informal settlement conference, alternative dispute resolution, or other appropriate means.
(b) Informal Settlement Conferences. The Department may conduct an informal settlement conference in order to resolve an enforcement action that has been appealed. An individual or entity subject to an enforcement action may request an informal settlement conference. An informal settlement conference does not create any new rights or obligations. Informal settlement conferences:
(1) are conducted at the discretion of legal or enforcement staff;
(2) may not be used as a delay tactic; and
(3) may be primarily conducted remotely, including solely over the phone or videoconference, or by email.
(c) Mediation. As applicable under Finance Code §13.017, the Department may, at the discretion of the Commissioner or his or her designee, arrange for the services of a qualified mediator or subject matter expert to assist in resolving complaints or other matters.
(d) Hearings. Hearings may be conducted in accordance with Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings), with Texas Government Code Chapter 2001, and may be conducted by the State Office of Administrative Hearings (SOAH).
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 24, 2022.
TRD-202202376
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
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 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, 156.104, and 157.0024.
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 24, 2022.
TRD-202202378
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rules are adopted under the authority of: Finance Code §156.102(a), authorizing the commission to adopt and enforce rules necessary for the intent of or to ensure compliance with Finance Code Chapter 156, the Residential Mortgage Loan Company Licensing Act; and Finance Code §156.102(b-1), authorizing the commission to adopt rules to promote the fair and orderly administration of the recovery fund administered by the department's commissioner under Finance Code Chapter 156, Subchapter F
The adopted rules affect the statutes contained in Finance Code Chapter 156.
§51.300.Purpose and Applicability.
The rules contained in 7 TAC Chapter 51, Subchapter D govern the Commissioner's administration of the recovery fund the Commissioner is required to establish, administer and maintain in accordance Finance Code §13.016 and Chapter 156, Subchapter F.
§51.301.Definitions.
The following terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.
(1) "Application" means a request, in any form, for an offer (or a response to a solicitation for an offer) of residential mortgage loan terms, and the information about the mortgage applicant that is customary or necessary in a decision on whether to make such an offer, including, but not limited to, a mortgage applicant's name, income, social security number to obtain a credit report, property address, an estimate of the value of the real estate, and/or the mortgage loan amount.
(2) "Claimant" means a mortgage applicant making or seeking to make a claim on the recovery fund in accordance with Finance Code §156.504.
(3) "Commissioner" means the Savings and Mortgage Lending Commissioner appointed under Finance Code Chapter 13.
(4) "Department" means the Department of Savings and Mortgage Lending.
(5) "Mortgage applicant" means an applicant for a residential mortgage loan or a person who is solicited (or contacts an originator in response to a solicitation) to obtain a residential mortgage loan, and includes a person who has not completed or started completing a formal loan application on the appropriate form (e.g., Fannie Mae's Form 1003 Uniform Residential Loan Application), but has submitted financial information constituting an application as provided by paragraph (1) of this section.
(6) "Originator" has the meaning assigned by Finance Code §180.002 in defining the term "residential mortgage loan originator."
(7) "Recovery fund" means the fund the Commissioner is required to establish, administer, and maintain in accordance with Finance Code §13.016 and Chapter 156, Subchapter F.
(8) "Residential mortgage loan" has the meaning assigned by Finance Code §180.002 and includes new loans and renewals, extensions, modifications, and rearrangements of such loans. The term does not include a loan which is secured by a structure that is suitable for occupancy as a dwelling, but is used for a commercial purpose such as a professional office, salon, or other non-residential use, and is not used as residence.
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 24, 2022.
TRD-202202379
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rules are adopted under the authority of: Finance Code §156.102(a), authorizing the commission to adopt and enforce rules necessary for the intent of or to ensure compliance with Finance Code Chapter 156, the Residential Mortgage Loan Company Licensing Act; and Finance Code §156.556, authorizing the commission to adopt rules to administer Finance Code Chapter 156, Subchapter G, Mortgage Grant Fund, including rules to: (i) ensure that a grant awarded from the mortgage grant fund, administered by the department's commissioner under Finance Code Chapter G (mortgage grant fund), is used for a public purpose; and (ii) provide a means of recovering money awarded from the mortgage grant fund that is not used for a public purpose.
The adopted rules affect the statutes contained in Finance Code Chapter 156.
§51.400.Purpose and Applicability.
The rules contained in 7 TAC Chapter 51, Subchapter E govern the Commissioner's administration of the Mortgage Grant Fund as provided by Finance Code Chapter 156, Subchapter G other than claims made against the Mortgage Grant Fund in accordance with Finance Code §156.555 which are governed by the rules contained in 7 TAC Chapter 51, Subchapter F (relating to Mortgage Grant Fund: Recovery Claims for Unlicensed Activity).
§51.401.Definitions.
The following terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.
(1) "Auxiliary mortgage loan activity company" has the meaning assigned by Finance Code §156.002.
(2) "Commissioner" means the Savings and Mortgage Lending Commissioner appointed under Finance Code Chapter 13.
(3) "Department" means the Department of Savings and Mortgage Lending.
(4) "Finance Commission" means the Finance Commission of Texas.
(5) "Grant Coordinator" means the individual appointed as the Grant Coordinator for purposes of §51.403 of this title (relating to Grant Coordinator).
(6) "Mortgage Grant Advisory Committee" or "MGAC" means the Mortgage Grant Advisory Committee formed to advise the Commissioner concerning administration of the fund, as provided by §51.404 of this title (relating to Mortgage Grant Advisory Committee).
(7) "Mortgage Grant Administration Manual" means the manual created by the Commissioner to reflect the various policies and procedures governing administration of the Mortgage Grant Fund grant program as provided by §51.402 of this title (relating to Commissioner as Manager).
(8) "Mortgage Grant Fund" or "fund" means the fund the Commissioner is required to establish, administer, and maintain in accordance with Finance Code Chapter 156, Subchapter G.
§51.403.Grant Coordinator.
The Commissioner may appoint an employee of the Department to serve as grant coordinator to assist the Commissioner in discharging his or her duties related to the fund. The Grant Coordinator serves under the direction of the Commissioner and acts as liaison between grantees and the Mortgage Grant Advisory Committee. The Commissioner may delegate any authority of the Commissioner to act as manager of the fund to the Grant Coordinator, including any specific duties listed under Finance Code §156.553 except the authority to appear at hearings or judicial proceedings related to the fund.
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 24, 2022.
TRD-202202380
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rules are adopted under the authority of: Finance Code §156.102(a), authorizing the commission to adopt and enforce rules necessary for the intent of or to ensure compliance with Finance Code Chapter 156, the Residential Mortgage Loan Company Licensing Act; and Finance Code §156.556, authorizing the commission to adopt rules to administer Finance Code Chapter 156, Subchapter G, Mortgage Grant Fund, including rules to: (i) ensure that a grant awarded from the mortgage grant fund, administered by the department's commissioner under Finance Code Chapter G (mortgage grant fund), is used for a public purpose; and (ii) provide a means of recovering money awarded from the mortgage grant fund that is not used for a public purpose.
The adopted rules affect the statutes contained in Finance Code Chapter 156.
§51.500.Purpose and Applicability.
The rules contained in 7 TAC Chapter 51, subchapter F govern the Commissioner's administration of Finance Code §156.555, allowing for claims to be made against the 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 who did not hold the required license issued under Finance Code Chapter 157.
§51.501.Definitions.
The following terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.
(1) "Application" means a request, in any form, for an offer (or a response to a solicitation for an offer) of residential mortgage loan terms, and the information about the mortgage applicant that is customary or necessary in a decision on whether to make such an offer, including, but not limited to, a mortgage applicant's name, income, social security number to obtain a credit report, property address, an estimate of the value of the real estate, and/or the mortgage loan amount.
(2) "Claimant" means a mortgage applicant making or seeking to make a claim on the Mortgage Grant Fund in accordance with Finance Code §156.555.
(3) "Commissioner" means the Savings and Mortgage Lending Commissioner appointed under Finance Code Chapter 13.
(4) "Department" means the Department of Savings and Mortgage Lending.
(5) "Mortgage applicant" means an applicant for a residential mortgage loan or a person who is solicited (or contacts an originator or an individual acting or attempting to act in the capacity of an originator in response to a solicitation) to obtain a residential mortgage loan, and includes a person who has not completed or started completing a formal loan application on the appropriate form (e.g., Fannie Mae's Form 1003 Uniform Residential Loan Application), but has submitted financial information constituting an application as provided by paragraph (1) of this section.
(6) "Mortgage Grant Fund" means the fund the Commissioner is required to establish, administer, and maintain in accordance with Finance Code Chapter 156, Subchapter G.
(7) "Originator" has the meaning assigned by Finance Code §180.002 in defining the term "residential mortgage loan originator."
(8) "Recovery fund" means the fund the Commissioner is required to establish, administer, and maintain in accordance with Finance Code §13.016 and Finance Code Chapter 56, Subchapter F.
(9) "Residential mortgage loan" has the meaning assigned by Finance Code §180.002 and includes new loans and renewals, extensions, modifications, and rearrangements of such loans. The term does not include a loan which is secured by a structure that is suitable for occupancy as a dwelling, but is used for a commercial purpose such as a professional office, salon, or other non-residential use, and is not used as residence.
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 24, 2022.
TRD-202202388
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (department), adopts the repeal of all preexisting rules in 7 TAC Chapter 52, as follows: §§52.10 - 52.13, 52.20, 52.30, 52.100 - 52.104, 52.200 - 52.205, and 52.300 - 52.306. The commission further adopts new rules in 7 TAC Chapter 52, as follows: §§52.1 - 52.15. The commission's proposal was published in the May 6, 2022, issue of the Texas Register (47 TexReg 2631). The rules are adopted without changes to the proposed text as published in the Texas Register and will not be republished.
Explanation of and Justification for the Rules
Changes Concerning the Relocation (Swapping) of 7 TAC Chapters 51 and 52
The department's preexisting rules in 7 TAC Chapters 51, 53, 57, 61, 64, 65, 67, 69, 71, and 73 implement Finance Code Title 3, Subtitle B, Savings and Loan Associations, and affect savings and loan associations regulated by the department. The department's preexisting rules in 7 TAC Chapter 52, Department Administration, concern the administrative processes and procedures of the Department, and are therefore located among the rule chapters concerning savings and loan associations which may tend to create confusion for the reader. The department further asserts that 7 TAC Chapter 51 - the first rule chapter assigned to the department - is a more appropriate chapter for the department's rules concerning its administrative processes and procedures to reside. As a result, the department has determined it should relocate the preexisting rules in 7 TAC Chapters 51 and 52 by essentially swapping the rules in such chapters. Specifically, the adopted rules (i) repeal the preexisting rules in 7 TAC Chapter 52 and insert new rules largely patterned after the preexisting rules in 7 TAC Chapter 51; and (ii) rename 7 TAC Chapter 52 to reflect the new rules inserted in such chapter.
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 for the rules recited a deadline of 30 days to receive public comments, or June 5, 2022. A public hearing in accordance with Government Code §2001.029 was not required. No comments were received.
Statutory Authority
The rules are adopted under the authority of: Finance Code §11.302(a), authorizing the commission to adopt rules applicable to state savings associations (savings and loan associations); Finance Code §62.001, authorizing the commission to adopt rules concerning the information required in an application for a savings and loan association charter; and Finance Code §66.002(3), authorizing the commission to adopt rules concerning the procedures for processing, hearing, and deciding applications filed with the department's commissioner relating to the operation of a savings and loan association.
The adopted rules affect the statutes contained in Finance Code Title 3, Subtitle B.
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 24, 2022.
TRD-202202381
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
SUBCHAPTER A. COMPLAINTS
Statutory Authority
The rule repeals 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.
The adopted rule repeals affect the statutes contained 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 24, 2022.
TRD-202202382
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rule repeal 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.
The adopted rule repeal affects the statutes contained 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 24, 2022.
TRD-202202383
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rule repeal 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.
The adopted rule repeal affects the statutes contained in Finance Code §§13.018, 156.104, and 157.0024.
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 24, 2022.
TRD-202202384
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rule repeals 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.
The adopted rule repeals affect the statutes contained in Finance Code Chapter 156.
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 24, 2022.
TRD-202202385
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rule repeals 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.
The adopted rule repeals affect the statutes contained in Finance Code Chapter 156.
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 24, 2022.
TRD-202202386
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
Statutory Authority
The rule repeals 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.
The adopted rule repeals affect the statutes contained in Finance Code Chapter 156.
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 24, 2022.
TRD-202202387
Iain A. Berry
Deputy General Counsel
Department of Savings and Mortgage Lending
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 475-1535
CHAPTER 82. ADMINISTRATION
The Finance Commission of Texas (commission) adopts amendments to §82.2 (relating to Public Information Requests; Charges) in 7 TAC, Chapter 82, concerning Administration.
The commission adopts the amendments to §82.2 without changes to the proposed text as published in the May 6, 2022, issue of the Texas Register (47 TexReg 2635). The rule will not be republished.
The commission received no official comments on the proposed amendments.
In general, the purpose of rule changes to 7 TAC Chapter 82 are to implement recent legislative amendments to Texas Transportation Code, Chapter 730, and to provide clarity to public information requestors about the agency's response to requests for motor vehicle records.
In 2021, the Texas Legislature enacted SB 15 (the Texas Consumer Privacy Act Phase I). SB 15 amended Texas Transportation Code, Chapter 730 (the Motor Vehicle Records Disclosure Act), which governs the disclosure of motor vehicle records by state agencies. In particular, SB 15 added new Texas Transportation Code, §730.0121, stating: "An agency by rule shall require a requestor to delete from the requestor's records personal information received from the agency under this chapter if the requestor becomes aware that the requestor is not an authorized recipient of that information."
The adopted amendments to §82.2 implement SB 15 and describe how the OCCC handles requests for motor vehicle records. In subsection (a), amendments add definitions of "Motor vehicle record" and "Personal information in a motor vehicle record." These definitions are consistent with existing definitions in Texas Transportation Code, Chapter 730, and are intended to provide clarity to public information requestors. The amendments also add a new subsection (g) to §82.2 describing requests for motor vehicle records. The new subsection explains that personal information in a motor vehicle record may be disclosed only to an authorized person described by Texas Transportation Code, Chapter 730. The new subsection also requires a requestor who learns that the requestor is not an authorized recipient of personal information in a motor vehicle record to delete the information from the requestor's records. The new subsection ensures consistency with new Texas Transportation Code, §730.0121 (as added by SB 15).
The rule changes are adopted under Texas Transportation Code, §730.014 and §730.0121, which authorize state agencies to adopt rules to implement and administer requirements for the disclosure of motor vehicle records. In addition, Texas Government Code, §552.230 authorizes governmental bodies to adopt reasonable rules of procedure under which public information may be inspected and copied.
The statutory provisions affected by the adoption are contained in Texas Transportation Code, Chapter 730.
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 24, 2022.
TRD-202202356
Audrey Spalding
Assistant General Counsel
Office of Consumer Credit Commissioner
Effective date: July 14, 2022
Proposal publication date: May 6, 2022
For further information, please call: (512) 936-7659
CHAPTER 153. HOME EQUITY LENDING
The Finance Commission of Texas and the Texas Credit Union Commission ("commissions") adopts amendments to §153.1 (relating to Definitions) in 7 TAC, Chapter 153, concerning Home EquityLending.
The commissions adopt the amendments to §153.1 without changes to the proposed text as published in the March 25, 2022, issue of the Texas Register (47 TexReg 1556). The rule will not be republished.
7 TAC Chapter 153 contains the commissions' interpretations of the home equity lending provisions of Texas Constitution, Article XVI, Section 50 ("Section 50"). In general, the purposes of the rule changes to 7 TAC Chapter 153 are: (1) to amend the definition of "business day" to ensure that the definition appropriately excludes legal public holidays, reflects the common understanding of "business day" in the context of mortgage loan disclosures, and is consistent with similar definitions under federal law, and (2) to make technical corrections to ensure consistency in the text of other definitions.
The interpretations in 7 TAC Chapter 153 are administered by the Joint Financial Regulatory Agencies ("agencies"), consisting of the Texas Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and Texas Credit Union Department. The agencies distributed an early precomment draft of proposed changes to interested stakeholders for review, and then held an online webinar regarding the proposed changes. The agencies received informal verbal feedback from stakeholders during the webinar, and received one written precomment on the rule text draft. The agencies appreciate the thoughtful input provided by stakeholders.
The adoption amends the definition of "business day" in §153.1(2). The term "business day" is used in Section 50(a)(6)(M)(ii) and Section 50(f)(2)(D). Under Section 50(a)(6)(M)(ii), the lender must provide a preclosing disclosure to the owner at least one business day before the closing of a home equity loan. Under Section 50(f)(2)(D), when a lender refinances a home equity loan into a non-home-equity loan, the lender must provide a refinance disclosure within three business days after the homeowner submits a loan application.
The adopted amendments to §153.1(2) contain three definitions of "business day." First, for purposes of 7 TAC §153.13 (relating Preclosing Disclosures: Section 50(a)(6)(M)(ii)), the adoption states that a business day is a calendar day except for Sunday or a legal public holiday described by federal law. This is similar to the previous definition of "business day" in §153.1(2), but adds Juneteenth National Independence Day as a listed holiday. In 2021, federal law was amended to add Juneteenth as a legal public holiday. Juneteenth National Independence Day Act, Pub. L. No. 117-17, 135 Stat. 287 (2021) (codified at 5 U.S.C. §6103(a)). The adoption also adds a reference to the federal law listing legal public holidays at 5 U.S.C. §6103(a) (in case this section is amended to describe additional holidays in the future). Second, for purposes of 7 TAC §153.45 (relating to Refinance of an Equity Loan: Section 50(f)), the adoption amends §153.1(2) to state that a business day is a day on which the lender's offices are open to the public for carrying on substantially all of its business functions. Third, for purposes of 7 TAC §153.25 (relating to Right of Rescission: Section 50(a)(6)(Q)(viii)), the adoption states that a business day has the meaning provided by Regulation Z, 12 C.F.R. §1026.2(a)(6) that applies for purposes of rescission.
These definitions are based on the definitions of "business day" that currently apply to mortgage disclosures under federal law, as well as regulatory commentary on those definitions. Federal Regulation Z, 12 C.F.R. part 1026, requires a lender to provide several disclosures to a borrower in connection with a mortgage loan. The two definitions of "business day" are listed in Regulation Z, 12 C.F.R. §1026.2(a)(6). One of these definitions provides that a business day is a day on which the creditor's offices are open to the public for carrying on substantially all of its business functions. The other definition provides that a business day is any calendar day except Sundays and legal public holidays listed in federal law. In its official commentary to Regulation Z, the Consumer Financial Protection Bureau (CFPB) refers to these two definitions as the "business function test" and the "more precise rule," respectively. Official Interpretations of Regulation Z, 12 C.F.R. pt. 1026, supp. I, para. 2(a)(6). Each definition applies to a different set of deadlines and timing requirements under Regulation Z. For example, the business function test applies for purposes of the requirement to provide an early disclosure within three business days after a creditor receives the consumer's application (as provided by 12 C.F.R. §1026.18(e)(1)(iii)(A)). The more precise rule applies for purposes of the requirement to provide final disclosures at least three days before closing (as provided by 12 C.F.R. §1026.18(f)(1)(ii)(A)), as well as the consumer's right to rescind certain mortgage loans within three business days after consummation (as provided by 12 C.F.R. §1026.23(a)(2)). The CFPB analyzed how these definitions apply to Juneteenth in an interpretive rule issued in August 2021. Consumer Financial Protection Bureau, Impact of the 2021 Juneteenth Holiday on Certain Closed-End Mortgage Requirements, 86 Fed. Reg. 44,267 (2021).
The changes to the definition of "business day" respond to an informal comment that the agencies received from an industry attorney in August 2021. This attorney recommended adding a reference to Juneteenth in §153.1(2), and recommended consistency with Regulation Z's definitions of "business day."
During the online webinar on the precomment draft of the amendments, a second industry attorney expressed general support for the amendments, agreeing that the amendments reflected her members' understanding of what a business day is. This attorney requested additional clarity regarding observed holidays (such as holidays observed on the Monday following a holiday). In response to this verbal comment, the adopted amendment at §153.1(2)(A) includes guidance on observed holidays, based on the CFPB's commentary to Regulation Z, 12 C.F.R. pt. 1026, supp. I, para. 2(a)(6)1.
A third industry attorney (who works for a company that prepares closing documents for Texas mortgage lenders) submitted a written precomment expressing general support for the amendments. This attorney stated: "We believe the proposed amendments are a positive step in aligning the Texas and federal business day definitions. . . . We believe the draft amendments are appropriate and consistent with the Texas Constitution. In the context of mortgage loan disclosures, the term 'business day' has multiple meanings that are set out in Regulation Z. The term obviously has differing meanings depending on the context and type of disclosure . . . ." The attorney explained that the proposed amendments would lead to fewer mistakes that may result from lenders manually providing Texas disclosures that do not align with their automated loan origination systems. The attorney also recommended replacing the list of holidays in §153.1(2)(A) with a single reference to federal law. The agencies considered this approach, but believe that the list of holidays helps the reader quickly understand the definition without having to refer to a separate legal source.
Based on these comments from stakeholders, the agencies believe that the adopted definitions reflect the common understanding of the term "business day" in the context of disclosures for mortgage loans. The definitions also have practical benefits. For example, by aligning the definition in §153.1(2) with Regulation Z, the adoption allows a lender to send the constitutionally required refinance disclosure on the same date it sends the federally required early disclosure. Also, the adoption allows a lender additional time to provide the refinance disclosure if its offices are closed for business functions due to an emergency (such as a pandemic or storm).
Other changes throughout §153.1 make technical corrections to ensure consistency of formatting and capitalization. The changes to capitalization are based on feedback from staff of the Texas Register.
The commissions received no official comments on the proposal.
The rule changes are adopted under Texas Finance Code, §11.308 and §15.413, which authorize the commissions to issue interpretations of Texas Constitution, Article XVI, §50(a)(5) - (7), (e) - (p), (t), and (u), subject to Texas Government Code, Chapter 2001.
The constitutional provisions affected by the adoption are contained in Texas Constitution, Article XVI, §50. No statute is affected by this adoption.
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 24, 2022.
TRD-202202352
Matthew Nance
Deputy General Counsel, Office of Consumer Credit Commissioner
Joint Financial Regulatory Agencies
Effective date: July 14, 2022
Proposal publication date: March 25, 2022
For further information, please call: (512) 936-7660