TITLE 7. BANKING AND SECURITIES

PART 2. TEXAS DEPARTMENT OF BANKING

CHAPTER 33. MONEY SERVICES BUSINESSES

7 TAC §§33.7, 33.23, 33.27, 33.33, 33.37, 33.51, 33.54

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), adopts amendments concerning §33.7, how to obtain an exemption from licensing related to exchanging currency in connection with retail, wholesale or service transactions; §33.23, additional provisions that apply to permissible investments; §33.27, fees to obtain and maintain a license; §33.33, receipts issued relating to currency exchange transactions; §33.37, receipts issued relating to money transmission transactions; §33.51, providing information to customers on how to file a complaint; and, §33.54, an exemption from licensure for securities dealers and agents. These amendments are adopted without changes to the proposed text as published in the March 4, 2022, issue of the Texas Register (47 TexReg 1043). The amended rules will not be republished.

The amended rules arise from rule review conducted pursuant to Texas Government Code §2001.039 and provide clarity, correct statutory citations and certain scrivener's errors, and maintain consistent formatting within the chapter.

The department received no comments regarding the proposed amendments. Notice of the intent to amend §33.27 was submitted to the Regulatory Compliance Division of the Office of the Governor (Division) as the rule has the potential to affect market competition. The Division approved the amendment without further revision.

The amendments are adopted pursuant to Finance Code, §151.102, which authorizes the commission to adopt rules to administer and enforce Texas Finance Code, Chapter 151.

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 April 22, 2022.

TRD-202201567

Catherine Reyer

General Counsel

Texas Department of Banking

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 475-1301


PART 4. DEPARTMENT OF SAVINGS AND MORTGAGE LENDING

CHAPTER 80. RESIDENTIAL MORTGAGE LOAN COMPANIES

SUBCHAPTER C. DUTIES AND RESPONSIBILITIES

The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (department), adopts the repeal of 7 TAC §80.204, Books and Records. The commission further adopts a new rule concerning the same or similar subject matter at 7 TAC §80.204, Books and Records. The commission's proposal was published in the March 11, 2022, issue the Texas Register (47 TexReg 1145). 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

The rules in 7 TAC Chapter 80 implement Finance Code Chapter 156, Residential Mortgage Loan Companies (Chapter 156). The department, under Chapter 156, licenses residential mortgage loan companies that originate residential mortgage loans (a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other security interest on a dwelling or residential real estate) made to consumers (for purposes of the adopted rules, "residential mortgage loan company" has the meaning assigned by Finance Code §156.002; mortgage company). A mortgage company acts by and through one or more individuals licensed by the department as a residential mortgage loan originator under Finance Code Chapters 157 and 180 (originator).

Books and Recordkeeping Changes

Pursuant to Finance Code §156.301(a), the department's commissioner (commissioner) may conduct inspections (including examinations) of a mortgage company or an originator sponsored by a mortgage company (sponsored originator) to determine compliance with the requirements of Chapter 156 and the rules adopted thereunder. Inspections include inspection of the mortgage company's or sponsored originator's "books, records, documents, operations, and facilities . . . and access to any documents required under rules adopted under [Chapter 156]" (Finance Code §156.301(a)). Pursuant to Finance Code §156.301(b), the commissioner, upon receipt of a signed written complaint against a mortgage company, "shall investigate the actions and records" of the mortgage company or its sponsored originator. Pursuant to Finance Code §156.301(e), the commission "by rule shall . . . determine the information and records to which the commissioner may demand access during an inspection or an investigation." Pursuant to Finance Code §156.102(c), the commission "may adopt rules regarding books and records that a [mortgage company] is required to keep, including the location at which the books and records must be kept." Preexisting §80.204 establishes requirements concerning the books and records that a mortgage company must maintain. The adopted rules: (i) establish a new requirement concerning the location where required records must be maintained; (ii) clarify preexisting requirements concerning the mortgage transaction log a mortgage company is required to maintain under preexisting §80.204, with respect to the description of the purpose for the mortgage loan, and the owner's or prospective owner's intended occupancy of the real estate secured or designed to be secured by the mortgage loan; (iii) expand a preexisting requirement under preexisting §80.204 by requiring that the mortgage transaction log include information concerning the type of lien anticipated after consummation of the mortgage loan (first lien, second lien, or wrap mortgage); and (iv) clarify preexisting requirements concerning the books and records that a mortgage company must maintain under preexisting §80.204 by specifically identifying certain records a mortgage company is required to maintain to comply with the requirements of applicable state law (other than the adopted rules; including in connection with wrap mortgage loans made in accordance with Finance Code Chapter 159, Wrap Mortgage Loan Financing, which became effective on January 1, 2022), and federal law.

Other Modernization and Update Changes.

The adopted rules make changes to modernize and update the rule including: removing unnecessary or duplicative provisions; updating terminology; and reorganizing and restating the requirements of preexisting §80.204 for clarity and to improve readability, including the insertion of explanatory headings throughout the rule.

Summary of Public Comments

Publication of the commission's proposal for the rules recited a deadline of 30 days to receive public comments, or April 10, 2022. A public hearing in accordance with Government Code §2001.029 was not required. No comments were received.

7 TAC §80.204

Statutory Authority

The rule repeal is adopted under the authority of Finance Code §156.102(a) and (a-1), 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, and as required to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (federal SAFE Act; 12 U.S.C. §5101 et seq.).

The adopted rule repeal affects 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 April 24, 2022.

TRD-202201596

Iain A. Berry

Deputy General Counsel

Department of Savings and Mortgage Lending

Effective date: May 14, 2022

Proposal publication date: March 11, 2022

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


7 TAC §80.204

Statutory Authority

The rule is adopted under the authority of: Finance Code §156.102(a) and (a-1), 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, and as required to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (federal SAFE Act; 12 U.S.C. §5101 et seq.); and Finance Code §156.102(c), authorizing the commission to adopt rules regarding books and records that a person licensed under Finance Code 156 is required to keep, including the location at which the books and records must be kept. The rule is also adopted under the authority of, and to implement, Finance Code §156.301.

The adopted rule affects 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 April 24, 2022.

TRD-202201597

Iain A. Berry

Deputy General Counsel

Department of Savings and Mortgage Lending

Effective date: May 14, 2022

Proposal publication date: March 11, 2022

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


CHAPTER 81. MORTGAGE BANKERS AND RESIDENTIAL MORTGAGE LOAN ORIGINATORS

SUBCHAPTER C. DUTIES AND RESPONSIBILITIES

The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (department), adopts the repeal 7 TAC §81.204, Books and Records. The commission further adopts a new rule concerning the same or similar subject matter at 7 TAC §81.204, Books and Records. The commission's proposal was published in the March 11, 2022, issue the Texas Register (47 TexReg 1150). 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

The rules under 7 TAC Chapter 81 implement Finance Code Chapter 157, Mortgage Bankers and Residential Mortgage Loan Originators (Chapter 157), and Chapter 180, Residential Mortgage Loan Originators (Texas SAFE Act), with respect to persons regulated under Chapter 157. The department, under Chapter 157, registers mortgage bankers (for purposes of the adopted rules, "mortgage banker" has the meaning assigned by Finance Code §157.002). Under Chapter 157 and the Texas SAFE Act the department also licenses individuals to act a residential mortgage loan originator (originator). Mortgage bankers and originators (acting on behalf of either a mortgage banker or a residential mortgage loan company licensed by the department under Finance Code Chapter 156 (mortgage company)) originate residential mortgage loans (a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other security interest on a dwelling or residential real estate) made to consumers.

Books and Recordkeeping Changes

With respect to originators, pursuant to Finance Code §157.021(a), the department's commissioner (commissioner) may conduct inspections (including examinations) of an originator to determine compliance with Chapter 157 and the Texas SAFE Act, or the rules of the department adopted thereunder. Inspections include inspection of the originator's "books, records, documents, operations, and facilities" (Finance Code §157.021(a)). Pursuant to Finance Code §157.021(b), the commissioner, upon receipt of a signed written complaint against an originator, "shall investigate the actions and records" of the originator. Pursuant to Finance Code §157.021(e), the commission "by rule shall . . . determine the information and records [of the originator] to which the commissioner may demand access during an inspection or an investigation." Pursuant to Finance Code §157.02015(b), the commission "may adopt rules regarding books and records that [an originator] is required to keep, including the location at which the books and records must be kept." With respect to mortgage bankers, pursuant to Finance Code §157.0022, the commissioner "may request documentary and other evidence [from a mortgage banker] considered by the commissioner as necessary to effectively evaluate [a consumer] complaint, including correspondence, loan documents, and disclosures . . . [and a] mortgage banker shall promptly provide any evidence requested by the commissioner." In conducting an inspection of an originator the commissioner may also "request the assistance and cooperation of the sponsoring mortgage banker in providing needed documents and records" (Finance Code §157.021(a)). Preexisting §81.204 establishes requirements concerning the books and records that a mortgage banker and an originator must maintain. The adopted rules: (i) establish a new requirement concerning the location where required records must be maintained; (ii) clarify preexisting requirements concerning the mortgage transaction log an originator is required to maintain under preexisting §81.204, with respect to the description of the purpose for the mortgage loan, and the owner's or prospective owner's intended occupancy of the real estate secured or designed to be secured by the mortgage loan; (iii) expand a preexisting requirement under preexisting §81.204 by requiring that the mortgage transaction log include information concerning the type of lien anticipated after consummation of the mortgage loan (first lien, second lien, or wrap mortgage); (iv) clarify preexisting requirements concerning the books and records that an originator must maintain under preexisting §81.204 by specifically identifying certain records an originator is required to maintain to comply with the requirements of applicable state law (other than the adopted rules; including in connection with wrap mortgage loans made in accordance with Finance Code Chapter 159, Wrap Mortgage Loan Financing, which became effective on January 1, 2022), and federal law; and (v) establish a new requirement for a mortgage banker to maintain records concerning its general business operations, and simultaneously repeal such requirement as it pertains to originators under preexisting §81.204 as being inapplicable to an originator when considering that, in practice, such records are actually maintained in the ordinary course of business by the mortgage banker or mortgage company sponsoring the originator.

Other Modernization and Update Changes.

The adopted rules make changes to modernize and update the rule including: removing unnecessary or duplicative provisions; updating terminology; and reorganizing and restating the requirements of preexisting §81.204 for clarity and to improve readability, including the insertion of explanatory headings throughout the rule.

Summary of Public Comments

Publication of the commission's proposal for the rules recited a deadline of 30 days to receive public comments, or April 10, 2022. A public hearing in accordance with Government Code §2001.029 was not required. No comments were received.

7 TAC §81.204

Statutory Authority

The rule repeal is adopted under the authority of Finance Code §157.0023, authorizing the commission to adopt rules necessary to implement or fulfill the purpose of Finance Code Chapter 157, the Mortgage Banker Registration and Residential Mortgage Loan Originator License Act, and as required to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (federal SAFE Act; 12 U.S.C. §5101 et seq.).

The adopted rule repeal affects the statutes contained in Finance Code Chapters 156 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 April 24, 2022.

TRD-202201598

Iain A. Berry

Deputy General Counsel

Department of Savings and Mortgage Lending

Effective date: May 14, 2022

Proposal publication date: March 11, 2022

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


7 TAC §81.204

Statutory Authority

The rule is adopted under the authority of: Finance Code §157.0023(a) and (c), authorizing the commission to adopt rules necessary to implement or fulfill the purpose of Finance Code Chapter 157, the Mortgage Banker Registration and Residential Mortgage Loan Originator License Act, and as required to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (federal SAFE Act; 12 U.S.C. §5101 et seq.); and Finance Code §157.02015(b), authorizing the commission to adopt rules regarding books and records that a person licensed under Finance Chapter 157 is required to keep, including the location at which the books and records must be kept. The rule is also adopted under the authority of, and to implement, Finance Code §§157.0022(b), 157.003(b)(6), and 157.021.

The adopted rule affects the statutes contained in Finance Code Chapters 156 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 April 24, 2022.

TRD-202201599

Iain A. Berry

Deputy General Counsel

Department of Savings and Mortgage Lending

Effective date: May 14, 2022

Proposal publication date: March 11, 2022

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


PART 5. OFFICE OF CONSUMER CREDIT COMMISSIONER

CHAPTER 83. REGULATED LENDERS AND CREDIT ACCESS BUSINESSES

SUBCHAPTER A. RULES FOR REGULATED LENDERS

The Finance Commission of Texas (commission) adopts amendments to §83.101 (relating to Purpose and Scope), §83.205 (relating to Loans by Mail and Internet), §83.301 (relating to Definitions), §83.308 (relating to Relocation), §83.404 (relating to Denial, Suspension, or Revocation Based on Criminal History), §83.504 (relating to Default Charges), §83.602 (relating to Default Charges), §83.703 (relating to Default Charges), and §83.834 (relating to Unclaimed Funds) in 7 TAC, Chapter 83, Subchapter A, concerning Rules for Regulated Lenders.

The commission adopts the amendments to §83.101, §83.301, §83.308, §83.504, §83.602, §83.703, and §83.834 without changes to the proposed text as published in the March 4, 2022, issue of the Texas Register (47 TexReg 1045). These rules will not be republished.

The commission adopts the amendments to §83.205 and §83.404 with changes to the proposed text as published in the March 4, 2022, issue of the Texas Register (47 TexReg 1045). These rules will be republished.

The rules in 7 TAC Chapter 83, Subchapter A govern regulated lenders. In general, the purpose of the rule changes to 7 TAC Chapter 83, Subchapter A is to implement changes resulting from the commission's review of the subchapter under Texas Government Code, §2001.039. In November 2021, the OCCC issued an advance notice of rule review, seeking informal feedback on the rule review. Notice of the review of 7 TAC Chapter 83, Subchapter A was published in the Texas Register on December 3, 2021, (46 TexReg 8261). The commission received two official comments in response to that notice. Both of these official comments deal with whether the commission should amend the maximum administrative fee in §83.503 (relating to Administrative Fee). The OCCC intends to study this issue further.

The OCCC distributed an early precomment draft of proposed changes to interested stakeholders for review, and then held a stakeholder webinar regarding the rule changes. The OCCC received five precomments on the rule text draft. The five precomments deal with whether the commission should amend the maximum administrative fee in §83.503. The OCCC intends to study this issue further.

Amendments to §83.101 ensure that language about the scope of the rules is consistent with amendments in HB 1442, which the Texas Legislature passed in 2019. HB 1442 amended Texas Finance Code, §342.005 to state that Chapter 342 applies to a consumer loan made to a person who is located in Texas at the time the loan is made. To be consistent with this statutory amendment, the adoption adds the phrase "to a person located in Texas at the time the loan is made" in subsection (b)(1)(B). The adoption also removes the phrase "or secured by a lien on real estate" in subsection (b)(1)(C)(i). This phrase is unnecessary, because subsection (b)(1)(C)(ii) specifies that the rules apply to a secondary mortgage loan, which is the type of real-estate-secured loan that is subject to Chapter 342 (and therefore subject to the rules).

Amendments to §83.205 ensure that language about online loans is consistent with amendments in HB 1442 (2019). HB 1442 added the words "or online" to Texas Finance Code, §342.053(b), which deals with loans by mail. As a result of the amendment, Texas Finance Code, §342.053(b) now states: "A lender may make, negotiate, arrange, and collect loans by mail or online from a licensed office." This adoption adds the words "or online" in §83.205(b) and (c), to use wording that is consistent with the statute. The adoption removes previous subsection (d), which provided that an internet loan is considered a "loan by mail," because this language is no longer be necessary due to the other changes to §83.205. The adoption also amends the title of the section to replace "and Internet" with "or Online," to use wording that is consistent with the statute.

Since the proposal, a change has been made to add the phrase "or online" in the second sentence of §83.205(c), in order to ensure consistency with the changes described in the previous paragraph.

Amendments to §83.301 update the definition of "net assets." The amendment explains that debt may be subordinated to the net asset requirement under certain conditions. This ensures consistency with other OCCC rules regarding net assets. This also ensures consistency with Texas Attorney General Opinion No. DM-332 (1995).

Amendments to §83.308 relate to notifying debtors when a licensed lender relocates. Previously, §83.308(b) required licensees to mail a notice to all debtors before relocation of an office. An amendment to §83.308(b) explains that a licensee may send this notice by email in lieu of mail if the debtor has provided an email address to the licensee and has consented in writing to be contacted at the email address. The commission believes that this change will improve licensees' ability to use electronic communication to ensure compliance. This change responds to an informal comment that proposed revising this subsection to allow electronic notice.

Amendments to §83.404 relate to the OCCC's review of the criminal history of a regulated lender applicant or licensee. The OCCC is authorized to review criminal history of regulated lender applicants and licensees under Texas Occupations Code, Chapter 53; Texas Finance Code, §14.109; and Texas Government Code, §411.095. The amendments to §83.404 ensure consistency with HB 1342, which the Texas Legislature enacted in 2019. HB 1342 included the following changes in Texas Occupations Code, Chapter 53: (1) the bill repealed a provision that generally allowed denial, suspension, or revocation for any offense occurring in the five years preceding the application, (2) the bill added provisions requiring an agency to consider correlation between elements of a crime and the duties and responsibilities of the licensed occupation, as well as compliance with conditions of community supervision, parole, or mandatory supervision, and (3) the bill removed previous language specifying who could provide a letter of recommendation on behalf of an applicant. Amendments throughout subsections (c) and (f) of §83.404 implement these statutory changes from HB 1342. Other amendments to §83.404 include technical corrections, clarifying changes, and updates to citations.

Since the proposal, a change has been made to correct a citation in §83.404(d). In this subsection, an adopted amendment replaces "(f)(2)" with "(f)(1)." This technical correction is necessary because previous subsection (f)(1) is being deleted in order to implement statutory changes described in the previous paragraph.

Amendments to §83.504, §83.602, and §83.703 remove references to the Federal Reserve Board's Regulation AA. The Federal Reserve Board repealed this rule in 2016. 81 Fed. Reg. 8133 (Feb. 18, 2016). The amendments to §83.504, §83.602, and §83.703 maintain current references to the Federal Trade Commission's Credit Practices Rule, 16 C.F.R. §444.4, and therefore do not affect the current prohibition on pyramiding late charges.

Amendments to §83.834(d) make technical changes relating to the escheat of unclaimed funds. Amended text in this subsection (d) reflects that unclaimed funds are submitted to the "Unclaimed Property Division" of the Texas Comptroller of Public Accounts. Another amendment adds a reference to Texas Property Code, §74.301, in order to provide a more complete statutory reference for the requirement to pay unclaimed funds to the state after three years.

The commission received no official comments on the proposed amendments.

DIVISION 1. GENERAL PROVISIONS

7 TAC §83.101

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

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 April 22, 2022.

TRD-202201575

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 2. AUTHORIZED ACTIVITIES

7 TAC §83.205

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

§83.205.Loans by Mail or Online.

(a) Definitions. The words "make," "negotiate," "arrange," and "collect" as used in Texas Finance Code, §342.053(b) are to be construed according to the definitions contained in §83.204(a) of this title (relating to Multiple Licenses).

(b) Application. Any office, wherever located, making, negotiating, arranging, or collecting loans by mail or online must be licensed. For example, if a lender receives and reviews loan applications at one office, makes the loan decision at another office, funds the loan at a third, and collects past-due payments from another, all of these offices involved in lending by mail or online must be licensed. On the other hand, an office that merely receives, records, accounts for, and processes payments need not be licensed.

(c) Authorized lenders. The following entities with offices located outside of Texas may make loans by mail or online to Texas residents and are considered to meet the definition of authorized lender as contained in §83.102 of this title (relating to Definitions):

(1) a person who has obtained a regulated loan license from the OCCC;

(2) a bank, savings bank, savings and loan association, or credit union doing business under the laws of this state, another state, or the United States;

(3) a bank, savings bank, or savings and loan association chartered in another state and insured by the Federal Deposit Insurance Corporation; and

(4) a credit union chartered in another state and insured through the National Credit Union Share Insurance 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 April 22, 2022.

TRD-202201576

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 3. APPLICATION PROCEDURES

7 TAC §83.301, §83.308

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

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 April 22, 2022.

TRD-202201577

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 4. LICENSE

7 TAC §83.404

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

§83.404.Denial, Suspension, or Revocation Based on Criminal History.

(a) Criminal history record information. After an applicant submits a complete license application, including all required fingerprints, and pays the fees required by §83.310 of this title (relating to Fees), the OCCC will investigate the applicant and its principal parties. The OCCC will obtain criminal history record information from the Texas Department of Public Safety and the Federal Bureau of Investigation based on the applicant's fingerprint submission. The OCCC will continue to receive information on new criminal activity reported after the fingerprints have been initially processed.

(b) Disclosure of criminal history. The applicant must disclose all criminal history information required to file a complete application with the OCCC. Failure to provide any information required as part of the application or requested by the OCCC reflects negatively on the belief that the business will be operated lawfully and fairly. The OCCC may request additional criminal history information from the applicant, including the following:

(1) information about arrests, charges, indictments, and convictions of the applicant and its principal parties;

(2) reliable documents or testimony necessary to make a determination under subsection (c) of this section, including letters of recommendation from prosecution, law enforcement, and correctional authorities;

(3) proof that the applicant has maintained a record of steady employment, has supported the applicant's dependents, and has otherwise maintained a record of good conduct; and

(4) proof that all outstanding court costs, supervision fees, fines, and restitution as may have been ordered have been paid or are current.

(c) Crimes directly related to licensed occupation. The OCCC may deny a license application, or suspend or revoke a license, if the applicant or licensee has been convicted of an offense that directly relates to the duties and responsibilities of a licensee under Texas Finance Code, Chapter 342, as provided by Texas Occupations Code, §53.021(a)(1).

(1) Originating, acquiring, or servicing loans under Texas Finance Code, Chapter 342 involves or may involve making representations to consumers regarding the terms of the loan, receiving money from consumers, remitting money to third parties, maintaining accounts, repossessing property without a breach of the peace, maintaining goods that have been repossessed, collecting due amounts in a legal manner, and foreclosing on real property in compliance with state and federal law. Consequently, the following crimes are directly related to the duties and responsibilities of a licensee and may be grounds for denial, suspension, or revocation:

(A) theft;

(B) assault;

(C) any offense that involves misrepresentation, deceptive practices, or making a false or misleading statement (including fraud or forgery);

(D) any offense that involves breach of trust or other fiduciary duty;

(E) any criminal violation of a statute governing credit transactions or debt collection;

(F) failure to file a government report, filing a false government report, or tampering with a government record;

(G) any greater offense that includes an offense described in subparagraphs (A) - (F) of this paragraph as a lesser included offense;

(H) any offense that involves intent, attempt, aiding, solicitation, or conspiracy to commit an offense described in subparagraphs (A) - (G) of this paragraph.

(2) In determining whether a criminal offense directly relates to the duties and responsibilities of holding a license, the OCCC will consider the following factors, as specified in Texas Occupations Code, §53.022:

(A) the nature and seriousness of the crime;

(B) the relationship of the crime to the purposes for requiring a license to engage in the occupation;

(C) the extent to which a license might offer an opportunity to engage in further criminal activity of the same type as that in which the person previously had been involved;

(D) the relationship of the crime to the ability or capacity, or fitness required to perform the duties and discharge the responsibilities of a licensee; and

(E) any correlation between the elements of the crime and the duties and responsibilities of the licensed occupation.

(3) In determining whether a conviction for a crime renders an applicant or a licensee unfit to be a licensee, the OCCC will consider the following factors, as specified in Texas Occupations Code, §53.023:

(A) the extent and nature of the person's past criminal activity;

(B) the age of the person when the crime was committed;

(C) the amount of time that has elapsed since the person's last criminal activity;

(D) the conduct and work activity of the person before and after the criminal activity;

(E) evidence of the person's rehabilitation or rehabilitative effort while incarcerated or after release, or following the criminal activity if no time was served;

(F) evidence of the person's compliance with any conditions of community supervision, parole, or mandatory supervision; and

(G) evidence of the person's current circumstances relating to fitness to hold a license, which may include letters of recommendation.

(d) Crimes related to character and fitness. The OCCC may deny a license application if the OCCC does not find that the financial responsibility, experience, character, and general fitness of the applicant are sufficient to command the confidence of the public and warrant the belief that the business will be operated lawfully and fairly, as provided by Texas Finance Code, §342.104(a)(1). In conducting its review of character and fitness, the OCCC will consider the criminal history of the applicant and its principal parties. If the applicant or a principal party has been convicted of an offense described by subsections (c)(1) or (f)(1) of this section, this reflects negatively on an applicant's character and fitness. The OCCC may deny a license application based on other criminal history of the applicant or its principal parties if, when the application is considered as a whole, the agency does not find that the financial responsibility, experience, character, and general fitness of the applicant are sufficient to command the confidence of the public and warrant the belief that the business will be operated lawfully and fairly. The OCCC will, however, consider the factors identified in subsection (c)(2) - (3) of this section in its review of character and fitness.

(e) Revocation on imprisonment. A license will be revoked on the licensee's imprisonment following a felony conviction, felony community supervision revocation, revocation of parole, or revocation of mandatory supervision, as provided by Texas Occupations Code, §53.021(b).

(f) Other grounds for denial, suspension, or revocation. The OCCC may deny a license application, or suspend or revoke a license, based on any other ground authorized by statute, including the following:

(1) a conviction for an offense listed in Texas Code of Criminal Procedure, art. 42A.054 or art. 62.001(6), as provided by Texas Occupations Code, §53.021(a)(3) - (4);

(2) errors or incomplete information in the license application;

(3) a fact or condition that would have been grounds for denying the license application, and that either did not exist at the time of the application or the OCCC was unaware of at the time of application, as provided by Texas Finance Code, §342.156(3); and

(4) any other information warranting the belief that the business will not be operated lawfully and fairly, as provided by Texas Finance Code, §342.104(a)(1) and §342.156.

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 April 22, 2022.

TRD-202201578

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 5. INTEREST CHARGES ON LOANS

7 TAC §83.504

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

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 April 22, 2022.

TRD-202201579

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 6. ALTERNATE CHARGES FOR CONSUMER LOANS

7 TAC §83.602

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

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 April 22, 2022.

TRD-202201580

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 7. INTEREST AND OTHER CHARGES ON SECONDARY MORTGAGE LOANS

7 TAC §83.703

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

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 April 22, 2022.

TRD-202201581

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660


DIVISION 10. DUTIES AND AUTHORITY OF AUTHORIZED LENDERS

7 TAC §83.834

The rule changes are adopted under Texas Finance Code, §342.551, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 342. In addition, Texas Finance Code, §11.304 authorizes the commission to adopt rules necessary to supervise the OCCC and ensure compliance with Texas Finance Code, Title 4.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 342.

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 April 22, 2022.

TRD-202201582

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: May 12, 2022

Proposal publication date: March 4, 2022

For further information, please call: (512) 936-7660