TITLE 7. BANKING AND SECURITIES

PART 1. FINANCE COMMISSION OF TEXAS

CHAPTER 2. RESIDENTIAL MORTGAGE LOAN ORIGINATORS APPLYING FOR LICENSURE WITH THE OFFICE OF CONSUMER CREDIT COMMISSIONER UNDER THE SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT

SUBCHAPTER A. APPLICATION PROCEDURES FOR OFFICE OF CONSUMER CREDIT COMMISSIONER APPLICANTS

7 TAC §2.107

The Finance Commission of Texas (commission) adopts new §2.107, concerning Prelicensing Education, in 7 TAC, Chapter 2, concerning Residential Mortgage Loan Originators Applying for Licensure with the Office of Consumer Credit Commissioner Under the Secure and Fair Enforcement for Mortgage Licensing Act.

The commission adopts new §2.107 without changes to the proposed text as published in the November 3, 2017, issue of the Texas Register (42 TexReg 6067).

The commission received no written comments on the proposal.

In general, the purpose of the new rule is to implement HB 3342, which the Texas Legislature passed in the 2017 legislative session. HB 3342 authorizes the commission to set the expiration period for prelicensing education of residential mortgage loan originators. Before HB 3342, Texas Finance Code, §180.056(h) stated: "An individual who fails to maintain a residential mortgage loan originator license for at least five consecutive years must retake the prelicensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act." HB 3342 amends this provision by replacing "at least five consecutive years" with "the period of time established by rule of the rulemaking authority." In this provision, "rulemaking authority" refers to the commission, as provided by Texas Finance Code, §180.002(21). HB 3342 goes into effect on January 1, 2018.

Adopted new §2.107 provides a five-year expiration period for prelicensing education. This is the same period described by current Texas Finance Code, §180.056(h). The five-year period is currently used by the Nationwide Multistate Licensing System (NMLS), the system for licensing residential mortgage loan originators.

Section 2.107(a) states that if an individual completes the 20 hours of prelicensing education required by the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §5104(c)(1), and fails to obtain a valid license or federal registration within five years from the date of completion, then the individual must retake the 20 hours of prelicensing education in order to be eligible for licensure. Section 2.107(b) states that if an individual obtains a license or federal registration and fails to maintain the license or registration for at least five consecutive years, then the individual must retake the 20 hours of prelicensing education required by the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §5104(c)(1), in order to be eligible for licensure.

The State Regulatory Registry (SRR) has proposed reducing the five-year expiration period to three years, as explained in SRR's "Response to Comments Received During the SRR Comment Period on the Proposed Pre-Licensure Education Expiration Policy," dated July 21, 2015. However, this change has not yet taken effect in the NMLS system. The agency anticipates that the change will occur as part of an NMLS update currently scheduled for fall 2018. The agency intends to revisit the rule in 2018. Because the change to a three-year period will take some time to be effective, the commission is currently adopting a five-year period consistent with current requirements.

The new rule is adopted under Texas Finance Code, §180.004(b), which grants the commission the authority to implement rules to comply with Texas Finance Code, Chapter 180. Additionally, Texas Finance Code, §180.056(h), as amended by HB 3342, authorizes the commission to adopt a rule establishing the period of time after which an individual must retake prelicensing education requirements. Texas Finance Code, §180.056(a) authorizes the commission to adopt rules providing additional requirements for prelicensing education. Texas Finance Code, §180.061(4) authorizes the commission to adopt rules establishing requirements for any activity the agency considers necessary for participation in NMLS.

The statutory provisions affected by the adopted new rule are contained in Texas Finance Code, §180.056.

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 December 15, 2017.

TRD-201705203

Laurie Hobbs

Assistant General Counsel

Finance Commission of Texas

Effective date: January 4, 2018

Proposal publication date: November 3, 2017

For further information, please call: (512) 936-7621


PART 2. TEXAS DEPARTMENT OF BANKING

CHAPTER 15. CORPORATE ACTIVITIES

SUBCHAPTER E. CHANGE OF CONTROL APPLICATIONS

7 TAC §15.81

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), adopts amended §15.81, concerning application for acquisition or change of control of a state, without changes to the proposed text as published in the November 3, 2017, issue of the Texas Register (42 TexReg 6068). The amended rule will not be republished.

Finance Code §33.002 was amended effective September 1, 2017, by Section 1 of SB 1400 (Acts 2017, 85th Leg., R.S., Ch. 915, §1), to require the banking commissioner to promptly notify an applicant for acquisition or change of control of a state bank of the date the banking commissioner determines the application to be informationally complete and accepted for filing. This amendment conforms to the statutory change, and establishes a deadline within which the applicant must publish notice of the application that is based upon the date that the commissioner notifies the applicant of acceptance of the filing.

One comment supporting the proposed amendment was received from the Independent Bankers Association of Texas (IBAT).

The amendment is adopted pursuant to Finance Code, §31.103, which authorizes the commission to adopt rules to accomplish the purposes of Subchapter A.

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 December 15, 2017.

TRD-201705184

Catherine Reyer

General Counsel

Texas Department of Banking

Effective date: January 4, 2018

Proposal publication date: November 3, 2017

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


CHAPTER 33. MONEY SERVICES BUSINESSES

7 TAC §§33.3, 33.13, 33.15, 33.27, 33.51, 33.71 - 33.75

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), adopts the amendment to §33.3, concerning the exclusion from licensing for bank agents; §33.13, concerning new license applications; §33.15, concerning violation of new license application processing times; §33.27, concerning fees, assessments and reimbursements; and §33.51, concerning providing information to customers about how to file a complaint. The commission also adopts new §33.71, concerning security required for depository agents; §33.72, concerning net worth required for depository agents; §33.73, concerning depository agent recordkeeping; §33.74, concerning depository agent receipts; and §33.75, concerning exemptions. The amendments and new rules are adopted without changes to the proposed text as published in the November 3, 2017, issue of the Texas Register (42 TexReg 6069). The amendments and new rules will not be republished.

The new and amended rules implement and administer Subchapter J of the Money Services Act, which creates a new type of money services license for depository agents.

During the 84th legislative session, the Texas Legislature created the Texas Bullion Depository (the depository) within the Office of the Comptroller of Public Accounts (the comptroller) (Act of June 19, 2015, 84th Leg., R.S., H.B. 483). The depository will hold certain bullion and specie acquired by the state or a political subdivision of the state, as well as receive and hold such deposits for private entities. The bill also created a new license and corresponding regulatory structure for depository agents, which are private, independently managed firms and institutions authorized to act as intermediaries to conduct retail transactions on behalf of the depository with current and prospective depository account holders. The bill placed responsibility for regulating depository agents under the purview of the department by amending several existing sections of Chapter 151 of the Texas Finance Code, the Money Services Act, and adding new Subchapter J. The depository is scheduled to begin accepting deposits of bullion and specie on January 1, 2018.

The amendments to §33.13 make conforming changes and set out the requirements for what must be included in an application for a new depository agent license. Conforming changes are made in subsections (a) and (b). Subsection (d)(1)(F) establishes the specific application requirements.

The amendments to §33.27 add references to depository agent licenses and set out the fees that an applicant must pay to obtain a new or temporary depository agent license. Subsection (a) is amended to add references to depository agents. Subsection (c) is amended to add statutory references to the list of statutes that authorize fees, assessments and reimbursements. Subsection (d)(1) is amended to set the fee for obtaining a new depository agent license. Subsection (d)(3) is added to set the fee for obtaining a temporary depository agent license. Subsection (f) is added to set the fee for maintaining a depository agent license. Subsection (g) is amended to add references to depository agent business. Subsection (j) is amended to add a reference to subsection (d)(3).

New §33.71 specifies the requirements for the security that a depository agent must provide. Subsection (a) establishes the acceptable forms of security. Subsection (b) sets the amount of required security. Subsection (c) sets out specific requirements for the security. Subsection (d) specifies who may bring a suit on the security. Subsection (e) establishes that the commissioner may collect delinquent costs from the security. Subsection (f) specifies that the security must remain in effect until cancelled and that cancellation does not affect previous liability. Subsection (g) requires that the security cover claims for at least one year after the license holder surrenders its license, but gives the commissioner authority to permit the amount of security to be reduced or eliminated as obligations are reduced or eliminated. Subsection (h) allows the commissioner to require new or additional security as reasonably required. Subsection (i) sets out specific requirements for a license holder or applicant that provides a deposit of cash in lieu of a bond. Subsection (j) sets out the specific requirements for a license holder or applicant that provides a deposit of bullion or specie in lieu of a bond. Subsection (k) establishes that the security is held in trust and is not considered an asset of the license holder.

New §33.72 specifies the net worth required for depository agents. Subsection (a) requires a license holder or applicant to maintain a minimum net worth and sets out what that minimum net worth is, based on the locations where business is conducted. Subsection (b) authorizes the commissioner to increase the amount of net worth required and sets out the criteria to be considered. Subsection (c) requires that 50 percent of net worth be in tangible net worth.

New §33.73 specifies the records a license holder must maintain related to depository agent services transactions. Subsection (a) clarifies to whom the new section applies and subsection (b) sets out general recordkeeping requirements. Subsection (b) permits a depository agent license holder to retain the information in a log or by any other means that allows the information to be readily retrieved. Subsection (c) sets out the specific recordkeeping requirements that apply to depository agent services transactions. Subsection (d) authorizes the banking commissioner to waive a requirement of §33.73 in appropriate circumstances.

New §33.74 requires that a receipt be issued in connection with all depository agent services transactions. Subsection (a) clarifies to whom the section applies and subsection (b) explains and establishes the specific receipt requirements. Paragraph (1) of subsection (b) defines "receipt" in a manner that applies to electronic or online transactions, in addition to in person transactions. Paragraph (2) identifies the information the receipt must include and also requires that the receipt be linked to the depository agent transaction records required under new §33.73. Finally, paragraph (3) provides that a license holder may use one receipt to satisfy the requirements of both new §33.74 and Finance Code, Chapter 278.

New §33.75 creates two exemptions from licensing. Subsection (a) affirms that the depository, as an agency of this state in the office of the comptroller, is exempt from all money services licensing. Subsection (b) creates a new exemption from depository agent licensing for the individual, partnership or corporation that operates the depository pursuant to a contract with the comptroller.

The remaining sections (§§33.3, 33.15 and 33.51) contain conforming changes.

The department received no comments regarding the proposed amendments or new rules.

The amendments and new rules 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 amendments and new rules are also adopted pursuant to Finance Code, §151.855, which authorizes the commission to establish the amount of the application fee, the minimum net worth required for applicants, and the requirements for the security that applicants must file with the department, and Finance Code, §151.857, which authorizes the commission to establish the amount of the temporary license fee.

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 December 15, 2017.

TRD-201705185

Catherine Reyer

General Counsel

Texas Department of Banking

Effective date: January 4, 2018

Proposal publication date: November 3, 2017

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


PART 4. DEPARTMENT OF SAVINGS AND MORTGAGE LENDING

CHAPTER 80. TEXAS RESIDENTIAL MORTGAGE LOAN COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

7 TAC §80.2

The Finance Commission of Texas (the "Finance Commission") adopts amendment to 7 Tex. Admin. Code §80.2, relating to definitions. The Finance Commission adopts the amendment to §80.2 without changes to the proposed text as published in the November 3, 2017, issue of the Texas Register (42 TexReg 6077). The rule will not be republished.

In general, the purpose of the adoption is to clarify and better organize the requirements regarding physical offices.

The adoption regarding 7 Tex. Admin. Code §80.2 is to simplify the definition of a physical office to mean an actual office where the business of mortgage lending and/or the business of taking or soliciting residential mortgage loan applications are conducted.

The commission did not receive any comments on the proposed amendment.

The adoption is made under the authority granted by the Texas Legislature to the Finance Commission pursuant to Tex. Fin. Code §156.102.

The statutory provisions affected by the adoption are contained in Tex. Fin. 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 December 18, 2017.

TRD-201705226

Devyn F. Wills

Associate General Counsel

Department of Savings and Mortgage Lending

Effective date: January 7, 2018

Proposal publication date: November 3, 2017

For further information, please call: (512) 475-1297


SUBCHAPTER C. DUTIES AND RESPONSIBILITIES

7 TAC §80.200, §80.206

The Finance Commission of Texas (the "Finance Commission") adopts amendment to 7 TAC §80.200, relating to required disclosures, and adopts a new rule §80.206, relating to physical offices. The Finance Commission adopts the amendment to §80.200 and adopts new rule §80.206 without changes to the proposed text as published in the November 3, 2017, issue of the Texas Register (42 TexReg 6078). The rules will not be republished.

In general, the purpose of the adoption is to reduce regulatory burden and create parity between the Texas Mortgage Company and Mortgage Banker Disclosures, as found in 7 Tex. Admin. Code §§80.200 and 81.200, respectively, and to clarify and better organize the requirements regarding physical offices.

The adoption regarding 7 Tex. Admin. Code §80.200 is to simplify the information contained in the Texas Mortgage Company Disclosure, thus creating parity with the Texas Mortgage Banker Disclosure. In addition, the Texas Mortgage Company Disclosure is amended to add clarifying language, including that residential mortgage loan originators will be paid in compliance with Regulation Z.

The adoption regarding 7 Tex. Admin. Code new §80.206 outlines the requirements a physical office must meet and that the physical office of a licensee need not be the location at which such person's required records are maintained, but the location at which such required records are maintained must be accessible to the Commissioner or the Commissioner's designee for inspection during normal business hours.

The commission did not receive any comments on the proposed amendments.

The adoption is made under the authority granted by the Texas Legislature to the Finance Commission pursuant to Tex. Fin. Code §156.102.

The statutory provisions affected by the proposal are contained in Tex. Fin. 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 December 18, 2017.

TRD-201705227

Devyn F. Wills

Associate General Counsel

Department of Savings and Mortgage Lending

Effective date: January 7, 2018

Proposal publication date: November 3, 2017

For further information, please call: (512) 475-1297


CHAPTER 81. MORTGAGE BANKERS AND RESIDENTIAL MORTGAGE LOAN ORIGINATORS

SUBCHAPTER A. GENERAL PROVISIONS

7 TAC §81.2

The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), adopts the amendment to 7 Texas Administrative Code §81.2, relating to definitions. The Finance Commission adopts the amendments to §81.2 without changes to the proposed text as published in the November 3, 2017, issue of the Texas Register (42 TexReg 6079). The rules will not be republished.

In general, the purpose of this adoption is to clarify and better organize the requirements regarding physical offices.

The adoption regarding 7 Texas Administrative Code §81.2 is to simplify the definition of a physical office to mean an actual office where the business of mortgage lending and/or the business of taking or soliciting residential mortgage loan applications are conducted.

The commission did not receive any comments on the proposed amendment.

The amended rule is adopted under the authority granted by the Texas Legislature to the Finance Commission pursuant to Texas Finance Code §157.0023.

The statutory provisions affected by this adoption are contained in Texas Finance Code, chapter 157.

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 December 18, 2017.

TRD-201705228

Devyn F. Wills

Associate General Counsel

Department of Savings and Mortgage Lending

Effective date: January 7, 2018

Proposal publication date: November 3, 2017

For further information, please call: (512) 475-1297


SUBCHAPTER B. LICENSING

7 TAC §81.109

The Finance Commission of Texas (the "Finance Commission") on behalf of the Department of Savings and Mortgage Lending (the "Department"), adopts a new rule 7 Tex. Admin. Code §81.109, relating to pre-licensing education. The Finance Commission adopts the new rule without changes to the proposed text as published in the November 3, 2017 issue of the Texas Register (42 TexReg 6080). The rule will not be republished.

In general, the purpose of this new rule is to implement H.B. 3342, which the Texas Legislature passed in the 85th regular legislative session.

H.B. 3342 amended Tex. Fin. Code §180.056(h) and changed the period during which an individual who fails to maintain a residential mortgage loan originator license is required to retake the pre-licensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act, from at least five consecutive years, to a period established by rule of the Finance Commission.

H.B. 3342 further requires the Finance Commission to adopt the rules required by the newly amended Tex. Fin. Code §180.056(h) not later than December 1, 2017. The change in the law applies only to an application for a license filed on or after December 1, 2017. An application for a license filed before December 1, 2017 is governed by the law in effect on the date the application was filed, and the former law is continued in effect for that purpose.

New 7 Tex. Admin. Code §81.109 provides the circumstances under which an individual must retake the pre-licensing education requirements prescribed by the S.A.F.E. Mortgage Licensing Act.

The commission did not receive any comments on the proposed amendment.

The new rule is adopted under the authority granted by the Texas Legislature to the Finance Commission pursuant to H.B. 3342.

The statutory provisions affected by this adoption are contained in Tex. Fin. 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 December 18, 2017.

TRD-201705229

Devyn F. Wills

Associate General Counsel

Department of Savings and Mortgage Lending

Effective date: January 7, 2018

Proposal publication date: November 3, 2017

For further information, please call: (512) 475-1297


SUBCHAPTER C. DUTIES AND RESPONSIBILITIES

7 TAC §81.206

The Finance Commission of Texas (the "Finance Commission" adopts a new rule §81.206, relating to physical offices. The Finance Commission adopts new rule §81.206 without changes to the proposed text as published in the November 3, 2017 issue of the Texas Register (42 TexReg 6080). The rule will not be republished.

In general, the purpose of the adoption is to clarify and better organize the requirements regarding physical offices.

The adoption regarding 7 Tex. Admin. Code §81.206 outlines the requirements a physical office must meet and that the physical office of a licensee need not be the location at which such person's required records are maintained, but the location at which such required records are maintained must be accessible to the Commissioner or the Commissioner's designee for inspection during normal business hours.

The commission did not receive any comments on the proposed amendment.

The adoption is made under the authority granted by the Texas Legislature to the Finance Commission pursuant to Tex. Fin. Code §157.0023.

The statutory provisions affected by the adoption are contained in Tex. Fin. Code, chapter 157.

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 December 18, 2017.

TRD-201705230

Devyn F. Wills

Associate General Counsel

Department of Savings and Mortgage Lending

Effective date: January 7, 2018

Proposal publication date: November 3, 2017

For further information, please call: (512) 475-1297