Proposed Rules Title 7

TITLE 7. BANKING AND SECURITIES

CHAPTER 2. RESIDENTIAL MORTGAGE LOAN ORIGINATORS REGULATED BY THE OFFICE OF CONSUMER CREDIT COMMISSIONER

SUBCHAPTER A. APPLICATION PROCEDURES

The Finance Commission of Texas (commission) proposes amendments to §2.108 (relating to Military Licensing) in 7 TAC Chapter 2, concerning Residential Mortgage Loan Originators Regulated by the Office of Consumer Credit Commissioner.

The rules in 7 TAC Chapter 2 govern residential mortgage loan originators (RMLOs) licensed by the Office of Consumer Credit Commissioner (OCCC) under Texas Finance Code, Chapter 180. In general, the purpose of the proposed rule changes is to specify RMLO licensing requirements for military service members, military veterans, and military spouses, in accordance with Chapter 55 of the Texas Occupations Code, as amended by SB 422 (2023).

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 did not receive any informal precomments on the rule text draft.

Chapter 55 of the Texas Occupations Code describes licensing requirements for military service members, military veterans, and military spouses. Chapter 55 applies to licenses that "must be obtained by an individual to engage in a particular business." Tex. Occ. Code §55.001(3). Chapter 55 includes an expedited license application procedure for certain previously licensed individuals, and authorizes certain individuals licensed in other jurisdictions to engage in licensed occupations in Texas. SB 422, which the Texas Legislature passed in 2023, amends various provisions in Chapter 55. Specifically, SB 422 amends Texas Occupations Code, §55.0041 to extend recognition of licenses in other jurisdictions to military service members, and to specify a 30-day period for an agency to verify that a qualifying military service member or spouse is licensed in good standing with another jurisdiction. SB 422 also amends Texas Occupations Code, §55.005 to specify that agencies will review certain license applications from qualifying military service members, veterans, and spouses within 30 days after the agency received a complete application. SB 422 has been signed by the governor and will be effective September 1, 2023.

Proposed amendments to §2.108 would implement SB 422's statutory amendments for RMLOs licensed by the OCCC. Proposed amendments to §2.108(d) would specify that the OCCC will process an RMLO license application no later than 30 days after receiving a complete license application from a qualifying applicant who is a military service member, military veteran, or military spouse. These changes would implement SB 422's amendments to Texas Occupations Code, §55.005(a). Proposed amendments throughout §2.108(e) would specify that the authorization to engage in business in Texas applies to military service members, and that the OCCC will review information in NMLS (the nationwide system for licensing RMLOs) no later than the 30th day after the military service member or military spouse submits required information. These changes would implement SB 422's amendments to Texas Occupations Code, §55.0041.

Mirand Diamond, Director of Licensing, Finance and Human Resources, has determined that for the first five-year period the proposed rule changes are in effect, there will be no fiscal implications for state or local government as a result of administering the rule changes.

Huffman Lewis, Director of Consumer Protection, has determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of the changes will be that the commission's rules will ensure that the OCCC can effectively administer military licensing requirements under Texas Occupations Code, Chapter 55.

The OCCC does not anticipate economic costs to persons who are required to comply with the rule changes as proposed.

The OCCC is not aware of any adverse economic effect on small businesses, micro-businesses, or rural communities resulting from this proposal. But in order to obtain more complete information concerning the economic effect of these rule changes, the OCCC invites comments from interested stakeholders and the public on any economic impacts on small businesses, as well as any alternative methods of achieving the purpose of the proposal while minimizing adverse impacts on small businesses, micro-businesses, and rural communities.

During the first five years the proposed rule changes will be in effect, the rules will not create or eliminate a government program. Implementation of the rule changes will not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the rule changes will not require an increase or decrease in future legislative appropriations to the OCCC, because the OCCC is a self-directed, semi-independent agency that does not receive legislative appropriations. The proposal does not require an increase or decrease in fees paid to the OCCC. The proposal would not create a new regulation. The proposal would expand current §2.108 in accordance with SB 422. The proposal would not limit or repeal an existing regulation. The proposed rule changes do not increase or decrease the number of individuals subject to the rule's applicability. The agency does not anticipate that the proposed rule changes will have an effect on the state's economy.

Comments on the proposal may be submitted in writing to Matthew Nance, General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin, Texas 78705 or by email to rule.comments@occc.texas.gov. To be considered, a written comment must be received on or before the 30th day after the date the proposal is published in the Texas Register. After the 30th day after the proposal is published in the Texas Register, no further written comments will be considered or accepted by the commission.

The rule amendments are proposed under Texas Occupations Code, §55.004 and §55.0041 (as amended by SB 422), which authorize a state agency to adopt rules implementing requirements of Chapter 55 of the Texas Occupations Code. 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 proposal are contained in Texas Occupations Code, Chapter 55 and Texas Finance Code, Chapter 180.

§2.108.Military Licensing.

(a) Purpose. The purpose of this section is to specify residential mortgage loan originator licensing requirements for military service members, military veterans, and military spouses, in accordance with Texas Occupations Code, Chapter 55.

(b) Definitions. In this section, the terms "military service member," "military spouse," and "military veteran" have the meanings provided by Texas Occupations Code, §55.001.

(c) Late renewal. As provided by Texas Occupations Code, §55.002, an individual is exempt from any increased fee or other penalty for failing to renew a residential mortgage loan originator license in a timely manner, if the individual establishes to the satisfaction of the OCCC that the individual failed to renew the license in a timely manner because the individual was serving as a military service member.

(d) Expedited license procedure. As provided by Texas Occupations Code, §55.004 and §55.005, no later than the 30th day after the OCCC receives a complete residential mortgage loan originator license application from a qualifying applicant who is a military service member, military veteran, or military spouse, the OCCC will process the [~~a license~~] application [~~as soon as practicable~~] and issue a license to the [~~a qualifying~~] applicant [~~who is a military service member, military veteran, or military spouse~~], if the applicant:

(1) holds a current license in another jurisdiction as a residential mortgage loan originator in accordance with the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §§5101-5117; or

(2) held a residential mortgage loan originator license in Texas within the five years preceding the application date.

(e) Authorization for military service members and military spouses [~~spouse~~].

(1) As provided by Texas Occupations Code, §55.0041, a military service member or military spouse may engage in business as a residential mortgage loan originator if the member or spouse is currently licensed in good standing in another jurisdiction as a residential mortgage loan originator in accordance with the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §§5101-5117.

(2) Before engaging in business in Texas, the military service member or military spouse must comply with the notification requirements described by Texas Occupations Code, §55.0041(b). If the member or [~~military~~] spouse does not obtain a residential mortgage loan originator license in Texas, then the member or [~~military~~] spouse is limited to the time period described by Texas Occupations Code, §55.0041(d)-(d-1) [~~§55.0041(d)~~].

(3) For purposes of this subsection and Texas Occupations Code, §55.0041, a residential mortgage loan originator license issued in another jurisdiction is substantially equivalent to a Texas residential mortgage loan originator license if it is issued in accordance with the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §§5101-5117. The OCCC will verify a license issued in another jurisdiction through NMLS. The OCCC will review available information in NMLS no later than the 30th day after the military service member or military spouse submits the information required by Texas Occupations Code, §55.0041(b)(1)-(2).

(f) Credit toward licensing requirements. As provided by Texas Occupations Code, §55.007, with respect to an applicant who is a military service member or military veteran, the OCCC will credit verified military service, training, or education toward the licensing requirements, other than an examination requirement, for a residential mortgage loan originator license, by considering the service, training, or education as part of the applicant's employment history.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2023.

TRD-202303043

Matthew Nance

General Counsel

Finance Commission of Texas

Earliest possible date of adoption: October 1, 2023

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

PART 2. TEXAS DEPARTMENT OF BANKING

CHAPTER 33. MONEY SERVICES BUSINESSES

7 TAC §§33.3, 33.4, 33.13, 33.23, 33.37, 33.54

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes to repeal §33.3, concerning how to claim an exclusion from licensing as an agent for a federally insured financial institution or a foreign bank branch or agency; §33.4 concerning payment processors; §33.13, concerning how to obtain a new license and what deadlines are associated with applications; §33.23, concerning additional provisions that apply to permissible investments; §33.37, concerning receipts issued relating to money transmission transactions; and §33.54, concerning an exemption from licensure for securities dealers and agents.

The proposed repeals arise from the passage of Senate Bill 895, sponsored by Senator Nathan Johnson, during the 88th legislative session and are proposed to provide clarity and update statutory citations. Effective September 1, 2023, Senate Bill 895 repeals Chapter 151 of the Texas Finance Code (Finance Code) and adds Chapter 152 relating to the regulation of money services businesses.

Section 33.3 is proposed to be repealed because it is as an outdated guideline for claiming an exclusion from licensing that is defined in statute. The department does not require a person to seek a determination that the exclusion applies. Under Finance Code, Chapter 152, the banking commissioner has the express authority to require any person claiming a statutory exemption to demonstrate that they qualify for such exemption, however this would be done on a case-by-case basis.

Sections 33.4, 33.13, 33.23, 33.37, and 33.54 are proposed to be repealed as the provisions of the rules were incorporated in the statutory language of Finance Code, Chapter 152 and are therefore redundant.

Jesus Saucillo, Director of Non-Depository Supervision, Texas Department of Banking, has determined that for the first five-year period the proposed rules are in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering the proposed rules.

Director Saucillo also has determined that, for each year of the first five years the rules as proposed are in effect, the public benefit anticipated as a result of enforcing the rules is greater clarity of the rules to which money services businesses are subject.

For each year of the first five years that the rules will be in effect, the economic costs to persons required to comply with the rules as proposed will be unchanged from the costs required under these rules as they currently exist.

For each year of the first five years that the rules will be in effect, the rules will not:

-- create or eliminate a government program;

-- require the creation of new employee positions or the elimination of existing employee positions;

-- require an increase or decrease in future legislative appropriations to the agency;

-- require an increase or decrease in fees paid to the agency;

-- create a new regulation;

-- expand, limit or repeal an existing regulation;

-- increase or decrease the number of individuals subject to the rule's applicability; and

-- positively or adversely affect this state's economy.

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. There will be no difference in the cost of compliance for these entities.

To be considered, comments on the proposals must be submitted no later than 5:00 p.m. on October 2, 2023. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to legal@dob.texas.gov.

The repeals are proposed under Finance Code, §151.102, which authorizes the commission to adopt rules to administer and enforce Finance Code, Chapter 151. As noted above, pursuant to Senate Bill 895, Chapter 151 will be repealed and replaced by Chapter 152 as of September 1, 2023. Therefore, the authority to adopt the proposed repeals will be replaced with §152.052 which similarly authorizes the commission to adopt rules to administer and enforce Finance Code, Chapter 152.

No statutes are affected by the proposed repeals.

§33.3.How Do I Claim an Exclusion from Licensing because I Am an Agent for a Federally Insured Financial Institution or a Foreign Bank Branch or Agency?

§33.4.Payment Processors.

§33.13.How Do I Obtain a New License and What are the Deadlines Associated with Applications?

§33.23.What Additional Provisions Apply to Permissible Investments?

§33.37.What Receipts Must I Issue Related to Money Transmission Transactions?

§33.54.Exemption for Registered Securities Dealers and Agents.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2023.

TRD-202303046

Marcus Adams

Acting General Counsel

Texas Department of Banking

Earliest possible date of adoption: October 1, 2023

For further information, please call: (512) 475-1382

7 TAC §§33.7, 33.15, 33.27, 33.30, 33.31, 33.33, 33.35, 33.51 - 33.53

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes to amend §33.7, concerning how to obtain an exemption from licensing related to exchanging currency in connection with retail, wholesale or service transactions; §33.15, concerning the options available when the department does not comply with new license application processing times; §33.27, concerning fees to obtain and maintain a license; §33.30, concerning a notice of cybersecurity incident; §33.31, concerning records relating to currency exchange transactions; §33.33, concerning receipts issued relating to currency exchange transactions; §33.35, concerning records relating to money transmission transactions; §33.51, concerning providing information to customers on how to file a complaint; §33.52, concerning notice relating to authorized delegates; and §33.53, concerning an exemption from licensure for debt management service providers.

The proposed amendments arise from the passage of Senate Bill 895, sponsored by Senator Nathan Johnson, during the 88th legislative session and are proposed to provide clarity and update statutory citations. Effective September 1, 2023, Senate Bill 895 repeals Chapter 151 of the Texas Finance Code (Finance Code) and adds Chapter 152 relating to the regulation of money services businesses.

The proposed amendments to §§33.7, 33.15, 33.27, 33.30, 33.31, 33.33, 33.35, 33.51, 33.52, and 33.53 update existing citations to reference Chapter 152 of the Finance Code.

For each year of the first five years that the rules will be in effect, the rules will not:

--create or eliminate a government program;

--require the creation of new employee positions or the elimination of existing employee positions;

--require an increase or decrease in future legislative appropriations to the agency;

--require an increase or decrease in fees paid to the agency;

--create a new regulation;

--expand, limit or repeal an existing regulation;

--increase or decrease the number of individuals subject to the rule's applicability; and

--positively or adversely affect this state's economy.

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. There will be no difference in the cost of compliance for these entities.

The amendments are proposed under Finance Code, §151.102, which authorizes the commission to adopt rules to administer and enforce Finance Code, Chapter 151. As noted above, pursuant to Senate Bill 895, Chapter 151 will be repealed and replaced by Chapter 152 as of September 1, 2023. Therefore, the authority to adopt the proposed amendments will be replaced with §152.052 which similarly authorizes the commission to adopt rules to administer and enforce Finance Code, Chapter 152.

Finance Code §§ 152.003, 152.056, 152.057, 152.102, 152.106, 152.107, 152.207, 152.253, and 152.303 are affected by the proposed amended sections.

§33.7.How Do I Obtain an Exemption from Licensing Because I Exchange Currency in Connection with Retail, Wholesale or Service Transactions?

(a) Does this section apply to me?

(1) This section applies if you are a retailer, wholesaler, or service provider and in the ordinary course of business:

(A) accept the currency of a foreign country or government as payment for your goods or services;

(B) in connection with the transaction, make or give change in the currency of a different foreign country or government; and

(2) This section does not apply, and you do not conduct currency exchange within the meaning of Finance Code, Chapter 152 [~~151~~], or need a currency exchange license under the Act, if you accept payment for your goods or services in a foreign currency or a check denominated in a foreign currency and any change you make or give in connection with the transaction is in the same foreign currency as the payment you receive.

(b) To request an exemption, you must submit a letter to the commissioner that fully explains your business and is accompanied by a statement, signed and sworn to before a notary, affirming that none of the disqualifying conditions set out in Finance Code, §152.102(e)(1) - (5), [~~§151.502(d)(1) - (5),~~] apply to you. For purposes of the subsection (e)(4) [~~(d)(4) of this section~~] disqualification, you are considered to be engaged in the "business of cashing checks, drafts or other payment instruments" if, in the 12 month period immediately preceding the filing of the application for exemption, you derived more than 1.00% of your gross receipts, directly or indirectly, from fees or other consideration you charged, earned, or imputed from cashing checks, drafts or other monetary instruments.

§33.15.What May I Do If the Department Does Not Comply with the New License Application Processing Times?

(a) Does this section apply to me? This section applies if you applied for a new money transmission or currency exchange license under Finance Code, Chapter 152 [~~151~~], and you believe that the department failed to comply with the application processing times specified in Finance Code, §152.106. [~~§33.13(e) or (h) of this title (relating to Application for New License).~~]

(b) What does "promptly" mean for purposes of Finance Code, §152.106(a) and this rule? "Promptly" means on or before the 30th day after the date the department receives your application.

(c) [~~(b)~~] May I file a complaint? Yes. If the department does not process your application for a new money transmission or currency exchange license within the time periods specified in Finance Code, 152.106 [~~§33.13(e) or (h) of this title (relating to Application for New License)~~], you may file a written complaint with the banking commissioner. The complaint must set out the facts regarding the delay and the specific relief you seek. The department must receive your complaint on or before the 30th day after the date the commissioner approves or denies your license application.

(d) [~~(c)~~] How will the banking commissioner evaluate my complaint?

(1) - (3) (No change.)

(e) [~~(d)~~] When will the banking commissioner notify me of the decision? The banking commissioner will notify you of the decision regarding your complaint on or before the 60th day after the date the commissioner receives your written complaint. The commissioner's decision is final and may not be appealed.

(f) [~~(e)~~] What happens if the banking commissioner decides in my favor? If the banking commissioner decides that the department exceeded the applicable time period without good cause, the department will reimburse you all of your application fees.

(g) [~~(f)~~] Does the banking commissioner's decision regarding my complaint affect the decision on my application? No. A decision in your favor under this section does not affect any decision by the banking commissioner to grant or deny your license application. The decision to grant or deny your license application is based upon applicable substantive law without regard to whether the department timely processed your application.

§33.27.What Fees Must I Pay to Get and Maintain a License?

(a) Does this section apply to me? This section applies if you hold a money transmission or currency exchange license issued under Finance Code, Chapter 152 [~~151~~], or are an applicant for a new money transmission or currency exchange license, as applicable. This section also applies if you are a person other than a license holder or applicant and are investigated under the authority of Finance Code, §152.056. [~~§151.104.~~]

(b) Definitions. The following words and terms, when used in this section, have the following meanings unless the context clearly indicates otherwise.

(1) "Annual Assessment" means the fee assessed annually to pay the costs incurred by the department to examine a license holder and administer Finance Code, Chapter 152 [~~151~~], including the annual license fee required by Finance Code, §152.107(d)(1). [~~§151.207(b)(1).~~]

(2) "Examination" means the process, either by on-site or off-site review, of evaluating the books and records of a license holder under the authority of Finance Code, §152.057 [~~§151.601~~], relating to its money services activities. For purposes of this section, the term does not include an investigation conducted under the authority of Finance Code, §§152.056 or 152.106. [~~§151.104, §151.305, or §151.505.~~]

(c) What provisions of Finance Code, Chapter 152 [~~151~~], authorize the fees, assessments, and reimbursements required under this section? The fees, assessments, and reimbursements established by or required under this section are authorized by one or more of the following provisions of Finance Code, Chapter 152 [~~151~~ ]: §§152.052(b)(1), 152.056(e), 152.107(d)(1), 152.104(d), and 152.151(b)(2). [~~§§151.102(a)(5), 151.104(e), 151.207(b)(1), 151.304(b)(1), 151.306(a)(5), 151.504(b)(1), 151.605(c)(3) and 151.605(i).~~]

(d) What fees must I pay to obtain a new license?

(1) You must pay a [~~non-refundable~~] $10,000 application fee to obtain a new money transmission license or a [~~non-refundable~~ ] $5,000 application fee to obtain a currency exchange license. If your application is accepted for processing pursuant to Finance Code, §152.106, your application fee will be nonrefundable. You may also be required to pay the following additional fees:

(A) - (C) (No change.)

[(2) To apply for a temporary money transmission license authorized under Finance Code, §151.306, you must pay a non-refundable $2,500 temporary license application fee in addition to the fees required under paragraph (1) of this subsection.]

(2) [~~(3)~~] The commissioner may reduce the fees required under paragraph (1) [~~or (2)~~] of this subsection, if the commissioner determines that a lesser amount than would otherwise be collected is necessary to administer and enforce Finance Code, Chapter 152 [~~151~~], and this chapter.

(e) What fees must I pay to maintain my money transmission or currency exchange license? You must pay your annual assessment. Subject to paragraph (3) of this subsection, the amount of your annual assessment is determined based on the total annual dollar amount of your Texas money transmission and or currency exchange transactions, as applicable, as reflected on your most recent annual report filed with the department under Finance Code, §152.107(d)(2). [~~§151.207(b)(2).~~]

(1) If you hold a currency exchange license, you must pay the annual assessment specified in the following table:

Figure: 7 TAC §33.27(e)(1) (No change.)

(2) If you hold a money transmission license, you must pay the annual assessment specified in the following table:

Figure: 7 TAC §33.27(e)(2) (No change.)

(3) If you are a new license holder and have not yet filed your first annual report under Finance Code, §152.107(d)(2) [~~§151.207(b)(2)~~], you must pay an examination fee of $75 per hour for each examiner and all associated travel expenses for an examination.

(f) What fees must I pay in connection with a department investigation?

(1) If the commissioner considers it necessary or appropriate to investigate you or another person in order to administer and enforce Finance Code, Chapter 152 [~~151~~], as authorized under §152.056 [~~§151.104~~], you or the investigated person must pay the department an investigation fee calculated at a rate of $75.00 per employee hour for the investigation and all associated travel expenses.

(2) - (3) (No change.)

(g) What fees must I pay in connection with a proposed change of control of my money transmission or currency exchange business?

(1) - (3) (No change.)

(4) The commissioner may reduce the filing fees described in paragraph (1) or (2) of this subsection, if the commissioner determines that a lesser amount than would otherwise be collected is necessary to administer and enforce Finance Code, Chapter 152 [~~151~~], and this chapter.

(h) What other fees must I pay?

(1) If the department does not receive your completed annual report on or before the due date prescribed by the commissioner under Finance Code, §152.107 [~~§151.207~~], you must pay a late fee of $100 per day for each business day after the due date that the department does not receive your completed annual report.

(2) If more than one examination is required in the same fiscal year because of your failure to comply with Finance Code, Chapter 152 [~~151~~], this chapter, or a department directive, you must pay for the additional examination at a rate of $75 per hour for each examiner required to conduct the additional examination and all associated travel expenses. A fiscal year is the 12-month period from September 1st of one year to August 31st of the following year.

(3) (No change.)

(4) If the commissioner determines it is necessary to conduct an on-site examination of your authorized delegate to ensure your compliance with Finance Code, Chapter 152 [~~151~~], you must pay an examination fee of $75 per hour for each examiner and any associated travel expenses.

(i) How and when do I need to pay for the fees required by this section?

(1) - (2) (No change.)

(3) Your annual assessment required under subsection (e) of this section may be billed in quarterly or fewer installments in such periodically adjusted amounts as reasonably necessary to pay for the costs of examination and to administer Finance Code, Chapter 152. [~~151.~~] You must pay the annual assessment fee by ACH debit, or by another method if directed to do so by the department. At least 15 days prior to the scheduled ACH transfer, the department will send you a notice specifying the amount of the payment due and the date the department will initiate payment by ACH debit. The commissioner may decrease your annual assessment if it is determined that a lesser amount than would otherwise be collected is necessary to administer the Act.

(4) - (8) (No change.)

(j) (No change.)

§33.30.Notice of Cybersecurity Incident.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (2) (No change.)

(3) "You" means a holder of a money transmission or currency exchange license issued under Finance Code, Chapter 152. [~~151.~~]

(b) - (e) (No change.)

§33.31.What Records Must I Keep Related to Currency Exchange Transactions?

(a) Does this section apply to me? This section applies if you hold a license issued by the department under Finance Code, Chapter 152 [~~151 (Money Services Act)~~], or are the authorized delegate of a license holder, as applicable, and you conduct currency exchange transactions.

(b) What are the general recordkeeping requirements?

(1) As a general matter, you must maintain:

(A) records of all filings made, and that contain all information required, under applicable federal laws and regulations, including the BSA and 31 CFR Chapter X;

(B) in addition to the records required under Finance Code, Chapter 152 [~~151~~], the records required under this section related specifically to currency exchange transactions; and

(C) records sufficient to enable you to file accurate and complete reports with the commissioner or department in accordance with Finance Code, Chapter 152 [~~151~~] and Chapter 33 of this title (relating to Money Services Businesses).

(2) (No change.)

(d) May I obtain a waiver of the recordkeeping requirements? The commissioner may waive any requirement of this section upon a showing of good cause if the commissioner determines that:

(1) you maintain records sufficient for the department to examine your currency exchange business; and

(2) the imposition of the requirement would cause an undue burden on you and conformity with the requirement would not significantly advance the state's interest under Finance Code, Chapter 152. [~~151.~~]

§33.33.What Receipts Must I Issue Related to Currency Exchange Transactions?

(b) (No change.)

§33.35.What Records Must I Keep Related to Money Transmission Transactions?

(a) Does this section apply to me? This section applies to you if you hold a money transmission license issued by the department under Finance Code, Chapter 152 [~~151 (Money Services Act)~~], or are the authorized delegate of a license holder, as applicable.

(b) What are the general recordkeeping requirements?

(1) As a general matter, you must maintain:

(A) records of all filings made, and that contain all information required, under applicable federal laws and regulations, including the Bank Secrecy Act and 31 CFR Chapter X (collectively BSA);

(B) in addition to the records required under Finance Code, Chapter 152 [~~151~~], the records required in this section related to specific types of money transmission transactions; and

(2) - (4) (No change.)

(g) May I obtain a waiver of the recordkeeping requirements? The commissioner may waive any requirement of this section upon a showing of good cause if the commissioner determines that:

(1) you maintain records sufficient for the department to examine your money transmission business; and

§33.51.How do I Provide Information to My Customers about How to File a Complaint?

(a) Does this section apply to me? This section applies if you hold a money transmission or currency exchange license issued by the department under Finance Code, Chapter 152. [~~151.~~]

(b) Definitions. Words used in this section that are defined in Finance Code, Chapter 152 [~~151~~], have the same meaning as defined in the Finance Code. The following words and terms, when used in this section, shall have the following meanings unless the text clearly indicates otherwise.

(1) - (4) (No change.)

(f) How do I provide the required notice if I conduct business through authorized delegates?

(1) If you conduct business through one or more authorized delegates, each authorized delegate must provide the required notice by one or more of the methods described in subsection (e)(3) of this section. You must specify the method or methods to be used by your authorized delegate and provide your authorized delegate with the means by which to give the notice you select.

(2) If your authorized delegate personally receives all funds paid by your customers and you require your authorized delegate to post the required notice described in subsection (e)(3)(B) of this section, you may use one posted notice to provide the required notice and the authorized delegate designation required under §33.52 of this title. [~~Finance Code, §151.403(a)(6).~~]

(g) Am I subject to an enforcement action if I do not provide the required notice? Yes. You are subject to enforcement sanctions under Finance Code, Chapter 152 [~~151~~], Subchapter I [H], if you:

(1) - (2) (No change.)

(h) (No change.)

§33.52.Authorized Delegate Notice.

(a) In addition to the complaint notice required by §33.51(f) of this title, an authorized delegate of a money transmission license holder appointed in accordance with Texas Finance Code, Chapter 152, Subchapter F, [~~§151.402~~] must provide each of its Texas customers with notice that:

(1) - (3) (No change.)

(b) - (c) (No change.)

§33.53.Exemption for Debt Management Service Providers.

(a) (No change.)

(b) A debt management service provider who, in the course of conducting its debt management services, receives money from consumers for distribution to the consumer's creditors need not obtain a money transmission license if that provider:

(1) is registered and in good standing with the Office of Consumer Credit Commissioner as a debt management service provider under Finance Code Chapter 394;

(2) is in compliance with all requirements of Finance Code Chapter 394 and 7 TAC Chapter 88 (relating to Consumer Debt Management Services); and

(3) conducts no money transmission as defined by Finance Code §152.003 [~~§151.301~~], except as necessary to provide debt management services to contractual customers.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2023.

TRD-202303048

Marcus Adams

Acting General Counsel

Texas Department of Banking

Earliest possible date of adoption: October 1, 2023

For further information, please call: (512) 475-1382

PART 4. DEPARTMENT OF SAVINGS AND MORTGAGE LENDING

CHAPTER 81. MORTGAGE BANKERS AND RESIDENTIAL MORTGAGE LOAN ORIGINATORS

SUBCHAPTER B. LICENSING OF INDIVIDUAL ORIGINATORS

7 TAC §81.103

The Finance Commission of Texas (commission), on behalf of the Department of Savings and Mortgage Lending (department), proposes to amend 7 TAC Chapter 81, §81.103, concerning Licensing of Military Service Members, Military Veterans, and Military Spouses. This proposal and the rule as amended by this proposal are referred to collectively as the "proposed rule."

Explanation of and Justification for the Rule

Existing §81.103 specifies licensing requirements for military service members, military veterans, and military spouses applying for an individual residential mortgage loan originator (RMLO) license, in accordance with Occupations Code Chapter 55.

Changes Concerning Implementation of SB422

Senate Bill 422 (SB422) was enacted during the 88th Legislature, Regular Session (2023) and becomes effective September 1, 2023. SB422 amended Occupations Code Chapter 55. The rule changes are designed to implement the requirements of SB422, and if adopted, would: (i) amend existing §81.103(d) to specify that the department will process an RMLO application from a military service member, military veteran, or military spouse on or before 30 days after the date the license application and request for expedited review are received; and (ii) amend existing §81.103(e) to specify that the subsection applies to military service members.

Changes Concerning Request for Expedited Review

In order for the department to have notice of an applicant's military-related status and for the department to receive documentation to verify such status, the rule changes, if adopted, would amend existing §81.103(d) to specify that a military service member, military veteran, or military spouse seeking expedited review of his or her application must make a written request on the appropriate form and provide supporting documentation concerning his or her status as a military service member, military veteran, or military spouse.

Other Modernization and Update Changes

The rule changes, if adopted, would modernize and update the rule, including: adding and replacing language for clarity and improve readability; removing unnecessary or duplicative provisions; and updating terminology.

Fiscal Impact on State and Local Government

Antonia Antov, Director of Operations for the department, has determined that for the first five-year period the proposed rule is in effect there are no foreseeable increases or reductions in costs to local governments as a result of enforcing or administering the proposed rule. Antonia Antov has further determined that for the first five-year period the proposed rule is in effect there are no foreseeable losses or increases in revenue to local governments as a result of enforcing or administering the proposed rule. Antonia Antov has further determined that for the first five-year period the proposed rule is in effect there are no foreseeable increases or reductions in costs, or losses or increases in revenue to the state overall and that would impact the state's general revenue fund as a result of enforcing or administering the proposed rule. Implementation of the proposed rule will not require an increase or decrease in future legislative appropriations to the department because the department is a self-directed, semi-independent agency that does not receive legislative appropriations. The proposed rule will not result in losses or increases in revenue to the state because the department does not contribute to the state's general revenue fund.

Public Benefits

William Purce, Director of Mortgage Regulation for the department, has determined that for each of the first five years the proposed rule is in effect the public benefit anticipated as a result of enforcing or administering the proposed rule will be for the public, particularly military-related members of the public, to have notice of the licensing requirements for a military service member, military veteran, or military spouse applying for an RMLO license.

Probable Economic Costs to Persons Required to Comply with the Proposed Rule

William Purce has determined that for the first five years the proposed rule is in effect there are no probable economic costs to persons required to comply with the proposed rule that are directly attributable to the proposed rule for purposes of the cost note required by Government Code §2001.024(a)(5) (direct costs).

One-for-One Rule Analysis

Pursuant to Finance Code §16.002, the department is a self-directed semi-independent agency not subject to the requirements of Government Code §2001.0045.

Government Growth Impact Statement

For each of the first five years the proposed rule is in effect, the department has determined the following: (1) the proposed rule does not create or eliminate a government program; (2) implementation of the proposed rule does not require the creation of new employee positions or the elimination of existing employee positions; (3) implementation of the proposed rule does not require an increase or decrease in future legislative appropriations to the agency; (4) the proposed rule does not require an increase or decrease in fees paid to the agency; (5) the proposed rule creates a new regulation (rule requirement), as discussed in the Changes Concerning Request for Expedited Review section above (incorporated by reference herein); (6) the proposed rule expands an existing rule requirement, as discussed in the Changes Concerning Implementation of SB422 section above (incorporated by reference herein), and does not limit or repeal an existing rule requirement; (7) the proposed rule increases the number of individuals subject to the rule's applicability, as discussed in the Changes Concerning Implementation of SB422 section above (incorporated by reference herein), and does not decrease the number of individuals subject to the rule's applicability; and (8) the proposed rule does not positively or adversely affect this state's economy.

Local Employment Impact Statement

No local economies are substantially affected by the proposed rule. As a result, preparation of a local employment impact statement pursuant to Government Code §2001.022 is not required.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

The proposed rule will not have an adverse effect on small or micro-businesses, or rural communities because there are no probable economic costs to persons required to comply with the proposed rule. As a result, preparation of an economic impact statement and a regulatory flexibility analysis as provided by Government Code §2006.002 are not required.

Takings Impact Assessment

There are no private real property interests affected by the proposed rule. As a result, preparation of a takings impact assessment as provided by Government Code §2007.043 is not required.

Public Comments

Written comments regarding the proposed rule may be submitted by mail to Iain A. Berry, General Counsel, at 2601 North Lamar Blvd., Suite 201, Austin, Texas 78705-4294, or by email to rules.comments@sml.texas.gov. All comments must be received on or before 30 days after the date this notice is published.

Statutory Authority

This proposal is made under the authority of Finance Code §157.0023, authorizing the commission to adopt rules necessary to implement or fulfill the purposes of Finance Code Chapter 157 and as required to carry out the intentions of the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. §§5101-5117; federal SAFE Act). This proposal is also made under authority of Finance Code § 180.004(b), authorizing the commission to adopt rules necessary to implement Finance Code Chapter 180 and as required to carry out the intentions of the federal SAFE Act. This proposal is also made under the authority of, and to implement, Occupations Code Chapter 55. This proposal is also made under the authority of, and to implement, Finance Code: §§157.0132, 157.016, 180.0511, 180.056, 180.057, and 180.060.

This proposal affects the statutes contained in Finance Code Chapter 157, the Mortgage Banker Registration and Residential Mortgage Loan Originator Act, and Chapter 180, the Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009.

§81.103.Licensing of Military Service Members, Military Veterans, and Military Spouses.

(a) Purpose [~~and Applicability~~]. This [~~The purpose of this~~] section specifies [~~is to specify~~] licensing requirements for military service members, military veterans, and military spouses, in accordance with Occupations Code Chapter 55.

(b) (No change.)

(c) Late Renewal (Reinstatement). As provided by Tex. Occ. Code §55.002, an individual is exempt from any increased fee or other penalty for failing to renew his or her originator license in a timely manner if the individual establishes to the satisfaction of the Commissioner that he or she [~~the individual~~] failed to timely renew the license because the individual was serving as a military service member. A military service member who fails to timely renew his or her originator license must seek reinstatement of the license within the time period prescribed by Tex. Fin. Code §157.016; otherwise, the individual must obtain a new license, including complying with the requirements and procedures then in existence for obtaining an original license.

(d) Expedited Review and Processing [~~License Procedure~~]. [~~As provided by~~] Tex. Occ. Code [~~§55.004 and~~] §55.005[,] provides that a military service member, military veteran, or military spouse is entitled to expedited review and processing of his or her application for an originator license. A military service member, military veteran, or military spouse seeking expedited review of his or her application must, after applying for the license in NMLS, make a written request for expedited review using the form prescribed by the Commissioner and posted on the Department's website (sml.texas.gov), including providing the supporting documentation specified by the form, to enable the Department to verify the individual's status as a military service member, military veteran, or military spouse. The [~~the~~] Department, on or before 30 days after the date it receives a complete application and request for expedited review from a qualifying applicant who is a military service member, military veteran, or military spouse, will process the [~~a license~~] application [~~as soon as practicable~~] and, provided the applicant is otherwise eligible to receive the license, issue a license to the [~~a qualifying~~] applicant [~~who is a military service member, military veteran, or military spouse~~], if the applicant:

(1) is licensed as an originator in another jurisdiction with substantially equivalent licensing requirements [~~holds a current license in another jurisdiction as a residential mortgage loan originator in accordance with the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. §§5101-5117~~]; or

(2) was licensed as an originator [~~held a residential mortgage loan originator license~~] in Texas within the 5 [~~five~~] years preceding the date of the application.

(e) Temporary Authority for Military Service Member or Military Spouse. Tex. Occ. Code §55.0041 provides that a military service member or military spouse may engage in a business or occupation for which a license is required without obtaining the applicable license if the member or spouse is currently licensed in good standing in another jurisdiction with substantially equivalent [~~similar~~] licensing requirements. However, federal law imposes specific, comprehensive requirements governing when and under what circumstances an individual licensed [~~sanctioned~~] to act as an originator in another jurisdiction may act under temporary authority in this state (12 U.S.C. §5117 (relating to Employment Transition of Loan Originators)). Tex. Occ. Code §55.0041(c) further requires that a military service member or military spouse "comply with all other laws and regulations applicable to the business or occupation." As a result, a military service member or military spouse seeking to avail himself or herself of the temporary authority conferred by Tex. Occ. Code §55.0041 must apply for and seek temporary authority in accordance with Tex. Fin. Code §180.0511 and §81.102 of this title (relating to Temporary Authority).

(f) Substantial Equivalency. For purposes of this section and Tex. Occ. Code §55.004, an originator [~~a residential mortgage loan originator~~] license issued in another jurisdiction is substantially equivalent to a Texas [~~residential mortgage loan~~] originator license if it is issued in accordance with the requirements of the S.A.F.E Mortgage Licensing Act, 12 U.S.C. §§5501-5117. The Department will verify a license issued in another jurisdiction through NMLS.

(g) Credit for Military Experience. As provided by Tex. Occ. Code §55.007, with respect to an applicant who is a military service member or military veteran, the Department will credit verified military service, training, or education toward the requirements for an originator license by considering the service, training, or education as part of the applicant's employment history. The following items cannot be substituted for military service, training, or education:

(1) the pre-licensing examination, as provided by Tex. Fin. Code §180.057;

(2) the required pre-licensing education [~~training~~] and coursework, as provided by Tex. Fin. Code §180.056 and §81.104 of this title (relating to Required Education); and

(3) continuing education [~~training~~] and coursework, as provided by Tex. Fin. Code §180.060 and §81.104 of this title [~~(relating to Required Education)~~].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 21, 2023.

TRD-202303074

Iain A. Berry

General Counsel

Department of Savings and Mortgage Lending

Earliest possible date of adoption: October 1, 2023

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

PART 5. OFFICE OF CONSUMER CREDIT COMMISSIONER

CHAPTER 85. PAWNSHOPS AND CRAFTED PRECIOUS METAL DEALERS

SUBCHAPTER A. RULES OF OPERATION FOR PAWNSHOPS

DIVISION 3. PAWNSHOP EMPLOYEE LICENSE

7 TAC §85.309

The Finance Commission of Texas (commission) proposes amendments to §85.309 (relating to Military Licensing) in 7 TAC Chapter 85, Subchapter A, concerning Rules of Operation for Pawnshops.

The rules in 7 TAC Chapter 85, Subchapter A govern pawnshops and pawnshop employees licensed by the Office of Consumer Credit Commissioner (OCCC) under Texas Finance Code, Chapter 371. In general, the purpose of the proposed rule changes is to specify pawnshop employee licensing requirements for military service members, military veterans, and military spouses, in accordance with Chapter 55 of the Texas Occupations Code, as amended by SB 422 (2023).

Proposed amendments to §85.309 would implement SB 422's statutory amendments for pawnshop employees licensed by the OCCC. Proposed amendments to §85.309(d) would specify that the OCCC will process a pawnshop employee license application no later than 30 days after receiving a complete license application from a qualifying applicant who is a military service member, military veteran, or military spouse. These changes would implement SB 422's amendments to Texas Occupations Code, §55.005(a). Proposed amendments throughout §85.309(e) would specify that the authorization to engage in business in Texas applies to military service members, and that the OCCC will send a request for records to the appropriate licensing authority no later than the 30th day after the military service member or military spouse submits required information. These changes would implement SB 422's amendments to Texas Occupations Code, §55.0041.

The OCCC does not anticipate economic costs to persons who are required to comply with the rule changes as proposed.

During the first five years the proposed rule changes will be in effect, the rules will not create or eliminate a government program. Implementation of the rule changes will not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the rule changes will not require an increase or decrease in future legislative appropriations to the OCCC, because the OCCC is a self-directed, semi-independent agency that does not receive legislative appropriations. The proposal does not require an increase or decrease in fees paid to the OCCC. The proposal would not create a new regulation. The proposal would expand current §85.309 in accordance with SB 422. The proposal would not limit or repeal an existing regulation. The proposed rule changes do not increase or decrease the number of individuals subject to the rule's applicability. The agency does not anticipate that the proposed rule changes will have an effect on the state's economy.

The rule amendments are proposed under Texas Occupations Code, §55.004 and §55.0041 (as amended by SB 422), which authorize a state agency to adopt rules implementing requirements of Chapter 55 of the Texas Occupations Code. The rule amendments are also proposed under Texas Finance Code, §371.006, which authorizes the commission to adopt rules to enforce Texas Finance Code, Chapter 371. 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, Chapter 14 and Title 4.

The statutory provisions affected by the proposal are contained in Texas Occupations Code, Chapter 55 and Texas Finance Code, Chapter 371.

§85.309.Military Licensing.

(a) Purpose and scope. The purpose of this section is to specify pawnshop employee licensing requirements for military service members, military veterans, and military spouses, in accordance with Texas Occupations Code, Chapter 55. This section applies only to employees of pawnbrokers that participate in the pawnshop employee license program.

(b) Definitions. In this section, the terms "military service member," "military spouse," and "military veteran" have the meanings provided by Texas Occupations Code, §55.001.

(c) Late renewal. As provided by Texas Occupations Code, §55.002, an individual is exempt from any increased fee or other penalty for failing to renew a pawnshop employee in a timely manner, if the individual establishes to the satisfaction of the OCCC that the individual failed to renew the license in a timely manner because the individual was serving as a military service member.

(d) Expedited license procedure. As provided by Texas Occupations Code, §55.004 and §55.005, no later than the 30th day after the OCCC receives a complete pawnshop employee license application from a qualifying applicant who is a military service member, military veteran, or military spouse, the OCCC will process the [~~a license~~] application [~~as soon as practicable~~] and issue a license to the [~~a qualifying~~] applicant [~~who is a military service member, military veteran, or military spouse~~], if the applicant:

(1) holds a current license in another jurisdiction that has licensing requirements that are substantially equivalent to the requirements for a pawnshop employee license in Texas; or

(2) held a pawnshop employee license in Texas within the five years preceding the application date.

(e) Authorization for military service members and military spouses [~~spouse~~].

(1) As provided by Texas Occupations Code, §55.0041, a military service member or military spouse may engage in business as a pawnshop employee if the member or spouse is currently licensed in good standing in another jurisdiction that has licensing requirements that are substantially equivalent to the requirements for a pawnshop employee license in Texas.

(2) Before engaging in business in Texas, the military service member or military spouse must comply with the notification requirements described by Texas Occupations Code, §55.0041(b), and must notify the OCCC of the jurisdiction where the military spouse is licensed and how the license can be verified. If the member or [~~military~~] spouse does not obtain a pawnshop employee license in Texas, then the member or [~~military~~] spouse is limited to the time period described by Texas Occupations Code, §55.0041(d)-(d-1) [~~§55.0041(d)~~].

(3) For purposes of this section and Texas Occupations Code, §55.0041, the OCCC will determine whether the other jurisdiction's licensing requirements are substantially similar to Texas's by reviewing the applicable legal requirements that a license holder must comply with in the other jurisdiction, as well as the application review process in the other jurisdiction. The OCCC will verify a license issued in another jurisdiction by requesting records from the appropriate licensing authority. The OCCC will send a request for records to the appropriate licensing authority no later than the 30th day after the military service member or military spouse submits the information required by Texas Occupations Code, §55.0041(b)(1)-(2).

(f) Credit toward licensing requirements. As provided by Texas Occupations Code, §55.007, with respect to an applicant who is a military service member or military veteran, the OCCC will credit verified military service, training, or education toward the licensing requirements for a pawnshop employee license, by considering the service, training, or education as part of the applicant's employment history.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 18, 2023.

TRD-202303042

Matthew Nance

General Counsel

Office of Consumer Credit Commissioner

Earliest possible date of adoption: October 1, 2023

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