HBA-JLV C.S.H.B. 1493 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1493 By: Wise Financial Institutions 3/30/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE The Texas Savings and Loan Department (department) protects the depositors of Texas by ensuring the sage and sound operation of state-chartered savings institutions. In 1999, the legislature also gave the department the responsibility for licensing mortgage brokers. C.S.H.B. 1493 amends the Mortgage Broker License Act regarding provisional licenses for and inspection of mortgage brokers and loan officers. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the savings and loan commissioner in SECTION 1 (Section 156.105, Finance Code), in SECTION 3 (Section 156.207, Finance Code), and in SECTION 7 of this bill. ANALYSIS C.S.H.B. 1493 amends the Finance Code to modify provisions relating to the regulation of mortgage brokers. The bill requires the savings and loan commissioner (commissioner) by rule to adopt one or more standard forms for use by a mortgage broker or loan officer in representing that an applicant for a mortgage loan is preapproved or has prequalified for the loan. The bill requires the commissioner to adopt rules requiring a mortgage broker or loan officer to use the forms adopted by the commissioner not later than January 1, 2002 (Sec. 156.105 and SECTION 7). The bill requires the commissioner to obtain criminal history record information on an applicant from the Federal Bureau of Investigation (FBI) (Sec. 156.206). The bill provides that if 61 days after the commissioner requested the information, the FBI has not submitted the criminal history record information, the commissioner is required to issue a provisional license to the applicant, with an expiration date of not later than 60 days after the date of issuance. The bill provides for the renewal of the provisional license pending receipt of the criminal history record information. The bill requires the commissioner to issue a license to the applicant if the commissioner has not received the requested information from the FBI after the 181st day from the date the information was requested. The bill requires the commissioner to adopt rules for the administration of these provisions (Sec. 156.207). The bill requires each licensed mortgage broker to file a confidential annual report with the commissioner on a form prescribed by the commissioner with certain requirements (Sec. 156.213). The bill authorizes the commissioner to investigate and conduct inspections of a licensed person to determine whether the person is complying with these provisions and applicable rules. The bill provides that an inspection includes the authority to inspect books, records, documents, operations, and facilities of the license holder and access to any documents required by rules. The bill authorizes the commissioner to share information of criminal activity gathered during an inspection or investigation with a state agency or federal law enforcement agency (Sec. 156.301). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1493 modifies the original to require the savings and loan commissioner (commissioner) by rule to adopt standard forms for use by a mortgage broker of loan officer in representing that an applicant for a mortgage loan is preapproved or has been prequalified. The substitute requires the commissioner to adopt rules by January 1, 2002 requiring a mortgage broker or loan officer to use the forms (Sec. 156.105 and SECTION 7). The substitute no longer requires applicants for a mortgage broker or loan officer license to submit information and fingerprints to be used for background checks (Sec. 156.206). The substitute removes provisions from the original which modified the list of exemptions from regulations of mortgage brokers specifying that only full-time employees of certain institutions are exempt from the regulations (Sec. 156.202). The substitute authorizes the commissioner, for reasonable cause, to investigate a licensed person to determine whether the person is complying with these provisions and applicable rules. The substitute no longer requires the commissioner to adopt rules specifying the criteria to be used in determining reasonable cause. The substitute no longer provides that an affiliate of a licensee is subject to routine inspections by the commissioner if reports issued in connection with a routine inspection of a license holder provide documented evidence of unlawful activity between a license holder and an affiliate. The substitute amends the original to authorize the commissioner to share information of criminal activity gathered during an inspection or investigation with a state or federal law enforcement agency, but no longer authorizes the commissioner to cooperate and share information with other state and federal governmental agencies. The substitute no longer requires the commissioner to adopt rules to implement provisions relating to complaints, investigations, and routine inspections (Sec. 156.301).