Client Memo - Proposed Rule Changes - Texas Department of Savings & Mortgage Lending
October 1,2020
Texas law requires all State agencies to perform a rule review every four years. This process facilitates: elimination of unnecessary rules, needed clarifications, and reconciliation with either changes in current practices or changes in other sections of the law. The Texas Department of Savings and Mortgage Lending (SML) has completed their review of rules related to non-depository mortgage servicers, mortgage companies, mortgage bankers, and mortgage originators.
The comment period remains open if you wish to share an opinion on these proposed changes. A vote for final adoption of the changes to all three Chapters, barring any substantial objections, will be made by the Finance Commission of Texas at their December 11, 2020 meeting. The changes will not become effective until after this final adoption vote and rules are published again in the Texas Register.
Mortgage Servicers
Proposed rule amendment to 7 TAC Chapter 79 was published on September 4, 2020 in the Texas Register. Public comment ends October 4, 2020. SML has provided a link on their website to view the proposed changes.
https://www.sos.state.tx.us/texreg/archive/September42020/Proposed%20Rules/7.BANKING%20AND%20SECURITIES.html#45
Beyond clarifying language the only substantive change in this section is the removal of the required disclosure form and graphic embedded in the rule. Going forward the required disclosure form will be published on the SML website.
https://www.sml.texas.gov/ResidentialMortgageLoanServicer/documents/rmls_news_information/rmls_required_disclosure_statement.pdf
Mortgage Originators, Mortgage Bankers, Mortgage Companies
Proposed rule amendment to 7 TAC Chapter 80 (Texas Residential Mortgage Loan Companies) and 7 TAC Chapter 81 (Mortgage Bankers and Residential Mortgage Loan Originators) was published on September 25, 2020 in the Texas Register. Public comment ends October 25, 2020. SML has provided a link on their website to view the proposed changes. https://www.sos.state.tx.us/texreg/archive/September252020/Proposed%20Rules/7.BANKING%20AND%20SECURITIES.html#6
Each person should review all these proposed changes themselves. Highlighted in the bullets below are several substantive additions and deletions.
- §80.202 and §81.202. Prohibition on False, Misleading, or Deceptive Practices and Improper Dealings
- expands the definitions to include “knowingly overstating, inflating, altering, amending or disparaging” any source or potential source of residential mortgage loan funds.
- adds “Failing to accurately respond within a reasonable time period to reasonable questions from a mortgage applicant concerning the scope and nature of the mortgage banker's or originator's services and any costs.”
- adds section on “Sharing or Splitting Origination Fees with the Mortgage Applicant.”
- requires inclusion of the originator's NMLS identification information on all correspondence.
- requires additional information to be included on the mortgage transaction log including “a description of the purpose for the loan (e.g., purchase, refinance, construction, etc.);" and “a description of the owner's intended occupancy of the subject real estate.”
- expressly requires posting the consumer complaint recovery fund disclosure on social media sites; but removes the posting requirement of the complaint recovery fund notice at physical offices and clarifies the existing requirement on websites.
- removes the requirement to post office hours at physical locations.