This legislative update for the 2011 legislative session of the Texas Legislature summarizes Senate Bill 1124, which amends Chapters 156 (Mortgage Brokers), 157 (Registration of Mortgage Bankers), and 180 (Texas SAFE Act) of the Texas Finance Code. The federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Federal SAFE Act) required all states to enact a system for licensing and registering loan originators that meets its the requirements. To be in compliance with the Federal SAFE Act the Texas Legislature, in the 2009 legislative session, enacted Chapter 180 and amended Chapters 156 and 157. A number of provisions in Chapters 156, 157, and 180, however, still need to be reconciled due to the differences in definitions, powers and terminology that exist in these Chapters. Senate Bill 1124 reconciles these differences, harmonizes the text, where applicable, and conforms the terminology of these Chapters to that used in the Federal SAFE Act. In addition, Senate Bill 1124 makes other amendments to these Chapters. In the November 4, 2011 issue of the Texas Register, the Finance Commission of Texas issued final administrative rules implementing the changes to Chapters 156 and 157 enacted by Senate Bill 1124 (see 7 TAC Chapter 80, §§80.1 – 80.7 (repealed); and §§80.9, 80.13 – 80.15, 80.20 – 80.23, 80.301 – 80.305, and 80.307 (amended), concerning Texas Residential Mortgage Loan Originator Regulations; 7 TAC Chapter 81, §§81.1 – 81.5, 81.7, 81.8, 81.10 – 81.12, and 81.15 (amended) and §81.20 (new), concerning Mortgage Banker Registration and Residential Mortgage Loan Officer Licensing.) These administrative rule changes are not addressed in this legislative update but will be the subject of a separate memorandum. SENATE BILL 1124 SUMMARY • Effective September 1, 2011, except for new Section 180.171 concerning certain individuals originating residential mortgage loans exclusively for a federally chartered depository institution that takes effect on November 1, 2011 (see SECTION 63 below). • Changes the heading of Chapter 156 from “Mortgage Brokers” to “Residential Mortgage Loan Companies and Residential Mortgage Loan Originators,” changes the title of Chapter 156 from the “Mortgage Broker License Act” to the “Residential Mortgage Loan Company and Residential Mortgage Loan Originator Licensing and Registration Act,” and replaces the terms “mortgage broker” and “loan officer” with the terms “residential mortgage loan company” and “residential mortgage loan originator,” respectively.
