HBA-JLV H.B. 1636 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1636 By: McCall Financial Institutions 6/14/2001 Enrolled BACKGROUND AND PURPOSE The Texas Savings and Loan Department (department) protects the depositors of Texas by ensuring the safe and sound operation of state-chartered savings institutions. In 1999, the legislature also gave the department responsibility for licensing mortgage brokers. The Sunset Advisory Commission review of the department began shortly after the 76th Regular Session and provided several recommendations relating to licensing of mortgage brokers, criminal background information, and routine inspections. House Bill 1636 continues the department until 2013 and applies the recommendations of the Sunset Advisory Commission. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Finance Commission of Texas in SECTION 9 (Section 156.213, Finance Code) and in SECTION 10 (Section 156.301, Finance Code) of this bill. ANALYSIS House Bill 1636 amends the Finance Code to continue the Texas Savings and Loan Department (department) until September 1, 2013, to set forth standard Sunset Advisory Commission recommendations regarding conflicts of interest, consumer information and complaints, standards of conduct, and the development of an equal employment opportunity policy, and to modify the functions of the department. The bill requires the savings and loan commissioner (commissioner) or the commissioner's designee to provide to agency employees information and training on participation in the state employee incentive program (Sec. 13.015). The bill also requires the commissioner to issue a provisional license to applicants for a mortgage broker or loan officer license (license) for whom criminal history information has not been received from the Federal Bureau of Investigation within 60 days of the request for information and if the information has not been received within 180 days, the license is no longer provisional (Sec. 156.207). The bill authorizes the commissioner to waive any prerequisite to obtaining a license for an applicant after reviewing the applicant's credentials and determining that the applicant holds a license issued by another jurisdiction. The bill sets conditions in which the commissioner may issue a provisional license to an applicant currently licensed in another jurisdiction, including a foreign country. The bill requires the commissioner to issue a license to the provisional license holder if the provisional license holder is eligible to be licensed, or the commissioner verifies that the provisional license holder meets the academic and experience requirements for a license. The bill provides that the commissioner must approve or deny a provisional license holder's application for a license within 180 days of the issuance of a provisional license. The bill authorizes the finance commission to establish a reasonable fee for provisional licenses in an amount necessary to cover the cost of issuing the license (Sec. 156.2071). The bill prohibits a person whose license has expired from engaging in activities that require a license until the license has been renewed. The bill provides the fee amounts and the requirements necessary for the renewal of a license after certain periods of time. The bill requires the commissioner to send a written notice of the impending expiration of a license by a specific time to the person at the person's last known address according to the records of the department (Sec. 156.2081). The bill requires each licensed mortgage broker to file an annual report with the department. The report must include data on loan originations in this state for the mortgage broker, information on each loan officer sponsored by the mortgage broker, and any other information required by finance commission rule. The bill also provides that trade information, including information used to determine statistical entries in the report related to loan origination volume, is confidential and is prohibited from being disclosed by the department (Sec. 156.213). The bill authorizes the commissioner to conduct inspections of a licensed person as the commissioner determines necessary to determine whether the person is complying with the applicable rules and provides that inspections may include inspection of the books, records, documents, operations, and facilities of the person and access to any documents. The bill authorizes the commissioner to share evidence of criminal activity gathered during an inspection or investigation with any state or federal law enforcement agency (Sec. 156.301). The bill requires the commission by rule to provide guidelines to govern a routine inspection or an investigation, including rules to determine the information and records to which the commissioner may demand access and to establish what constitutes reasonable cause for an investigation. The bill provides that information obtained by the commissioner during a routine inspection or an investigation is confidential unless disclosure of the information is permitted or required by other law (Sec. 156.301). The bill clarifies provisions to provide that only administrative penalties that are appealed are to be considered contested cases, rather than all proceedings to impose the penalties (Sec. 156.302). EFFECTIVE DATE September 1, 2001.