Texas Amends Provisions of the Secondary Mortgage Loan Act
The Finance Commission of Texas (“OCCC”) recently adopted provisions amending the Rules implementing the Secondary Mortgage Loan Act (“SMLA”), which generally apply to lenders making secondary mortgage loans with interest rates exceeding 10% a year.
The amendments became effective September 8, 2016.
Information Updates. The Rules describe when the OCCC must be notified of changes to information provided in the original license application. As amended, the Rules specify that the requirement to provide updated information within 10 days applies prior to application approval, that licensees must notify the OCCC within 30 days if the information relates to the names of principal parties, criminal history, regulatory actions or court judgments, and that each applicant or licensee must ensure that all contact information is current and correct.
License Transfers. The Rules, as amended, repeal and replace the Rules governing license transfers. The amended Rules largely maintain the requirements of the former Rules, but now also provide for an alternative method for transferring a license. The amended Rules also clarify the “transfer of ownership” definition, and specify that the OCCC’s written permission is required to sell, transfer or assign a license and that an application must be filed within 30 days after the transfer. The amended Rules also allow the OCCC to temporarily authorize a transferee to operate pending final approval.
Criminal History Review. The Rules, as amended, repeal and replace the Rules governing criminal history review. The amended Rules specify the criminal history information collected by the OCCC, outlines factors the OCCC will consider when reviewing such information, identifies the criminal history information applicants must disclose and describes grounds for license denial, suspension and revocation.
Recordkeeping. The Rules describe recordkeeping requirements. As amended, the Rules identifies documentation and disclosures required under the Department of Defense’s Military Lending Act Rule as well as documents that lenders can obtain to determine whether a consumer is a covered military borrower, and specifies that amount of time licensees must maintain such documents in the borrower’s loan file.
Fingerprint Processing Fee. The Rules, as amended, provide that a license applicant must pay a fee to a party designated by the Texas Department of Public Safety for processing fingerprints, replacing a statement that the fee will be paid by the OCCC.
