Texas Department of Savings and Mortgage Lending to Remain Separate Agency

The Texas Finance Commission recently rejected the Sunset Advisory Commission’s recommendation to abolish the Department of Savings and Mortgage Lending (SML), deciding instead to continue the SML as a separate state agency for at least the next 12 years, until 2031.

The Sunset Advisory Commission’s recommendation was based on its finding that the SML, which regulates 26 state savings banks as well as mortgage companies and licensed residential mortgage loan originators, unnecessarily duplicates functions of the Texas Department of Banking (DBO), which regulates, among others, 240 state-chartered banks.  Based on this finding, the Sunset review recommended abolishing the SML and transferring all SML functions, including regulation of state savings banks and the mortgage industry, to the DBO.  Although the finding was based primarily on the Sunset staff’s determination that differences between the banks regulated at each agency have diminished over time, and that no other state regulates banks in two separate state agencies like Texas, the Sunset review also suggested that transferring mortgage industry regulation from the SML to the DBO would be beneficial as it would maintain and centralize mortgage lending regulation expertise in the state.  The Finance Commission declined to follow the recommendation.

The Sunset Advisory Commission’s review was conducted pursuant to its mandate to make state government more efficient, effective, and accountable by monitoring and periodically reviewing the performance of state agencies to determine whether the agencies and their functions continue to be needed.