Law:Title 4. Regulation Of Interest, Loans, And Financed Transactions. Subtitle B. Loans And Financed Transactions from Chapter 351. Property Tax Lenders (Texas)

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Subtitle B. Loans And Financed Transactions

Contents

Chapter 351. Property Tax Lenders

Subchapter A. General Provisions

Section 351.001.  Short Title.

This chapter may be cited as the Property Tax Lender License Act.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.002.  Definitions.

In this chapter:

(1)  "Property tax lender" means a person that engages in activity requiring a license under Section 351.051.  The term does not include:

(A)  a person who is sponsored by a licensed property tax lender to assist with or perform the acts of a property tax lender; or

(B)  a person who performs only clerical functions such as delivering a loan application to a property tax lender, gathering or requesting information related to a property tax loan application on behalf of the prospective borrower or property tax lender, word processing, sending correspondence, or assembling files.

(2)  "Property tax loan" means an advance of money:

(A)  in connection with a transfer of lien under Section 32.06, Tax Code, or a contract under Section 32.065, Tax Code;

(B)  in connection with which the person making the transfer arranges for the payment, with a property owner's written consent, of property taxes and related closing costs on behalf of the property owner in accordance with Section 32.06, Tax Code; and

(C)  that is secured by a special lien against property transferred from a taxing unit to the property tax lender and which may be further secured by the lien or security interest created by a deed of trust, security deed, or other security instrument.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.003.  Secondary Market Transactions.

This chapter does not prohibit a property tax lender from receiving compensation from a party other than the property tax loan applicant for the sale, transfer, assignment, or release of rights on the closing of a property tax loan transaction.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.004.  Affiliated Business Arrangements.

A property tax lender may conduct business under this chapter in an office, office suite, room, or place of business in which any other business is conducted or in combination with any other business unless the commissioner:

(1)  determines after a hearing that the conduct of the other business in that office, office suite, room, or place of business has concealed an evasion of this chapter; and

(2)  orders the lender in writing to desist from the conduct of the other business in that office, office suite, room, or place of business.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1382, Sec. 1, eff. September 1, 2009.



Section 351.005.  Application Of Tax Code.

This chapter does not affect the application of Section 32.06 or 32.065, Tax Code.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.006.  Enforcement.

In addition to any other applicable enforcement provisions, Subchapters E, F, and G, Chapter 14, apply to a violation of this chapter or Section 32.06 or 32.065, Tax Code, in connection with property tax loans.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.007.  Rules.

The finance commission may adopt rules to ensure compliance with this chapter and Sections 32.06 and 32.065, Tax Code.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.008.  Examination Of Lenders; Access To Records.

(a) The commissioner or the commissioner's representative shall, at the times the commissioner or the representative considers necessary:

(1)  examine each place of business of each property tax lender; and

(2)  investigate the lender's transactions, including loans, and records, including books, accounts, papers, and correspondence, to the extent the transactions and records pertain to the business regulated under this chapter and Sections 32.06 and 32.065, Tax Code.

(b)  The property tax lender shall:

(1)  give the commissioner or the commissioner's representative free access to the lender's office, place of business, files, safes, and vaults; and

(2)  allow the commissioner or the representative to make a copy of an item that may be investigated under Subsection (a)(2).

(c)  During an examination, the commissioner or the commissioner's representative may administer oaths and examine any person under oath on any subject pertinent to a matter that the commissioner or the representative is authorized or required to consider, investigate, or secure information about under this chapter or Section 32.06 or 32.065, Tax Code.

(d)  Information obtained under this section is confidential.

(e)  A property tax lender's violation of Subsection (b) is a ground for the suspension or revocation of the lender's license.

Added by Acts 2009, 81st Leg., R.S., Ch. 1382, Sec. 2, eff. September 1, 2009.



Section 351.009.  General Investigation.

(a) To discover a violation of this chapter or Section 32.06 or 32.065, Tax Code, or to obtain information required under this chapter or Section 32.06 or 32.065, Tax Code, the commissioner or the commissioner's representative may investigate the records, including books, accounts, papers, and correspondence, of a person, including a property tax lender, who the commissioner or the representative has reasonable cause to believe is violating this chapter or Section 32.06 or 32.065, Tax Code, regardless of whether the person claims to not be subject to this chapter or Section 32.06 or 32.065, Tax Code.

(b)  For the purposes of this section, a person who advertises, solicits, or otherwise represents that the person is willing to make a property tax loan is presumed to be engaged in the business described by Section 351.051.

Added by Acts 2009, 81st Leg., R.S., Ch. 1382, Sec. 2, eff. September 1, 2009.



Section 351.010.  Refusal To Allow Examination Or Inspection.

A property tax lender who fails or refuses to permit an examination or investigation authorized by this subchapter violates this chapter.  The failure or refusal is grounds for the suspension or revocation of the lender's license.

Added by Acts 2009, 81st Leg., R.S., Ch. 1382, Sec. 2, eff. September 1, 2009.



Section 351.011.  Verification Of Net Assets.

If the commissioner questions the amount of a property tax lender's net assets, the commissioner may require certification by an independent certified public accountant that:

(1)  the accountant has reviewed the property tax lender's books, other records, and transactions during the reporting year;

(2)  the books and other records are maintained using generally accepted accounting principles; and

(3)  the property tax lender meets the net assets requirement of Section 351.153.

Added by Acts 2009, 81st Leg., R.S., Ch. 1382, Sec. 2, eff. September 1, 2009.



Subchapter B. Authorized Activities; License

Section 351.051.  License Required.

(a) A person must hold a license issued under this chapter to:

(1)  engage in the business of making, transacting, or negotiating property tax loans;  or

(2)  contract for, charge, or receive, directly or indirectly, in connection with a property tax loan subject to this chapter, a charge, including interest, compensation, consideration, or another expense, authorized under this chapter that in the aggregate exceeds the charges authorized under other law.

(b)  A person may not use any device, subterfuge, or pretense to evade the application of this section.

(c)  This chapter does not apply to:

(1)  any of the following entities or an employee of any of the following entities, if the employee is acting for the benefit of the employer:

(A)  a bank, savings bank, or savings and loan association, or a subsidiary or an affiliate of a bank, savings bank, or savings and loan association; or

(B)  a state or federal credit union, or a subsidiary, affiliate, or credit union service organization of a state or federal credit union; or

(2)  an individual who:

(A)  makes a property tax loan from the individual's own funds to a spouse, former spouse, or persons in the lineal line of consanguinity of the individual lending the money;  or

(B)  makes five or fewer property tax loans in any consecutive 12-month period from the individual's own funds.

(d)  A property tax lender licensed under this chapter is not required to be licensed under Chapter 156 or any other provision of this code.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.0515.  Residential Mortgage Loan Originator License Required. (a)

In this section, "Nationwide Mortgage Licensing System and Registry" and "residential mortgage loan originator" have the meanings assigned by Section 180.002.

(b)  Unless exempt under Section 180.003, an individual who acts as a residential mortgage loan originator in the making, transacting, or negotiating of a property tax loan for a principal dwelling must:

(1)  be individually licensed to engage in that activity  under this chapter;

(2)  be enrolled with the Nationwide Mortgage Licensing System and Registry as required by Section 180.052; and

(3)  comply with other applicable requirements of Chapter 180 and rules adopted under that chapter.

(c)  The finance commission shall adopt rules establishing procedures for issuing, renewing, and enforcing an individual license under this section. In adopting rules under this subsection, the finance commission shall ensure that:

(1)  the minimum  eligibility requirements for issuance of an individual license are the same as the requirements of Section 180.055;

(2)  the minimum eligibility requirements for renewal of an individual license are the same as the requirements of Section 180.059; and

(3)  the applicant pays:

(A)  an investigation fee in a reasonable amount determined by the commissioner; and

(B)  an annual license fee in an amount determined as provided by Section 14.107.

(d)  The finance commission may adopt rules under this chapter as required to carry out the intentions of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No. 110-289).

Added by Acts 2009, 81st Leg., R.S., Ch. 1104, Sec. 17, eff. June 19, 2009.



Section 351.052.  Issuance Of More Than One License For Property Tax Lender.

(a) The commissioner may issue more than one license to a property tax lender on compliance with this chapter for each license.

(b)  A person who is required to hold a license under this chapter must hold a separate license for each office at which property tax loans are made, negotiated, serviced, held, or collected under this chapter.

(c)  A license is not required under this chapter for a place of business:

(1)  devoted to accounting or other recordkeeping;  and

(2)  at which property tax loans are not made, negotiated, serviced, held, or collected under this chapter.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.053.  Area Of Business; Property Tax Loans By Mail.

(a) A property tax lender is not limited to making property tax loans to residents of the community in which the office for which the license or other authority is granted is located.

(b)  A property tax lender may make, negotiate, arrange, and collect property tax loans by mail from a licensed office.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.054.  Notice To Taxing Unit.

(a) A transferee of a tax lien must include with the sworn document filed with the collector of a taxing unit under Section 32.06(a-1), Tax Code, the information required by this section.

(b)  If the transferee is licensed under this chapter, the transferee shall include with the filing the licensee's license number assigned by the commissioner.

(c)  If the transferee is exempt from this chapter under Section 351.051(c)(1), the transferee shall include with the filing an affidavit stating the entity's type of organization that qualifies it for the exemption, any charter number assigned by the governmental authority that issued the entity's charter, and the address of the entity's main office.

(d)  If the transferee is exempt from this chapter under Section 351.051(c)(2), the transferee shall include a certificate issued by the commissioner indicating the entity's exemption.  The commissioner shall establish procedures for issuance of a certificate under this subsection, application requirements, and requirements regarding information that must be submitted with an application.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Subchapter C. Application For And Issuance Of License

Section 351.101.  Application Requirements.

(a) The application for a license under this chapter must:

(1)  be under oath;

(2)  give the approximate location from which business is to be conducted;

(3)  identify the business's principal parties in interest;  and

(4)  contain other relevant information that the commissioner requires for the findings required under Section 351.104.

(b)  On the filing of one or more license applications, the applicant shall pay to the commissioner an investigation fee not to exceed $200.

(c)  On the filing of each license application, the applicant shall pay to the commissioner for the license's year of issuance a license fee in an amount determined as provided by Section 14.107.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.102.  Bond.

(a) If the commissioner requires, an applicant for a license under this chapter shall file with the application a bond that is:

(1)  in an amount not to exceed the total of:

(A)  $50,000 for the first license;  and

(B)  $10,000 for each additional license;

(2)  satisfactory to the commissioner;  and

(3)  issued by a surety company qualified to do business as a surety in this state.

(b)  The bond must be in favor of this state for the use of this state and the use of a person who has a cause of action under this chapter against the license holder.

(c)  The bond must be conditioned on:

(1)  the license holder's faithful performance under this chapter and rules adopted under this chapter;  and

(2)  the payment of all amounts that become due to the state or another person under this chapter during the calendar year for which the bond is given.

(d)  The aggregate liability of a surety to all persons damaged by the license holder's violation of this chapter may not exceed the amount of the bond.

(e)  A license holder engaged in the business of making, transacting, or negotiating a property tax loan for a principal dwelling must meet the surety bond or recovery fund fee requirement, as applicable, of the holder's residential mortgage loan originator under Section 180.058.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1104, Sec. 18, eff. June 19, 2009.



Section 351.103.  Investigation Of Application.

On the filing of an application and, if required, a bond, and on payment of the required fees, the commissioner shall conduct an investigation to determine whether to issue the license.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.104.  Approval Or Denial Of Application.

(a) The commissioner shall approve the application and issue to the applicant a license to make property tax loans under this chapter if the commissioner finds that:

(1)  the financial responsibility, experience, character, and general fitness of the applicant are sufficient to:

(A)  command the confidence of the public;  and

(B)  warrant the belief that the business will be operated lawfully and fairly, within the purposes of this chapter;  and

(2)  the applicant has net assets of at least $25,000 available for the operation of the business.

(b)  If the commissioner does not find that the eligibility requirements of Subsection (a) are met, the commissioner shall notify the applicant.

(c)  If an applicant requests a hearing on the application not later than the 30th day after the date of notification under Subsection (b), the applicant is entitled to a hearing not later than the 60th day after the date of the request.

(d)  The commissioner shall approve or deny the application not later than the 60th day after the date of the filing of a completed application with payment of the required fees, or if a hearing is held, after the date of the completion of the hearing on the application.  The commissioner and the applicant may agree to a later date in writing.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.105.  Disposition Of Fees On Denial Of Application.

If the commissioner denies the application, the commissioner shall retain the investigation fee and shall return to the applicant the license fee submitted with the application.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Subchapter D. License

Section 351.151.  Name And Place On License.

(a) A license must state:

(1)  the name of the license holder;  and

(2)  the address of the office from which the business is to be conducted.

(b)  A license holder may not conduct business under this chapter under a name or at a place of business in this state other than the name or office stated on the license.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.152.  License Display.

A license holder shall display a license at the place of business provided on the license.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.153.  Minimum Assets For License.

A license holder shall maintain for each office for which a license is held net assets of at least $25,000 that are used or readily available for use in conducting the business of that office.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.154.  Annual License Fee. Not

later than December 1, a license holder shall pay to the commissioner for each license held an annual fee for the year beginning the next January 1, in an amount determined as provided by Section 14.107.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.155.  Expiration Of License On Failure To Pay Annual Fee.

If the annual fee for a license is not paid before the 16th day after the date on which the written notice of delinquency of payment has been given to the license holder, the license expires on the later of:

(1)  that day;  or

(2)  December 31 of the last year for which an annual fee was paid.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.156.  License Suspension Or Revocation.

After notice and a hearing the commissioner may suspend or revoke a license if the commissioner finds that:

(1)  the license holder failed to pay the annual license fee, an examination fee, an investigation fee, or another charge imposed by the commissioner under this chapter;

(2)  the license holder, knowingly or without the exercise of due care, violated this chapter or Section 32.06 or 32.065, Tax Code, or a rule adopted or an order issued under this chapter or Section 32.06 or 32.065, Tax Code;

(3)  a fact or condition exists that, if it had existed or had been known to exist at the time of the original application for the license, clearly would have justified the commissioner's denial of the application; or

(4)  the license holder has failed to ensure that an individual acting as a residential mortgage loan originator, as defined by Section 180.002, in the making, transacting, or negotiating of a property tax loan for a principal dwelling is licensed under this chapter in accordance with Section 351.0515.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1104, Sec. 19, eff. June 19, 2009.



Section 351.157.  Corporate Charter Forfeiture.

(a) A license holder who violates this chapter is subject to revocation of the holder's license and, if the license holder is a corporation, forfeiture of its charter.

(b)  When the attorney general is notified of a violation of this chapter and revocation of a license, the attorney general shall file suit in a district court in Travis County, if the license holder is a corporation, for forfeiture of the license holder's charter.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.158.  License Suspension Or Revocation Filed With Public Records.

The decision of the commissioner on the suspension or revocation of a license and the evidence considered by the commissioner in making the decision shall be filed in the public records of the commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.159.  Reinstatement Of Suspended License;  Issuance Of New License After Revocation.

The commissioner may reinstate a suspended license or issue a new license on application to a person whose license has been revoked if at the time of the reinstatement or issuance no fact or condition exists that clearly would have justified the commissioner's denial of an original application for the license.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.160.  Surrender Of License.

A license holder may surrender a license issued under this chapter by delivering to the commissioner:

(1)  the license;  and

(2)  a written notice of the license's surrender.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.161.  Effect Of License Suspension, Revocation, Or Surrender.

(a) The suspension, revocation, or surrender of a license issued under this chapter does not affect the obligation of a contract between the license holder and a debtor entered into before the revocation, suspension, or surrender.

(b)  Surrender of a license does not affect the license holder's civil or criminal liability for an act committed before surrender.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.162.  Moving An Office.

(a) A license holder shall give written notice to the commissioner before the 30th day preceding the date the license holder moves an office from the location provided on the license.

(b)  The commissioner shall amend a license holder's license accordingly.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.163.  Transfer Or Assignment Of License.

A license may be transferred or assigned only with the approval of the commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.



Section 351.164.  Reporting Requirement.

(a) Each year, a license holder shall file with the commissioner a report that contains relevant information concerning its transactions conducted under this chapter.

(b)  A report under this section must be:

(1)  under oath; and

(2)  in the form prescribed by the commissioner.

(c)  A report under this section is confidential.

(d)  Annually the commissioner shall prepare and publish a consolidated analysis and recapitulation of reports filed under this section.

Added by Acts 2007, 80th Leg., R.S., Ch. 1220, Sec. 1, eff. September 1, 2007.


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