TITLE: Relating to an exemption for certain property owners from regulatory requirements for residential mortgage loan originators.

SUMMARY: Relating to an exemption for certain property owners from regulatory requirements for residential mortgage loan originators.

FULL TEXT:
AN ACT relating to an exemption for certain property owners from regulatory requirements for residential mortgage loan originators. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 156.2012(b), Finance Code, is amended to read as follows: (b) To be eligible to register as a registered financial services company, a person must: (1) be a depository institution exempt from this chapter under Section 156.202(a-1)(5)(A) [156.202(a-1)(4)(A)] and chartered and regulated by the Office of the Comptroller of the Currency, or be a subsidiary of the institution; (2) provide a business plan satisfactory to the commissioner that sets forth the person's plan to: (A) provide education to its sponsored residential mortgage loan originators; (B) handle consumer complaints relating to its sponsored residential mortgage loan originators; and (C) supervise the residential mortgage loan origination activities of its sponsored residential mortgage loan originators; (3) pay a registration fee in an amount not to exceed $500; (4) designate an officer of the person to be responsible for the activities of its sponsored residential mortgage loan originators; (5) submit a completed application through the Nationwide Mortgage Licensing System and Registry together with the applicable fee required by Subdivision (3) or Subsection (c); (6) obtain preapproval from the commissioner that the person meets the eligibility requirements for registration as a financial services company; and (7) not be in violation of this chapter, a rule adopted under this chapter, or any order previously issued by the commissioner to the applicant. SECTION 2. Section 156.202(a-1), Finance Code, is amended to read as follows: (a-1) The following entities are exempt from this chapter: (1) a nonprofit organization: (A) providing self-help housing that originates zero interest residential mortgage loans for borrowers who have provided part of the labor to construct the dwelling securing the loan; or (B) that has designation as a Section 501(c)(3) organization by the Internal Revenue Service and originates residential mortgage loans for borrowers who, through a self-help program, have provided at least 200 labor hours or 65 percent of the labor to construct the dwelling securing the loan; (2) a mortgage banker registered under Chapter 157; (3) subject to Subsection (b), any owner of residential real estate who in any 12-consecutive-month period makes no more than three residential mortgage loans to purchasers of the property for all or part of the purchase price of the residential real estate against which the mortgage is secured; [and] (4) an owner of residential real estate who makes a first lien mortgage loan to a purchaser of the property against which the mortgage is secured, provided that all residential mortgage loan origination activity in connection with the loan is provided by a properly sponsored and authorized licensee who is required to comply with the requirements of Chapter 180; and (5) an entity that is: (A) a depository institution; (B) a subsidiary of a depository institution that is: (i) owned and controlled by the depository institution; and (ii) regulated by a federal banking agency; or (C) an institution regulated by the Farm Credit Administration. SECTION 3. Section 180.003(a), Finance Code, is amended to read as follows: (a) The following persons are exempt from this chapter: (1) a registered mortgage loan originator when acting for an entity described by Section 180.002(16)(A)(i), (ii), or (iii); (2) an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual; (3) a licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney: (A) takes a residential mortgage loan application; and (B) offers or negotiates the terms of a residential mortgage loan; (4) an individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that serves as the individual's residence; (5) subject to Subsection (d), an owner of residential real estate who in any 12-consecutive-month period makes no more than three residential mortgage loans to purchasers of the property for all or part of the purchase price of the residential real estate against which the mortgage is secured; [and] (6) subject to Subsection (d), an owner of a dwelling who in any 12-consecutive-month period makes no more than three residential mortgage loans to purchasers of the property for all or part of the purchase price of the dwelling against which the mortgage or security interest is secured;and (7) an owner of residential real estate who makes a first lien mortgage loan to a purchaser of the property against which the mortgage is secured, provided that all residential mortgage loan origination activity in connection with the loan is provided by a properly sponsored and authorized licensee who is required to comply with the requirements of this chapter.SECTION 4. This Act takes effect September 1, 2025.