The Finance Commission of Texas, on behalf of the Texas Department of Savings and Mortgage Lending (“SML”), published final changes to existing rules and added new rules to the Texas Administration Code governing residential mortgage loan companies, mortgage bankers, individual residential mortgage loan originators, mortgage servicers, and wrap mortgage loans. The changes were previously proposed in the September 6, 2024, issue of the Texas Register (49 TexReg 6864) and have now been adopted without change, as published in the November 15, 2024, issue of the Texas Register (49 TexReg 9204).
Many existing rules under Title 7, Part 4 of the Texas Administrative Code (“TAC”) have been relocated to new chapters. Chapter 81, which previously covered both residential mortgage loan originators and mortgage bankers has been reorganized and split into Chapters 55 and 57, respectively. Rules for mortgage companies have been relocated from Chapter 80 to Chapter 56. Additionally, rules for mortgage servicers have been relocated from Chapter 79 to Chapter 58. Wrap mortgage loan rules are now covered in Chapter 59 instead of Chapter 78. Many of the finalized updates became effective on November 23, 2024.
New definitions have been added to the rules, including " "E-Sign Act," "making a residential mortgage loan," “trigger lead," "UETA," "wrap lender," and "wrap mortgage loan." In addition, clarification is provided that any notice or disclosure made by a mortgage company or mortgage banker may be delivered and signed electronically in accordance with state and federal law governing electronic signatures and delivery of electronic documents.
For Texas Home Equity loans, mortgage companies and mortgage bankers will be required to retain a copy of the Texas Home Equity Affidavit and Agreement and if a borrower is paying bona fide discount points, an acknowledgment form that substantiates that the discount points are bona fide as evidenced by a reduced interest rate. DocMagic currently provides a Texas Discount Point Acknowledgment in the closing package for Texas Home Equity loans, which satisfies this documentation requirement.
There are notable changes to the specific notices that must be provided to applicants by mortgage companies and mortgage bankers. Revised sample model forms were provided in the September 6, 2024, issue of the Texas Register for the Texas Mortgage Company Disclosure ( Form ID: TXMCD.MSC) and the Texas Mortgage Banker Disclosure (Form ID: TXMBD.MSC). In addition, the signature requirement for the forms was removed from the applicable rules.
Sample model forms were also provided for the following forms:
- Mortgage Company Conditional Pre-Qualification Letter – Form A (Form ID: TXCQL.MSC)
- Mortgage Company Conditional Approval Letter -Form B (Form ID: TXCAL.MSC)
- Mortgage Banker Conditional Pre-Qualification Letter – Form A (Form ID: TXMBCQL.MSC)
- Mortgage Banker Conditional Approval Letter – B (Form ID: TXMBCAL.MSC)
If an optional Conditional Pre-Qualification or Conditional Approval Letter is provided to an applicant, the form must now be signed by the residential mortgage loan originator acting on behalf of either a mortgage company or mortgage banker. New rules clarify that the loan originator has a duty to issue accurate letters and may be subject to disciplinary action and a recovery claim for fraudulent or misleading practices.
DocMagic will provide the updated forms automatically beginning on December 5, 2024. If you have any questions, please contact DocMagic’s Compliance Department.
