85R19328 TSR-F     By: Burrows H.B. No. 3367     Substitute the following for H.B. No. 3367:     By:  Stephenson C.S.H.B. No. 3367       A BILL TO BE ENTITLED   AN ACT   relating to savings and loan associations, savings banks,   residential mortgage loan originators and servicers, and other   persons or entities under the regulatory jurisdiction of the   Department of Savings and Mortgage Lending and the savings and   mortgage lending commissioner; creating an offense; imposing an   administrative penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Sections 62.001(a), (b), and (d), Finance Code,   are amended to read as follows:          (a)  Five or more residents of this state may apply to form   and incorporate an association by submitting to the commissioner an   application and the filing fee.          (b)  An application must contain:                (1)  two copies of the association's certificate of   formation [articles of incorporation] identifying:                      (A)  the name of the association;                      (B)  the location of the principal office; and                      (C)  the names and addresses of the initial   directors;                (2)  two copies of the association's bylaws;                (3)  data sufficiently detailed and comprehensive to   enable the commissioner to make a determination under Section   62.007, including statements, exhibits, and maps;                (4)  other information relating to the association and   its operation that the finance commission by rule requires; and                (5)  financial information about each applicant,   incorporator, director, or shareholder that the finance commission   by rule requires.          (d)  The certificate of formation [articles of   incorporation] and statements of fact shall be signed and sworn to.          SECTION 2.  Section 62.002(a), Finance Code, is amended to   read as follows:          (a)  A capital stock association's certificate of formation   [articles of incorporation] must include a statement of:                (1)  the aggregate number of shares of common stock   that the association may issue;                (2)  the par value of each share or that the shares are   without par value;                (3)  whether the association may issue preferred stock;                (4)  the amount of stock that has been subscribed and   will be paid for before the association begins business;                (5)  the name and address of each subscriber and the   amount subscribed by each; and                (6)  the amount of paid-in surplus with which the   association will begin business.          SECTION 3.  Section 62.003, Finance Code, is amended to read   as follows:          Sec. 62.003.  ADDITIONAL INCORPORATION REQUIREMENTS FOR   MUTUAL ASSOCIATION. (a) A mutual association's certificate of   formation [articles of incorporation] must include a statement of   the amount of savings liability of the association and the amount of   the expense fund with which the association will begin business.          (b)  Before approving the certificate of formation   [articles of incorporation] of a mutual association, the   commissioner may require the association to have subscriptions for   an aggregate amount of savings accounts and an expense fund in an   aggregate amount that the commissioner, under rules of the finance   commission, finds is necessary for the successful operation of the   association.          SECTION 4.  Sections 62.007(a) and (b), Finance Code, are   amended to read as follows:          (a)  The commissioner may approve an application to   incorporate only if the commissioner finds that:                (1)  the prerequisites to incorporation required by   this chapter are satisfied;                (2)  the character, responsibility, and general   fitness of each person named in the certificate of formation   [articles of incorporation] command confidence and warrant belief   that:                      (A)  the business of the association will be   honestly and efficiently conducted in accordance with the intent   and purpose of this subtitle; and                      (B)  the association will have qualified   full-time management;                (3)  there is a public need for the association;                (4)  the volume of business in the community in which   the association will conduct its business indicates a profitable   operation is probable; and                (5)  the operation of the association will not unduly   harm an existing association.          (b)  On finding that the requirements of Subsection (a) are   fulfilled, the commissioner shall:                (1)  enter an order approving the application and   stating the findings required by Subsection (a);                (2)  issue under official seal a certificate of   incorporation;                (3)  deliver a copy of the approved certificate of   formation [articles of incorporation] and bylaws to the   incorporators; and                (4)  permanently retain a copy of the certificate of   formation [articles] and bylaws.          SECTION 5.  The heading to Section 62.010, Finance Code, is   amended to read as follows:          Sec. 62.010.  AMENDMENT OF CERTIFICATE OF FORMATION   [ARTICLES OF INCORPORATION] OR BYLAWS.          SECTION 6.  Section 62.010(a), Finance Code, is amended to   read as follows:          (a)  An association may amend its certificate of formation   [articles of incorporation] or bylaws by a resolution adopted by a   majority vote of those entitled to vote attending an annual meeting   or a special meeting called for that purpose.          SECTION 7.  Section 62.011(a), Finance Code, is amended to   read as follows:          (a)  Only with the prior approval of the commissioner may an   association:                (1)  establish an office other than the principal   office stated in the association's certificate of formation   [articles of incorporation];                (2)  move an office from its immediate vicinity; or                (3)  change the association's name.          SECTION 8.  Section 62.051, Finance Code, is amended to read   as follows:          Sec. 62.051.  PURPOSE OF INCORPORATION. A person may apply   to form and incorporate an association for the purpose of:                (1)  purchasing the assets, assuming the liabilities,   excluding liability to stockholders, and continuing the business of   an association the commissioner considers to be in an unsafe   condition; or                (2)  acquiring an existing association by merger.          SECTION 9.  Sections 62.053(a) and (e), Finance Code, are   amended to read as follows:          (a)  The commissioner shall approve an application under   this subchapter if the commissioner finds that:                (1)  the business of the association that is to be   reorganized or merged can be effectively continued under the   certificate of formation [articles of incorporation]; and                (2)  the reorganization or merger is in the best   interest of the general public and the savers, depositors,   creditors, and shareholders of the association that is to be   reorganized or merged.          (e)  In a merger, a shareholder of a capital stock   association has the same dissenter's rights as a shareholder of a   domestic business corporation under the Business Organizations   Code [Texas Business Corporation Act].          SECTION 10.  Section 62.156(c), Finance Code, is amended to   read as follows:          (c)  An association may retire or redeem preferred stock in   the manner provided by:                (1)  the certificate of formation [articles of   incorporation]; or                (2)  a resolution of the board establishing the rights   and preferences relating to the stock.          SECTION 11.  Sections 62.157(a) and (c), Finance Code, are   amended to read as follows:          (a)  The certificate of formation [articles of   incorporation] may:                (1)  authorize that shares of preferred stock be   divided into and issued in series; and                (2)  determine the rights and preferences of each   series or part of a series.          (c)  The certificate of formation [articles of   incorporation] may authorize the board by resolution to divide   classes of preferred stock into series and to determine the rights   and preferences of the shares of each series. A copy of the   resolution must be submitted to the commissioner before the shares   may be issued. The commissioner shall file the resolution in the   commissioner's office if the resolution conforms to this subtitle.   After the resolution is filed, it is considered an amendment of the   association's certificate of formation [articles of   incorporation].          SECTION 12.  Sections 62.252(b) and (c), Finance Code, are   amended to read as follows:          (b)  The directors, or the managing officer, shall execute   [two copies of] the application required by Section 62.251.          (c)  Each director, or the managing officer, [of the   association] shall sign and acknowledge the application [as a   subscriber] and the proposed bylaws [as an incorporator].          SECTION 13.  Section 62.351(c), Finance Code, is amended to   read as follows:          (c)  A shareholder of a capital stock association has the   same dissenter's rights as a shareholder of a domestic corporation   under the Business Organizations Code [Texas Business Corporation   Act].          SECTION 14.  Section 62.405(c), Finance Code, is amended to   read as follows:          (c)  A surviving association that is a domestic association   shall operate under:                (1)  the certificate of formation [articles] and bylaws   of the merging or consolidating domestic association; and                (2)  the laws applicable to a domestic association.          SECTION 15.  Section 62.454(b), Finance Code, is amended to   read as follows:          (b)  After the merger takes effect:                (1)  a corporation that was merged ceases to exist;                (2)  the association assumes the rights and obligations   of the corporation and owns the property of the association; and                (3)  the association's certificate of formation is   [articles of incorporation are] considered amended to the extent   that a change is stated in the plan of merger.          SECTION 16.  Section 66.002, Finance Code, is amended to   read as follows:          Sec. 66.002.  ADOPTION OF RULES. The finance commission may   adopt rules relating to:                (1)  the minimum amounts of capital stock and paid-in   surplus required for incorporation as a capital stock association;                (2)  the minimum amounts of savings liability and   expense funds required for incorporation as a mutual association;                (3)  the fees and procedures for processing, hearing,   and deciding applications filed with the commissioner or the   Department of Savings and Mortgage Lending under this subtitle;                (4)  the books and records that an association is   required to keep and the location at which the books and records are   required to be maintained;                (5)  the accounting principles and practices that an   association is required to observe;                (6)  the conditions under which records may be copied   or reproduced for permanent storage before the original records are   destroyed;                (7)  [the form, contents, and time of publication of   statements of condition;                [(8)]  the form and contents of annual reports and   other reports that an association is required to prepare and   publish or file;                (8) [(9)]  the manner in which assets, liabilities, and   transactions in general are to be described when entered in the   books of an association, so that the entry accurately describes the   subject matter of the entry; and                (9) [(10)]  the conditions under which the   commissioner may require an asset to be charged off or reserves   established by transfer from surplus or paid-in capital because of   the depreciation of or overstated value of the asset.          SECTION 17.  Section 66.101, Finance Code, is amended to   read as follows:          Sec. 66.101.  INTERVENTION FOR VIOLATIONS AND UNSAFE AND   UNSOUND PRACTICES. The commissioner may intervene in the affairs   of an association if the association or a person who participates in   the affairs of the association or a subsidiary of the association:                (1)  engages in or is about to engage in an unsafe and   unsound practice in conducting the affairs of the association; or                (2)  violates or is about to violate:                      (A)  the certificate of formation [articles of   incorporation] or bylaws of the association;                      (B)  a law or supervisory order applicable to the   association; or                      (C)  a condition that the commissioner or the   finance commission has imposed on the association by written order   or agreement.          SECTION 18.  Section 67.001(b), Finance Code, is amended to   read as follows:          (b)  Subsection (a) does not prohibit activity that is not   considered to be transacting business in this state under Section   9.251, Business Organizations Code [Section B, Article 8.01, Texas   Business Corporation Act].          SECTION 19.  Sections 92.051(a), (b), and (d), Finance Code,   are amended to read as follows:          (a)  Five or more adult residents of this state may apply to   form and incorporate a savings bank by submitting to the   commissioner:                (1)  an application to incorporate a savings bank that   is:                      (A)  in a form specified by the commissioner; and                      (B)  signed by each incorporator; and                (2)  the filing fee.          (b)  An application must contain:                (1)  two copies of the savings bank's certificate of   formation [articles of incorporation] identifying:                      (A)  the name of the savings bank;                      (B)  the location of the principal office; and                      (C)  the names and addresses of the initial   directors;                (2)  two copies of the savings bank's bylaws;                (3)  data sufficiently detailed and comprehensive to   enable the commissioner to make findings under Section 92.058,   including statements, exhibits, and maps;                (4)  other information relating to the savings bank and   its operation that the finance commission by rule requires; and                (5)  financial information about each applicant,   incorporator, director, officer, or shareholder that the finance   commission by rule requires.          (d)  The certificate of formation [articles of   incorporation] and statements of fact must be signed and sworn to.          SECTION 20.  Section 92.052(a), Finance Code, is amended to   read as follows:          (a)  A capital stock savings bank's certificate of formation   [articles of incorporation] must include a statement of:                (1)  the aggregate number of shares of common stock   that the savings bank may issue;                (2)  the par value of each share or that the shares are   without par value;                (3)  whether the savings bank may issue preferred   stock;                (4)  the amount of stock that has been subscribed and   will be paid for before the savings bank begins business;                (5)  the name and address of each subscriber and the   amount subscribed by each; and                (6)  the amount of paid-in surplus with which the   savings bank will begin business.          SECTION 21.  Section 92.053, Finance Code, is amended to   read as follows:          Sec. 92.053.  ADDITIONAL REQUIREMENTS FOR MUTUAL SAVINGS   BANK. (a) A mutual savings bank's certificate of formation   [articles of incorporation] must include a statement of the amount   of deposit liability of the savings bank and the amount of the   expense fund with which the savings bank will begin business.          (b)  Before approving the certificate of formation [articles   of incorporation] of a mutual savings bank, the commissioner shall   require the savings bank to have subscriptions for an aggregate   amount of deposit accounts and an expense fund in an aggregate   amount the finance commission by rule establishes as necessary for   the successful operation of a mutual savings bank.          SECTION 22.  Sections 92.058(b) and (c), Finance Code, are   amended to read as follows:          (b)  The commissioner may approve an application to   incorporate only if:                (1)  the prerequisites to incorporation required by   this chapter are satisfied;                (2)  the character, responsibility, and general   fitness of each person named in the certificate of formation   [articles of incorporation] command confidence and warrant belief   that:                      (A)  the business of the savings bank will be   honestly and efficiently conducted in accordance with the intent   and purpose of this subtitle; and                      (B)  the savings bank will have qualified   full-time management;                (3)  there is a public need for the savings bank;                (4)  the volume of business in the community in which   the savings bank will conduct its business indicates a profitable   operation is probable; and                (5)  the operation of the savings bank will not unduly   harm an existing savings bank or state or federal savings and loan   association.          (c)  On finding that each requirement of Subsection (b) is   met, the commissioner shall:                (1)  enter an order approving the application and   stating the findings required by Subsection (b);                (2)  issue under official seal a certificate of   incorporation;                (3)  deliver a copy of the approved certificate of   formation [articles of incorporation] and bylaws to the   incorporators; and                (4)  permanently retain a copy of the certificate of   formation [articles of incorporation] and bylaws.          SECTION 23.  The heading to Section 92.062, Finance Code, is   amended to read as follows:          Sec. 92.062.  AMENDMENT OF CERTIFICATE OF FORMATION   [ARTICLES OF INCORPORATION] OR BYLAWS.          SECTION 24.  Section 92.062(a), Finance Code, is amended to   read as follows:          (a)  A savings bank may amend its certificate of formation   [articles of incorporation] or bylaws by a resolution adopted by a   majority vote of those entitled to vote attending an annual meeting   or a special meeting called for that purpose.          SECTION 25.  Section 92.063(a), Finance Code, is amended to   read as follows:          (a)  Only with the prior approval of the commissioner given   in accordance with rules of the finance commission may a savings   bank:                (1)  establish an office other than the principal   office stated in the savings bank's certificate of formation   [articles of incorporation];                (2)  move an office from its immediate vicinity; or                (3)  change the savings bank's name.          SECTION 26.  Section 92.101, Finance Code, is amended to   read as follows:          Sec. 92.101.  PURPOSE OF INCORPORATION. A person may apply   to form and incorporate a savings bank for the purpose of:                (1)  purchasing the assets, assuming the liabilities   other than liability to shareholders, and continuing the business   of a financial institution the commissioner considers to be in an   unsafe condition;                (2)  acquiring an existing financial institution by   merger; or                (3)  facilitating a reorganization or merger with or   into a savings bank under rules adopted by the finance commission.          SECTION 27.  Sections 92.103(a) and (e), Finance Code, are   amended to read as follows:          (a)  The commissioner shall approve an application under   this subchapter if the commissioner finds that:                (1)  the business of the financial institution that is   to be reorganized or merged can be effectively continued under the   certificate of formation [articles of incorporation]; and                (2)  the reorganization or merger is in the best   interest of the public and the savers, depositors, creditors, and   shareholders of the financial institution that is to be reorganized   or merged.          (e)  In a merger, a shareholder of a capital stock financial   institution has the same dissenter's rights as a shareholder of a   domestic business corporation under the Business Organizations   Code [Texas Business Corporation Act].          SECTION 28.  Section 92.152(b), Finance Code, is amended to   read as follows:          (b)  The members or shareholders shall elect the board by a   majority vote at the annual meeting. The directors may be elected   for staggered terms of longer than one year as provided by the   savings bank's bylaws or certificate of formation [articles of   incorporation].          SECTION 29.  Section 92.158(a), Finance Code, is amended to   read as follows:          (a)  The voting rights of a person entitled to vote at an   annual or special meeting of a savings bank are the same as those of   a shareholder of a domestic business corporation under the Business   Organizations Code [Texas Business Corporation Act].          SECTION 30.  Section 92.209(c), Finance Code, is amended to   read as follows:          (c)  A savings bank may retire or redeem preferred stock in   the manner provided by:                (1)  the certificate of formation [articles of   incorporation]; or                (2)  a resolution of the board of the savings bank   establishing the rights and preferences relating to the stock.          SECTION 31.  Sections 92.210(a) and (c), Finance Code, are   amended to read as follows:          (a)  The certificate of formation [articles of   incorporation] may:                (1)  authorize that shares of preferred stock be   divided into and issued in series; and                (2)  determine the rights and preferences of each   series or part of a series.          (c)  The certificate of formation [articles of   incorporation] may authorize the board by resolution to divide   classes of preferred stock into series and to determine the rights   and preferences of the shares of each series. A copy of the   resolution must be submitted to the commissioner before the shares   may be issued. The commissioner shall file the resolution in the   commissioner's office if the resolution conforms to this subtitle.   After the resolution is filed, it is considered an amendment of the   savings bank's certificate of formation [articles of   incorporation].          SECTION 32.  Sections 92.302(b) and (c), Finance Code, are   amended to read as follows:          (b)  The directors, or the managing officer [president and   secretary], shall execute the [two copies of an] application   required by Section 92.301 [for certificate of incorporation as   provided by Subchapter B].          (c)  Each director, or the managing officer [president and   secretary], shall sign and acknowledge the application [for   certificate of incorporation as a subscriber] and [shall sign and   acknowledge] the proposed bylaws [as an incorporator].          SECTION 33.  Section 92.351(c), Finance Code, is amended to   read as follows:          (c)  A shareholder of a capital stock savings bank has the   same dissenter's rights as a shareholder of a domestic corporation   under the Business Organizations Code [Texas Business Corporation   Act].          SECTION 34.  Section 92.405(c), Finance Code, is amended to   read as follows:          (c)  A surviving savings bank that is a domestic savings bank   shall operate under:                (1)  the certificate of formation [articles] and bylaws   of the merging or consolidating domestic savings bank; and                (2)  the law applicable to a domestic savings bank.          SECTION 35.  Section 92.454(b), Finance Code, is amended to   read as follows:          (b)  After the merger takes effect:                (1)  a corporation that was merged ceases to exist;                (2)  the savings bank assumes the rights and   obligations of the corporation and owns the property of the   corporation; and                (3)  the savings bank's certificate of formation is   [articles of incorporation are] considered amended to the extent   that a change is stated in the plan of merger.          SECTION 36.  Section 94.301, Finance Code, is amended to   read as follows:          Sec. 94.301.  AUTHORIZATION. With the prior approval   [consent] of the commissioner and subject to rules adopted by the   finance commission, a savings bank may invest in a subsidiary   corporation created under general corporation law.          SECTION 37.  Section 96.002(a), Finance Code, is amended to   read as follows:          (a)  The finance commission may adopt rules necessary to   supervise and regulate savings banks and to protect public   investment in savings banks, including rules relating to:                (1)  the minimum amounts of capital required to   incorporate and operate as a savings bank, which may not be less   than the amounts required of corresponding national banks;                (2)  the fees and procedures for processing, hearing,   and deciding applications filed with the commissioner or the   Department of Savings and Mortgage Lending under this subtitle;                (3)  the books and records that a savings bank is   required to keep and the location at which the books and records are   required to be maintained;                (4)  the accounting principles and practices that a   savings bank is required to observe;                (5)  the conditions under which records may be copied   or reproduced for permanent storage before the originals are   destroyed;                (6)  [the form, content, and time of publication of   statements of condition;                [(7)]  the form and content of any report that a savings   bank is required to prepare and publish or file under this chapter;                (7) [(8)]  the manner in which assets, liabilities, and   transactions in general are to be described when entered in the   books of a savings bank, so that the entry accurately describes the   subject matter of the entry;                (8) [(9)]  the conditions under which the commissioner   may require an asset to be charged off or reserves established by   transfer from surplus or paid-in capital because of depreciation of   or overstated value of the asset;                (9) [(10)]  the change of control of a savings bank;                (10) [(11)]  the conduct, management, and operation of   a savings bank;                (11) [(12)]  the withdrawable accounts, bonuses,   plans, and contracts for savings programs;                (12) [(13)]  the merger, consolidation,   reorganization, conversion, and liquidation of a savings bank;                (13) [(14)]  the establishment of an additional office   or the change of office location or name of a savings bank;                (14) [(15)]  the requirements for a savings bank's   holding companies, including those relating to:                      (A)  registration and periodic reporting of a   holding company with the commissioner; and                      (B)  transactions between a holding company, an   affiliate of a holding company, or a savings bank; and                (15) [(16)]  the powers of a savings bank to make loans   and investments that contain provisions reasonably necessary to   ensure that a loan made by a savings bank is consistent with sound   lending practices and that the savings bank's investment will   promote the purposes of this subtitle, including provisions   governing:                      (A)  the type of loans and the conditions under   which a savings bank may originate, make, or sell loans;                      (B)  the conditions under which a savings bank may   purchase or participate in a loan made by another lender;                      (C)  the conditions for the servicing of a loan   for another lender;                      (D)  the conditions under which a savings bank may   lend money on the security of a loan made by another person;                      (E)  the conditions under which a savings bank may   pledge loans held by it as collateral for borrowing by the savings   bank;                      (F)  the conditions under which a savings bank may   invest in securities and debt instruments;                      (G)  the documentation that a savings bank must   have in its files at the time of funding or purchase of a loan, an   investment, or a participation in a loan;                      (H)  the form and content of statements of   expenses and fees and other charges that are paid by a borrower or   that a borrower is obligated to pay;                      (I)  the title information that must be   maintained;                      (J)  the borrower's insurance coverage of   property securing a loan;                      (K)  an appraisal report;                      (L)  the financial statement of a borrower;                      (M)  the fees or other compensation that may be   paid to a person in connection with obtaining a loan for a savings   bank, including an officer, director, employee, affiliated person,   consultant, or third party;                      (N)  the conditions under which the savings bank   may advance money to pay a tax, assessment, insurance premium, or   other similar charge for the protection of the savings bank's   interest in property securing the savings bank's loans;                      (O)  the terms under which a savings bank may   acquire and deal in real property;                      (P)  the valuation on a savings bank's books of   real property held by the savings bank;                      (Q)  the terms governing the investment by a   savings bank in a subsidiary, the powers that may be exercised by a   subsidiary, and the activities that may be engaged in by a   subsidiary; and                      (R)  any other matter considered necessary to   administer each type of transaction.          SECTION 38.  Section 96.101(a), Finance Code, is amended to   read as follows:          (a)  The commissioner may intervene in the affairs of a   savings bank if the savings bank or a person who participates in the   affairs of the savings bank or a subsidiary or holding company of   the savings bank:                (1)  engages in or is about to engage in an unsafe and   unsound practice in conducting the affairs of the savings bank; or                (2)  violates or is about to violate:                      (A)  the certificate of formation [articles of   incorporation] or bylaws of the savings bank;                      (B)  a law or supervisory order applicable to the   savings bank; or                      (C)  a condition that the commissioner or the   finance commission has imposed on the savings bank by written   order, directive, or agreement.          SECTION 39.  Section 97.052, Finance Code, is amended to   read as follows:          Sec. 97.052.  APPLICATION FOR APPROVAL OF REORGANIZATION.   The application for approval of reorganization must contain:                (1)  a brief statement summarizing a reorganization   plan;                (2)  two copies of the proposed certificate of   formation [articles of incorporation] of the subsidiary savings   bank acknowledged by the incorporators of the subsidiary savings   bank;                (3)  two copies of the proposed bylaws of the savings   bank;                (4)  a statement that the plan of reorganization was   advised, authorized, and approved by the savings bank in the manner   and by the vote required by its charter and the laws of this state;   and                (5)  a statement of the manner of approval.          SECTION 40.  Section 98.001(b), Finance Code, is amended to   read as follows:          (b)  Subsection (a) does not prohibit activity that is not   considered to be transacting business in this state under Section   9.251, Business Organizations Code [Section B, Article 8.01, Texas   Business Corporation Act].          SECTION 41.  Section 119.101(c), Finance Code, is amended to   read as follows:          (c)  A stockholder of a capital stock savings bank has the   same right to examine the relevant books and records of a savings   bank as a shareholder of a business corporation under the Business   Organizations Code [Texas Business Corporation Act].          SECTION 42.  Section 156.004(a), Finance Code, is amended to   read as follows:          (a)  At the time a residential mortgage loan [an] applicant   submits an application to a residential mortgage loan originator   sponsored by and conducting business for a licensed or registered   residential mortgage loan company under this chapter, the   residential mortgage loan originator shall provide to the applicant   a disclosure form. The form must [that specifies]:                (1)  include the name, address, and toll-free telephone   number for the department [the nature of the relationship between   the applicant and the residential mortgage loan originator]; and                (2)  contain information on how to file a complaint or   recovery fund claim [the duties the residential mortgage loan   originator has to the applicant; and                [(3)     how the residential mortgage loan originator will   be compensated].          SECTION 43.  Section 157.0021(b), Finance Code, is amended   to read as follows:          (b)  A mortgage banker that indicates in its registration   that it acts as a residential mortgage loan servicer shall provide   to the borrower of each residential mortgage loan that it services   and that is secured by a lien on residential real estate located in   this state the following notice not later than the 30th day after   the date the mortgage banker commences servicing the loan:          "COMPLAINTS REGARDING THE SERVICING OF YOUR TEXAS MORTGAGE   SHOULD BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,   ______________________________ (street address of the Department   of Savings and Mortgage Lending).  A TOLL-FREE CONSUMER HOTLINE IS   AVAILABLE AT _______________ (telephone number of the Department of   Savings and Mortgage Lending's toll-free consumer hotline)."          SECTION 44.  The heading to Subchapter C, Chapter 158,   Finance Code, is amended to read as follows:   SUBCHAPTER C. INVESTIGATIONS;[,] COMPLAINTS[,] AND ACTIONS   AGAINST REGISTRANT          SECTION 45.  Section 158.101, Finance Code, is amended to   read as follows:          Sec. 158.101.  DISCLOSURE STATEMENT. A registrant shall   provide to the borrower of each residential mortgage loan that it   services and that is secured by a lien on residential real estate   located in this state the following notice not later than the 30th   day after the registrant commences servicing the loan:          "COMPLAINTS REGARDING THE SERVICING OF YOUR TEXAS MORTGAGE   SHOULD BE SENT TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING,   ______________________________ (street address of the Department   of Savings and Mortgage Lending).  A TOLL-FREE CONSUMER HOTLINE IS   AVAILABLE AT _______________ (telephone number of the Department of   Savings and Mortgage Lending's toll-free consumer hotline)."          SECTION 46.  The heading to Section 158.102, Finance Code,   is amended to read as follows:          Sec. 158.102.  INVESTIGATIONS [INVESTIGATION OF COMPLAINTS   AGAINST REGISTRANT]; SURCHARGE.          SECTION 47.  Section 158.102, Finance Code, is amended by   adding Subsections (a-1) and (e) to read as follows:          (a-1)  For reasonable cause, the commissioner at any time may   investigate a registrant to determine whether the registrant is   complying with this chapter and applicable rules.          (e)  The commissioner may conduct an undercover or covert   investigation only if the commissioner, after due consideration of   the circumstances, determines that the investigation is necessary   to prevent immediate harm and to carry out the purposes of this   chapter.          SECTION 48.  The heading to Section 158.105, Finance Code,   is amended to read as follows:          Sec. 158.105.  UNREGISTERED ACTIVITY; CEASE AND DESIST   ORDER.          SECTION 49.  Section 158.105(b), Finance Code, is amended to   read as follows:          (b)  An order issued under Subsection (a) must contain a   reasonably detailed statement of the facts on which the order is   made [issued].  The order may assess an administrative penalty in an   amount not to exceed $1,000 per day for each violation.          SECTION 50.  The Finance Commission of Texas shall adopt   rules to implement Section 156.004(a), Finance Code, as amended by   this Act, not later than January 1, 2018.          SECTION 51.  Section 156.004(a), Finance Code, as amended by   this Act, applies only to an application for a residential mortgage   loan that is submitted on or after January 1, 2018.  An application   for a residential mortgage loan that is submitted before January 1,   2018, is governed by the law in effect on the date the application   was submitted, and the former law is continued in effect for that   purpose.          SECTION 52.  Section 157.0021(b), Finance Code, as amended   by this Act, and Section 158.101, Finance Code, as amended by this   Act, apply only to a residential mortgage loan that is made on or   after the effective date of this Act.  A residential mortgage loan   that is made before the effective date of this Act is governed by   the law in effect on the date the residential mortgage loan was   made, and the former law is continued in effect for that purpose.          SECTION 53.  Section 158.105(b), Finance Code, as amended by   this Act, applies only to a violation committed on or after   September 1, 2017.  A violation committed before September 1, 2017,   is governed by the law in effect on the date the violation was   committed, and the former law is continued in effect for that   purpose.  For purposes of this section, a violation was committed   before September 1, 2017, if any element of the violation occurred   before that date.          SECTION 54.  (a) Except as otherwise provided by this   section, this Act takes effect September 1, 2017.          (b)  Section 156.004(a), Finance Code, as amended by this   Act, takes effect January 1, 2018.