87R18914 JES-F     By: Deshotel H.B. No. 3472     Substitute the following for H.B. No. 3472:     By:  Perez C.S.H.B. No. 3472       A BILL TO BE ENTITLED   AN ACT   relating to the investment and use of excess residential mortgage   loan originator recovery fund fees and to the creation of the   mortgage grant fund; changing a fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 13.016, Finance Code, is amended to read   as follows:          Sec. 13.016.  RECOVERY FUND. (a) Except as provided by   Subchapter G, Chapter 156, the [The] savings and mortgage lending   commissioner shall establish, administer, and maintain one   recovery fund for the purposes of Chapters 156 and 157. The   recovery fund shall be administered and maintained under Subchapter   F, Chapter 156.          (b)  The savings and mortgage lending commissioner's   authority under this section includes the authority to[:                [(1)  set fee amounts under Chapters 156 and 157 for   deposit in the recovery fund; and                [(2)]  enforce disciplinary action as provided by   Chapters 156 and 157 for a person's failure to comply with the   applicable provisions of those chapters relating to the recovery   fund and with applicable rules adopted under those chapters.          SECTION 2.  Sections 156.501(b) and (c), Finance Code, are   amended to read as follows:          (b)  Subject to this subsection and Section 156.502(b), the   recovery fund shall be used to reimburse residential mortgage loan   applicants for actual damages incurred because of acts committed by   a residential mortgage loan originator who was licensed under   Chapter 157 when the act was committed.  The use of the fund is   limited to reimbursement for out-of-pocket losses caused by an act   by a residential mortgage loan originator licensed under Chapter   157 that constitutes a violation of Section 157.024(a)(2), (3),   (5), (7), (8), (9), (10), (13), (16), (17), or (18) or 156.304(b).          (c)  Amounts in the recovery fund may be invested and   reinvested in accordance with Chapter 2256, Government Code, and   under the prudent person standard described in Section 11b, Article   VII, Texas Constitution [in the same manner as funds of the   Employees Retirement System of Texas], and the interest from these   investments shall be deposited to the credit of the fund. An   investment may not be made under this subsection if the investment   will impair the necessary liquidity required to satisfy claims   [judgment payments] awarded under this subchapter.          SECTION 3.  Section 156.502, Finance Code, is amended to   read as follows:          Sec. 156.502.  FUNDING. (a)  On an application for an   original license [or for renewal of a license] issued under Chapter   157, the applicant, in addition to paying the original application   fee [or renewal fee], shall pay a fee in the [an] amount of   [determined by the commissioner, not to exceed] $20.  The fee shall   be deposited in the recovery fund.          (a-1)  All or any portion of the amount of a penalty that is   collected under Sections 156.302, 156.303, 157.023, 157.024,   157.031, 158.105, and 180.202, as determined by the commissioner,   may be deposited to the credit of the recovery fund at the end of   each fiscal year.          (b)  If the balance remaining in the recovery fund at the end   of a calendar year is more than $3.5 million, the amount of money in   excess of that amount shall be remitted by the commissioner to the   comptroller for deposit in the mortgage grant fund established   under Subchapter G [available to the commissioner to offset the   expenses of participating in and sharing information with the   Nationwide Mortgage Licensing System and Registry in accordance   with Chapter 180].          SECTION 4.  Chapter 156, Finance Code, is amended by adding   Subchapter G to read as follows:   SUBCHAPTER G. MORTGAGE GRANT FUND          Sec. 156.551.  MORTGAGE GRANT FUND. (a) The commissioner   shall establish, administer, and maintain a mortgage grant fund as   provided by this subchapter. The amounts received by the   commissioner for deposit in the fund shall be held by the   commissioner in trust for carrying out the purposes of the fund.          (b)  All or any portion of the amount of a penalty that is   collected under Sections 156.302, 156.303, 157.023, 157.024,   157.031, 158.105, and 180.202, as determined by the commissioner,   may be deposited to the credit of the mortgage grant fund at the end   of each fiscal year.          Sec. 156.552.  FUNDING. The mortgage grant fund consists   of:                (1)  penalties collected by the commissioner and   deposited to the credit of the fund in accordance with Section   156.551(b); and                 (2)  excess amounts transferred from the recovery fund   under Section 156.502(b).          Sec. 156.553.  MANAGEMENT OF FUND. (a) The commissioner, as   manager of the mortgage grant fund, shall:                (1)  subject to Subsection (b), invest and reinvest the   assets of the fund;                (2)  make disbursements from the fund in accordance   with Section 156.554;                (3)  advise the finance commission regarding the fund;                (4)  maintain books and records for the fund as   required by the finance commission; and                (5)  appear at hearings or judicial proceedings related   to the fund.          (b)  Amounts in the mortgage grant fund may be invested and   reinvested in accordance with Chapter 2256, Government Code, and   under the prudent person standard described in Section 11b, Article   VII, Texas Constitution.          Sec. 156.554.  DISBURSEMENT FROM FUND. (a) The   commissioner shall approve each disbursement from the mortgage   grant fund, which must be for a purpose authorized by Subsection   (b).          (b)  The commissioner:                (1)  to the extent the commissioner determines the fund   has sufficient assets available, shall provide a grant in an amount   of not less than $100,000 each year to an auxiliary mortgage loan   activity company or another statewide nonprofit organization that   supports organizations described by Section 156.202(a-1)(1) for   the purposes of:                      (A)  providing statewide training and technical   assistance to entities described by Section 156.202(a-1);                      (B)  servicing third-party mortgage loans;                      (C)  providing financial education to consumers   that relates to mortgage loans; and                      (D)  administering disaster repair programs and   preparedness resources for consumers with mortgage loans;                (2)  shall make disbursements from the fund to pay   claims made under Section 156.555 that meet the requirements for   payment under that section; and                (3)  may make disbursements from the fund to:                      (A)  provide support for statewide financial   education, activities, and programs specifically related to   mortgage loans for consumers, including activities and programs   described by Section 393.628(c); and                      (B)  if a governor's declaration of a state of   disaster under Section 418.014, Government Code, is in effect, a   governmental or nonprofit organization providing mortgage payment   assistance for residence homesteads, as defined by Section 11.13,   Tax Code, as needed due to the disaster.          Sec. 156.555.  PAYMENT OF CLAIMS FOR FRAUDULENT UNLICENSED   ACTIVITY. (a) A residential mortgage loan applicant may make a   claim on and receive payment from the mortgage grant fund for the   recovery of the applicant's actual, out-of-pocket damages incurred   because of fraud committed by an individual who acted as a   residential mortgage loan originator but who did not hold the   required license issued under Chapter 157 at the time the   individual committed the fraudulent act.          (b)  The eligibility and procedural requirements for a claim   made under Section 156.504 and the statute of limitations under   Section 156.503 apply to a residential mortgage loan applicant who   makes a claim under this section.          (c)  Payments made from the mortgage grant fund to a   residential mortgage loan applicant under this section are subject   to the limits provided by Section 156.505.          Sec. 156.556.  RULES. The finance commission shall adopt   rules to administer this subchapter, including rules governing   implementation of Section 156.554 that:                (1)  ensure a grant awarded under that section is used   for a public purpose described by that section; and                (2)  provide a means of recovering money awarded that   is not used in compliance with that section.          SECTION 5.  Section 157.013(b), Finance Code, is amended to   read as follows:          (b)  An application for a residential mortgage loan   originator license must be accompanied by:                (1)  an application fee in an amount determined by the   commissioner, not to exceed $500; and                (2)  for an original license, a recovery fund fee in the   [an] amount of [determined by the commissioner, not to exceed] $20.          SECTION 6.  Sections 156.501(d) and (f), Finance Code, are   repealed.          SECTION 7.  Section 156.501(c), Finance Code, as amended by   this Act, applies only to an investment made on or after the   effective date of this Act.  An investment made before the effective   date of this Act is governed by the law as it existed immediately   before that date, and that law is continued in effect for that   purpose.          SECTION 8.  This Act takes effect September 1, 2021.