85R6360 GRM-D     By: Rodríguez, Watson, Zaffirini S.B. No. 1993       A BILL TO BE ENTITLED   AN ACT   relating to the licensing and other regulation of wrap lenders.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 156.002, Finance Code, is amended by   adding Subdivision (16) to read as follows:                (16)  "Wrap mortgage loan" has the meaning assigned by   Section 180.002.          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)  any owner of residential real estate who in any   12-consecutive-month period makes no more than five residential   mortgage loans, none of which is a wrap mortgage loan, 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 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 157.002, Finance Code, is amended by   adding Subdivision (7) to read as follows:                (7)  "Wrap mortgage loan" has the meaning assigned by   Section 180.002.          SECTION 4.  Sections 157.0121(b) and (c), Finance Code, are   amended to read as follows:          (b)  The following individuals are exempt from this chapter:                (1)  a registered mortgage loan originator when acting   for:                      (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;                (2)  an individual who offers or negotiates the 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)  any owner of residential real estate who in any   12-consecutive-month period makes no more than five residential   mortgage loans, none of which is a wrap mortgage loan, 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)  an individual who is exempt as provided by Section   180.003(b).          (c)  Employees of the following entities, when acting for the   benefit of those entities, are exempt from the licensing and other   requirements of this chapter applicable to residential mortgage   loan originators:                (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)  any owner of residential real estate who in any   12-consecutive-month period makes no more than five residential   mortgage loans, none of which is a wrap mortgage loan, 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                (3)  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 5.  Section 158.002, Finance Code, is amended by   adding Subdivisions (8) and (9) to read as follows:                (8)  "Wrap lender" has the meaning assigned by Section   180.002.                (9)  "Wrap mortgage loan" has the meaning assigned by   Section 180.002.          SECTION 6.  Section 158.052, Finance Code, is amended by   amending Subsection (a) and adding Subsection (d) to read as   follows:          (a)  This chapter does not require registration by:                (1)  a federal or state depository institution, or a   subsidiary or affiliate of a federal or state depository   institution;                (2)  a person registered under Chapter 157;                (3)  a person licensed under Chapter 342 or regulated   under Chapter 343, if the person does not act as a residential   mortgage loan servicer servicing first-lien secured loans; or                (4)  except as provided by Subsection (d), a person   making a residential mortgage loan with the person's own funds, or   to secure all or a portion of the purchase price of real property   sold by that person.          (d)  This chapter applies to a wrap lender who services a   wrap mortgage loan.          SECTION 7.  Section 180.002, Finance Code, is amended by   adding Subdivisions (24), (25), and (26) to read as follows:                (24)  "Wrap borrower" means a person obligated to pay a   wrap mortgage loan.                (25)  "Wrap lender" means a person who makes a wrap   mortgage loan.                (26)  "Wrap mortgage loan" means a residential mortgage   loan:                      (A)  made to finance the purchase of residential   real estate that will continue to be subject to an unreleased lien   that:                            (i)  attached to the residential real estate   before the loan was made; and                            (ii)  secures a debt incurred by a person   other than the wrap borrower that was not paid off at the time the   loan was made; and                      (B)  obligating the wrap borrower to the wrap   lender for payment of a debt the principal amount of which includes:                            (i)  the outstanding balance of the debt   described by Paragraph (A)(ii); and                            (ii)  any remaining amount of the purchase   price financed by the wrap lender.          SECTION 8.  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)  an owner of residential real estate who in any   12-consecutive-month period makes no more than five residential   mortgage loans, none of which is a wrap mortgage loan, 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)  an owner of a dwelling who in any   12-consecutive-month period makes no more than five residential   mortgage loans, none of which is a wrap mortgage loan, 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.          SECTION 9.  This Act takes effect September 1, 2017.