Texas Administrative Code
Title 7 - BANKING AND SECURITIES
Part 4 - DEPARTMENT OF SAVINGS AND MORTGAGE LENDING
Chapter 80 - RESIDENTIAL MORTGAGE LOAN COMPANIES
Subchapter C - DUTIES AND RESPONSIBILITIES
Section 80.204 - Books and Records

Universal Citation: 7 TX Admin Code ยง 80.204

Current through Reg. 49, No. 38; September 20, 2024

(a) Maintenance of Records, Generally. In order to ensure a mortgage company will have all records necessary to facilitate an inspection (including an examination) of the mortgage company by the Commissioner or the Commissioner's designee, enable the Commissioner or the Commissioner's designee to investigate complaints against a mortgage company or its sponsored originators, and otherwise ensure compliance with the requirements of Finance Code Chapter 156, and this chapter, a mortgage company must maintain records as prescribed by this section.

(1) Format. The records required by this section may be maintained by using a physical, electronic, or digitally-imaged recordkeeping system, or a combination thereof. The records must be accurate, complete, current, legible, and readily accessible and sortable.

(2) Location. A mortgage company must ensure the records required by this section (or true and correct copies thereof) are maintained at or are otherwise readily accessible from either the main office of the mortgage company or the location the mortgage company has designated in its MU1 filing under "Books and Records Information" in NMLS. (For purposes of this section "main office" has the meaning assigned by § RSA 80.206 of this title (relating to Office Locations; Remote Work.)

(3) Production of Records; Disciplinary Action. All records required by this section must be maintained in good order and produced for the Commissioner or the Commissioner's designee upon request. Failure to produce records upon request after a reasonable time for compliance may result in disciplinary action against the mortgage company, including, but not limited to, suspension or revocation of the mortgage company's license.

(4) Retention Period. All records required by this section must be maintained for 3 years or such longer period as may be required by other applicable law.

(5) Conflicting Law. If the requirements of other applicable law governing recordkeeping by the mortgage company differ from the requirements of this section, such other applicable law prevails only to the extent this section conflicts with the requirements of this section.

(b) Required Records. A mortgage company is required to maintain the following items:

(1) Mortgage Transaction Log. A mortgage transaction log, maintained on a current basis (which means all entries must be made within no more than 7 days from the date on which the matters they relate to occurred), setting forth, at a minimum:
(A) the name and contact information of each mortgage applicant;

(B) the date of the initial loan application;

(C) the full name of the originator who took the initial loan application, and his or her NMLS identification number;

(D) a description of the purpose for the loan (e.g., purchase, refinance, construction, home equity, home improvement, land lot loan, wrap mortgage loan, etc.);

(E) a description of the owner's or prospective owner's intended occupancy of the real estate secured or designed to be secured by the loan (e.g., primary residence (including real estate (land lot) or a dwelling not suitable for occupancy at the time the loan is consummated but that the owner intends to occupy as their primary residence after consummation of the loan), secondary residence, or investment property (no intent to occupy as their residence));

(F) the lien type (e.g., first lien, second lien, or wrap mortgage);

(G) a description of the current status or disposition of the loan application (e.g., in-process, withdrawn, closed, or denied); and

(H) if the loan is closed, the identity of the person who initially funded and/or acquired the loan;

(2) Residential Mortgage Loan File. For each residential mortgage loan transaction or prospective residential mortgage loan transaction, a residential mortgage loan file containing, at a minimum:
(A) All Transactions. For all transactions, the following records:
(i) the initial and any final loan application (including any attachments, supplements, or addendum thereto), signed and dated by each mortgage applicant and the sponsored originator, and any other written or recorded information used in evaluating the application, as required by Regulation B, RSA 1002.4(c);

(ii) the initial and any revised good faith estimate (Regulation X, RSA 1024.7) , integrated loan estimate disclosure (Regulation Z, RSA 1026.37) , or similar, provided to the mortgage applicant;

(iii) the final settlement statement (Regulation X, RSA 1024.8) , closing statement, or integrated closing disclosure (Regulation Z, RSA 1026.19(f) and § RSA 1026.38);

(iv) the disclosure statement required by Finance Code § 156.004 and § RSA 80.200(a) of this title (relating to Required Disclosures), signed and dated by each mortgage applicant and the sponsored originator;

(v) if provided to a mortgage applicant or prospective mortgage applicant, the Conditional Pre-Qualification Letter, or similar, as specified by Finance Code § 156.105 and § RSA 80.201 of this title (relating to Loan Status Forms);

(vi) if provided to a mortgage applicant or prospective mortgage applicant, the Conditional Approval Letter, or similar, as specified by Finance Code § 156.105 and § RSA 80.201 of this title (relating to Loan Status Forms);

(vii) each item of correspondence, all evidence of any contractual agreement or understanding, and all notes and memoranda of conversations or meetings with a mortgage applicant or any other party in connection with the loan application or its ultimate disposition (e.g., fee agreements, rate lock agreements, or similar documents);

(viii) if the loan is a "home loan" as defined by Finance Code § RSA 343.001, the notice of penalties for making a false or misleading written statement required by Finance Code § RSA 343.105, signed at closing by each mortgage applicant;

(ix) if the transaction is a purchase money or wrap mortgage loan transaction, the real estate sales contract or real estate purchase agreement for the sale of the residential real estate;

(x) consumer reports or credit reports obtained in connection with the loan or prospective loan, and if a fee is paid by or imposed on the mortgage applicant for such consumer report or credit report, invoices and proof of payment for the purchase of the consumer report or credit report;

(xi) appraisal reports or written valuation reports used to determine the value of the residential real estate secured or designed to be secured by the loan, and if a fee is paid by or imposed on the mortgage applicant for such appraisal report or written valuation report, invoices and proof of payment for the appraisal report or written valuation report;

(xii) invoices and proof of payment for any third party fees paid by or imposed on the mortgage applicant;

(xiii) refund checks issued to the mortgage applicant;

(xiv) if applicable, the risk-based pricing notice required by Regulation V, RSA 1022.72;

(xv) if applicable, invoices for independent loan processors or underwriters;

(xvi) if the mortgage company or sponsored originator acts in a dual capacity as the loan originator and real estate broker, sales agent, or attorney in the transaction, the disclosure of multiple roles in a consumer real estate transaction, signed and dated by each mortgage applicant, as required by Finance Code § RSA 156.303(a)(13) and § RSA 157.024(a)(10);

(xvii) the initial privacy notice required by Regulation P, RSA 1016.4 or RSA 313.4;

(xviii) the mortgage applicant's written authorization to receive electronic documents;

(xix) records reflecting compensation paid to employees or independent contractors in connection with the transaction;

(xx) any other agreements, notices, disclosures, or affidavits required by federal or state law in connection with the transaction; and

(xxi) any written agreements or other records governing the origination of the loan or prospective loan;

(B) Lender Transactions. For transactions where the mortgage company acted as the lender, the following records:
(i) the promissory note, loan agreement, or repayment agreement, signed by the borrower (mortgage applicant);

(ii) the recorded deed of trust, contract, security deed, security instrument, or other lien transfer document, signed by the borrower (mortgage applicant);

(iii) any verifications of income, employment, or deposits obtained in connection with the loan;

(iv) copies of any title insurance policies with endorsements or title search reports obtained in connection with the loan, and if a fee is paid by or imposed on the mortgage applicant for such title insurance policies or title search reports, invoices and proof of payment for the title insurance policy or title search report; and

(v) if applicable, the flood determination certificate obtained in connection with the loan, and if a fee is paid by or imposed on the mortgage applicant for such flood certificate, invoices and proof of payment for the flood determination certificate;

(C) Truth in Lending Act (TILA). For transactions that are subject to the requirements of TILA (RSA 1601 et seq.) and Regulation Z (RSA 1026.1 et seq.), the following records:
(i) the initial Truth-in-Lending statement for home equity lines of credit and reverse mortgage transactions required by Regulation Z, RSA 1026.19;

(ii) if the transaction is an adjustable rate mortgage transaction, the adjustable rate mortgage program disclosures;

(iii) records relating to the mortgage applicant's ability to repay the loan, as required by Regulation Z, RSA 1026.43(c);

(iv) if the mortgage applicant is permitted to shop for a settlement service, the written list of providers required by Regulation Z, RSA 1026.19(e)(1)(vi)(C);

(v) the notice of intent to proceed with the transaction required by Regulation Z, RSA 1026.19(e)(2)(i)(A);

(vi) if applicable, records related to a changed circumstance required by Regulation Z, RSA 1026.19(e)(3)(iv);

(vii) the notice of right to rescission required by Regulation Z, RSA 1026.15 or § RSA 1026.23;

(viii) for high-cost mortgage loans, the disclosures required by Regulation Z, RSA 1026.32(c);

(ix) for high-cost mortgage loans, the certification of counseling required by Regulation Z, RSA 1026.34(a)(5)(i); and

(x) any other notice or disclosure required by TILA or Regulation Z;

(D) Real Estate Settlement Procedures Act (RESPA). For transactions that are subject to the requirements of RESPA (RSA 2601 et seq.) and Regulation X (RSA 1024.1 et seq.), the following records:
(i) records reflecting delivery of the special information booklet required by Regulation X, RSA 1024.6;

(ii) any affiliated business arrangement disclosure statement provided to the mortgage applicant in accordance with Regulation X, RSA 1024.15;

(iii) records reflecting delivery of the list of homeownership counseling organizations required by Regulation X, RSA 1024.20; and

(iv) any other notice or disclosure required by RESPA or Regulation X;

(E) Equal Credit Opportunity Act - Transactions Not Resulting in Approval. For residential mortgage loan applications where a notice of incompleteness is issued, a counteroffer is made, or adverse action is taken, as provided by Regulation B (RSA 1002.1 et seq.), the following records, as applicable:
(i) the notice of incompleteness required by Regulation B, RSA 1002.9(c)(2);

(ii) the counteroffer letter sent to the mortgage applicant in accordance with Regulation B, RSA 1002.9; and

(iii) the adverse action notification (a/k/a turndown letter) required by Regulation B, RSA 1002.9(a);

(F) Home Equity Transactions. For home equity loan or home equity line of credit transactions, the following records (references in this subparagraph to Section 50 refers to Article XVI, Section 50, Texas Constitution):
(i) the preclosing disclosures required by Section 50(a)(6)(M)(ii) and § RSA 153.13 of this title (relating to Preclosing Disclosures: Section 50(a)(6)(M)(ii); as provided by such section, the closing disclosure or account-opening disclosures required by Regulation Z fulfills this requirement);

(ii) the consumer disclosure required by Section 50(g) and §153.51 of this tile (relating to Consumer Disclosure: Section 50(g));

(iii) if an attorney-in-fact executes the closing documents on behalf of the owner or owner's spouse, a copy of the executed power of attorney and any other documents evidencing execution of such power of attorney at the permanent physical address of an office of the lender, an attorney at law, or a title company, as required by § RSA 153.15 of this title (relating to Location of Closing: Section 50(a)(6)(N));

(iv) if the borrower (mortgage applicant) uses the proceeds of the loan to pay off a non-homestead debt with the same lender, a written statement, signed by the mortgage applicant, indicating the proceeds of the home equity loan were voluntarily used to pay such debt (see Section 50(a)(6)(Q)(i));

(v) notice of the right of rescission, as required by Section 50(a)(6)(Q)(viii) (as provided by § RSA 153.25 of this title (relating to Right of Rescission: Section 50(a)(6)(Q)(viii)), the notice of right of rescission required by TILA and Regulation Z fulfills this requirement);

(vi) the written acknowledgement as to the fair market value of the homestead property, as required by Section 50(a)(6)(Q)(ix) and § 153.26 of this title (relating to Acknowledgement of Fair Market Value: Section 50(a)(6)(Q)(ix)); and

(vii) if the home equity loan is refinanced into a non-home equity loan, the Texas Notice Concerning Refinance of Existing Home Equity to Non-Home Equity Loan, as required by Section 50(f)(2)(D) and § RSA 153.45 of this title (relating to Refinance of an Equity Loan: Section 50(f));

(G) Wrap Mortgage Loans. For wrap mortgage loan transactions subject to the requirements of Finance Code Chapter 159, the following records:
(i) the disclosure statement required by Finance Code § 159.101 and § 78.101 of this title (relating to Required Disclosure), signed and dated by each mortgage applicant, and any foreign language disclosure statement required by Finance Code § 159.102;

(ii) the disclosure statement required by Tex. Prop. Code §5.016 provided to each existing lienholder (the disclosure statement required by Finance Code § 159.101 and § 78.101 of this title (relating to Required Disclosure) referenced in clause (i) of this subparagraph fulfills this requirement if it was provided to each existing lienholder); and

(iii) documents evidencing that the wrap mortgage loan was closed by an attorney or a title company, as required by Finance Code § 159.105;

(H) Home Improvement Loans. For home improvement transactions (including repair, renovation, and new construction), the following records:
(i) the mechanic's lien contract;

(ii) documents evidencing the transfer of lien from the contractor to the lender;

(iii) the residential construction contract;

(iv) notice of the right of rescission required by Article XVI, Section 50(a)(5)(C), Texas Constitution (the notice of right of rescission required by TILA and Regulation Z fulfills this requirement); and

(v) any other notice or disclosure required by Texas Property Code Chapter 53;

(I) Reverse Mortgages. For reverse mortgage transactions, the following records:
(i) the disclosure required by Article XVI, Section 50(k)(9), Texas Constitution;

(ii) the certificate of counseling required by Article XVI, Section 50(k)(8), Texas Constitution;

(iii) the servicing disclosure statement required by Regulation X, RSA 1024.33(a);

(iv) the disclosures required by Regulation Z, RSA 1026.33(b); and

(v) any other notice or disclosure required by federal or state law to originate a reverse mortgage;

(3) General Business Records. General business records include:
(A) all checkbooks, check registers, bank statements, deposit slips, withdrawal slips, and cancelled checks (or copies thereof) relating to residential mortgage loan origination business;

(B) complete records (including invoices and supporting documentation) for all expenses and fees paid on behalf of a mortgage applicant, including a record of the date and amount of all such payments actually made by each mortgage applicant;

(C) all federal tax withholding forms, reports of income for federal taxation, and evidence of payments to all mortgage company employees, independent contractors and all others compensated by the mortgage company in connection with residential mortgage loan origination business;

(D) all written complaints or inquiries (or summaries of any verbal complaints or inquiries) along with any correspondence, notes, responses, and documentation relating thereto and the disposition thereof;

(E) all contractual agreements or understandings with third parties in any way relating to a residential mortgage loan transaction including, but not limited to, any delegations of underwriting authority, any agreements for pricing of goods or services, investor contracts, or employment agreements;

(F) all reports of audits, examinations, inspections, reviews, investigations, or similar, performed by any third party, including any regulatory or supervisory authorities;

(G) all advertisements in the medium (e.g., recorded audio, video, Internet or social media site posting, or print) in which they were published or distributed; and

(H) policies and procedures related to the origination of residential mortgage loans by the mortgage company and its sponsored originators, including, but not limited to:
(i) identity theft prevention program (red flags rule; RSA 681.1(d));

(ii) anti-money laundering program (RSA 1029.210);

(iii) information security program (RSA 314.3(a));

(iv) ability-to-repay underwriting policies, if any (Regulation Z, RSA 1026.43(c));

(v) quality control policy, if any;

(vi) compliance manual, if any; and

(vii) personnel administration/employee policies, if any;

(4) Other Records Required by Federal Law. A mortgage company must maintain such other books and records as may be required to evidence compliance with applicable federal laws and regulations, including, but not limited to:
(A) the Fair Credit Reporting Act (RSA 1681 et seq.) and Regulation V (RSA 1022.1 et seq.);

(B) the Gramm-Leach-Bliley Act (RSA 6801 et seq.) and Regulation P (RSA 1016.1 et seq.), and the regulations of the Federal Trade Commission (RSA 313.1 et seq.);

(C) the Secure and Fair Enforcement for Mortgage Licensing Act (RSA 5101 et seq.) and Regulation H (RSA 1008.1 et seq.); and

(D) Regulation N (Mortgage Acts and Practices-Advertising (MAP Rule); RSA 1014.1 et seq.);

(5) Other Records Designated by the Commissioner. A mortgage company must maintain such other books and records as the Commissioner or the Commissioner's designee may, from time to time, specify in writing;

(6) Records Concerning Administrative Offices. A mortgage company must maintain a list reflecting any office constituting an "administrative office" of the mortgage company for purposes of § RSA 80.206 of this title (relating to Office Locations; Remote Work); and

(7) Records Concerning Remote Work. A mortgage company must maintain records reflecting its compliance with the requirements for remote work, as provided by § RSA 80.206 of this title (relating to Office Locations; Remote Work).

(c) Records Retention After Terminating Operations. Within 10 days of termination operations, a mortgage company must provide the Department with written notice of where the records required by this section will be maintained for the prescribed period. If such records are transferred to another mortgage company licensed by the Department, the transferee must provide the Department with written notice within 10 days after receiving such records.

Disclaimer: These regulations may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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