Current through Reg. 49, No. 38; September 20, 2024
(a) False,
Misleading or Deceptive Practices. The following conduct by a mortgage banker
or an originator constitutes fraudulent and dishonest dealings for purposes of
Tex. Fin. Code §157.009(d) and §157.024(a)(3), deceptive practices
for purposes of Tex. Fin. Code §180.153(2), and a scheme to defraud a
person for purposes of Tex. Fin. Code §180.153(1):
(1) knowingly misrepresenting the mortgage
banker's or originator's relationship to a residential mortgage loan applicant
or any other party to an actual or proposed residential mortgage loan
transaction;
(2) knowingly
misrepresenting or understating any cost, fee, interest rate, or other expense
in connection with a residential mortgage loan applicant's applying for or
obtaining a residential mortgage loan;
(3) knowingly overstating, inflating,
altering, amending or disparaging any source or potential source of residential
mortgage loan funds in a manner which disregards the truth or makes any knowing
and material misstatement or omission;
(4) knowingly participating in or permitting
the submission of false or misleading information of a material nature to any
person in connection with a decision by that person whether or not to make or
acquire a residential mortgage loan;
(5) as provided for by the Real Estate
Settlement Procedures Act and Regulation X, brokering, arranging, or making a
residential mortgage loan in which the originator retains fees or receives
other compensation for services which are not actually performed or where the
fees or other compensation received bear no reasonable relationship to the
value of services actually performed;
(6) recommending or encouraging default or
delinquency or continuation of an existing default or delinquency by a
residential mortgage applicant on any existing indebtedness prior to closing a
residential mortgage loan which refinances all or a portion of such existing
indebtedness;
(7) altering any
document produced or issued by the Department, unless otherwise permitted by
statute or a rule of the Department.
(8) engaging in any other practice which the
Commissioner, by published interpretation, has determined to be false,
misleading, or deceptive.
(b) Improper and Unfair Dealings. The
following conduct by a mortgage banker or an originator constitutes improper
dealings for purposes of Tex. Fin. Code §157.009(d) and
§157.024(a)(3), and unfair practices for purposes of Tex. Fin. Code
§180.153(2):
(1) Acting negligently in
performing an act for which a person is required under Finance Code, Chapter
157 to hold a license;
(2)
Violating any provision of a local, State of Texas, or federal, constitution,
statute, rule, ordinance, regulation, or final court decision that governs the
same activity, transaction, or subject matter that is governed by the
provisions of Finance Code, Chapter 157 or Chapter 180, or this chapter,
including, but not limited to, the following:
(A) Real Estate Settlement Procedures Act (
RSA
2601 et seq.);
(B) Regulation X ( 12 C.F.R. § 1024 et
seq.);
(C) Consumer Credit
Protection Act, Truth in Lending Act (
RSA
1601 et seq.);
(D) Regulation Z ( 12 C.F.R. § 1026 et
seq.);
(E) Equal Credit Opportunity
Act (
RSA 1691 et
seq.);
(F) Regulation B ( 12 C.F.R.
§ 1002 et seq.); and
(G) Texas
Constitution, Article XVI, §50.
(3) Representing to a mortgage applicant that
a charge or fee which is payable to the mortgage banker or originator is a
"discount point" or otherwise confers a financial benefit on the mortgage
applicant unless the loan closes and:
(A) the
mortgage banker or mortgage company sponsoring the originator is the lender in
the transaction. For purposes of this paragraph, the mortgage banker or
mortgage company sponsoring the originator is deemed to be the lender if such
entity is the payee as evidenced on the face of the note or other written
evidence of indebtedness; or
(B)
the mortgage banker or mortgage company sponsoring the originator is not the
lender, but demonstrates by clear and convincing evidence that the lender has
charged or collected discount point(s) or other fees which the mortgage banker
or mortgage company sponsoring the originator has actually paid to the lender
on behalf of the mortgage applicant, to buy down the interest rate on a
residential mortgage loan.
(4) Failing to accurately respond within a
reasonable time period to reasonable questions from a mortgage applicant
concerning the scope and nature of the mortgage banker's or originator's
services and any costs.
(c) Related Transactions. A mortgage banker
or originator engages in a fraudulent and deceptive dealings for purposes of
Tex. Fin. Code §157.009(d) and §157.024(a)(3), deceptive practices
for purposes of Tex. Fin. Code §180.153(2), and a scheme to defraud a
person for purposes of Tex. Fin. Code §180.153(1) if, when in connection
with the origination of a mortgage loan:
(1)
The mortgage banker or originator offers other goods or services to a consumer
in a separate but related transaction and the mortgage banker or originator
engages in a false misleading or deceptive practice in the related transaction;
or
(2) The mortgage banker or
originator affiliates with another person that provides goods or services to a
consumer in a separate but related transaction and the affiliated person
performs false, misleading or deceptive acts, and the mortgage banker or
originator to the mortgage transaction knew or should have known of the false,
misleading or deceptive acts.
(d) Sharing or Splitting Origination Fees
with the Mortgage Applicant. A mortgage banker or originator must not offer or
agree to share or split any loan origination fees with a mortgage applicant,
rebate all or a part of an origination fee to a mortgage applicant, reduce
their established compensation to benefit a mortgage applicant, or otherwise
provide money, a cash equivalent, or anything of value to a mortgage applicant
in connection with providing mortgage loan origination services unless
otherwise allowable as provided by Regulation X. An originator acting in the
dual capacity of an originator and real estate sales broker or agent licensed
under Occupations Code, Chapter 1101 may rebate his or her fees legitimately
earned and derived from his or her real estate brokerage or sales agent
services to the extent allowable under applicable law governing real estate
brokers or sales agents; provided, the payment or other transfer described
herein occurs as a part of closing and is properly reflected in the closing
disclosure for the transaction. If a payment or other transfer described herein
by an originator acting in the dual capacity of an originator and real estate
broker or sales agent occurs after closing, a rebuttable presumption exists
that the payment or transfer is derived from the originator's fees for mortgage
origination services, and constitutes an improper sharing or splitting of fees
with the mortgage applicant. The rebuttable presumption created by this
subsection may only be overcome by clear and convincing evidence established by
the mortgage banker or originator that the payment or transfer is instead
derived from fees for real estate brokerage or sales agent services. A
violation of this subsection (d) is be deemed to constitute improper dealings
for purposes of Tex. Fin. Code §157.009(d) and §157.024(a)(3), and
unfair practices for purposes of Tex. Fin. Code §180.153(2).
