CHAPTER 351. PROPERTY TAX LENDERS - Texas Statutes

FINANCE CODE

TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED TRANSACTIONS

SUBTITLE B. LOANS AND FINANCED TRANSACTIONS

CHAPTER 351. PROPERTY TAX LENDERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 351.001. SHORT TITLE. This chapter may be cited as the

Property Tax Lender License Act.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.002. DEFINITIONS.In this chapter:

(1) "Property tax lender" means a person that engages in

activity requiring a license under Section 351.051. The term

does not include:

(A) a person who is sponsored by a licensed property tax lender

to assist with or perform the acts of a property tax lender; or

(B) a person who performs only clerical functions such as

delivering a loan application to a property tax lender, gathering

or requesting information related to a property tax loan

application on behalf of the prospective borrower or property tax

lender, word processing, sending correspondence, or assembling

files.

(2) "Property tax loan" means an advance of money:

(A) in connection with a transfer of lien under Section 32.06,

Tax Code, or a contract under Section 32.065, Tax Code;

(B) in connection with which the person making the transfer

arranges for the payment, with a property owner's written

consent, of property taxes and related closing costs on behalf of

the property owner in accordance with Section 32.06, Tax Code;

and

(C) that is secured by a special lien against property

transferred from a taxing unit to the property tax lender and

which may be further secured by the lien or security interest

created by a deed of trust, security deed, or other security

instrument.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.003. SECONDARY MARKET TRANSACTIONS. This chapter does

not prohibit a property tax lender from receiving compensation

from a party other than the property tax loan applicant for the

sale, transfer, assignment, or release of rights on the closing

of a property tax loan transaction.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.004. AFFILIATED BUSINESS ARRANGEMENTS. A property tax

lender may conduct business under this chapter in an office,

office suite, room, or place of business in which any other

business is conducted or in combination with any other business

unless the commissioner:

(1) determines after a hearing that the conduct of the other

business in that office, office suite, room, or place of business

has concealed an evasion of this chapter; and

(2) orders the lender in writing to desist from the conduct of

the other business in that office, office suite, room, or place

of business.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1382, Sec. 1, eff. September 1, 2009.

Sec. 351.005. APPLICATION OF TAX CODE. This chapter does not

affect the application of Section 32.06 or 32.065, Tax Code.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.006. ENFORCEMENT. In addition to any other applicable

enforcement provisions, Subchapters E, F, and G, Chapter 14,

apply to a violation of this chapter or Section 32.06 or 32.065,

Tax Code, in connection with property tax loans.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.007. RULES. The finance commission may adopt rules to

ensure compliance with this chapter and Sections 32.06 and

32.065, Tax Code.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.008. EXAMINATION OF LENDERS; ACCESS TO RECORDS. (a)

The commissioner or the commissioner's representative shall, at

the times the commissioner or the representative considers

necessary:

(1) examine each place of business of each property tax lender;

and

(2) investigate the lender's transactions, including loans, and

records, including books, accounts, papers, and correspondence,

to the extent the transactions and records pertain to the

business regulated under this chapter and Sections 32.06 and

32.065, Tax Code.

(b) The property tax lender shall:

(1) give the commissioner or the commissioner's representative

free access to the lender's office, place of business, files,

safes, and vaults; and

(2) allow the commissioner or the representative to make a copy

of an item that may be investigated under Subsection (a)(2).

(c) During an examination, the commissioner or the

commissioner's representative may administer oaths and examine

any person under oath on any subject pertinent to a matter that

the commissioner or the representative is authorized or required

to consider, investigate, or secure information about under this

chapter or Section 32.06 or 32.065, Tax Code.

(d) Information obtained under this section is confidential.

(e) A property tax lender's violation of Subsection (b) is a

ground for the suspension or revocation of the lender's license.

Added by Acts 2009, 81st Leg., R.S., Ch.

1382, Sec. 2, eff. September 1, 2009.

Sec. 351.009. GENERAL INVESTIGATION. (a) To discover a

violation of this chapter or Section 32.06 or 32.065, Tax Code,

or to obtain information required under this chapter or Section

32.06 or 32.065, Tax Code, the commissioner or the commissioner's

representative may investigate the records, including books,

accounts, papers, and correspondence, of a person, including a

property tax lender, who the commissioner or the representative

has reasonable cause to believe is violating this chapter or

Section 32.06 or 32.065, Tax Code, regardless of whether the

person claims to not be subject to this chapter or Section 32.06

or 32.065, Tax Code.

(b) For the purposes of this section, a person who advertises,

solicits, or otherwise represents that the person is willing to

make a property tax loan is presumed to be engaged in the

business described by Section 351.051.

Added by Acts 2009, 81st Leg., R.S., Ch.

1382, Sec. 2, eff. September 1, 2009.

Sec. 351.010. REFUSAL TO ALLOW EXAMINATION OR INSPECTION. A

property tax lender who fails or refuses to permit an examination

or investigation authorized by this subchapter violates this

chapter. The failure or refusal is grounds for the suspension or

revocation of the lender's license.

Added by Acts 2009, 81st Leg., R.S., Ch.

1382, Sec. 2, eff. September 1, 2009.

Sec. 351.011. VERIFICATION OF NET ASSETS. If the commissioner

questions the amount of a property tax lender's net assets, the

commissioner may require certification by an independent

certified public accountant that:

(1) the accountant has reviewed the property tax lender's books,

other records, and transactions during the reporting year;

(2) the books and other records are maintained using generally

accepted accounting principles; and

(3) the property tax lender meets the net assets requirement of

Section 351.153.

Added by Acts 2009, 81st Leg., R.S., Ch.

1382, Sec. 2, eff. September 1, 2009.

SUBCHAPTER B. AUTHORIZED ACTIVITIES; LICENSE

Sec. 351.051. LICENSE REQUIRED. (a) A person must hold a

license issued under this chapter to:

(1) engage in the business of making, transacting, or

negotiating property tax loans; or

(2) contract for, charge, or receive, directly or indirectly, in

connection with a property tax loan subject to this chapter, a

charge, including interest, compensation, consideration, or

another expense, authorized under this chapter that in the

aggregate exceeds the charges authorized under other law.

(b) A person may not use any device, subterfuge, or pretense to

evade the application of this section.

(c) This chapter does not apply to:

(1) any of the following entities or an employee of any of the

following entities, if the employee is acting for the benefit of

the employer:

(A) a bank, savings bank, or savings and loan association, or a

subsidiary or an affiliate of a bank, savings bank, or savings

and loan association; or

(B) a state or federal credit union, or a subsidiary, affiliate,

or credit union service organization of a state or federal credit

union; or

(2) an individual who:

(A) makes a property tax loan from the individual's own funds to

a spouse, former spouse, or persons in the lineal line of

consanguinity of the individual lending the money; or

(B) makes five or fewer property tax loans in any consecutive

12-month period from the individual's own funds.

(d) A property tax lender licensed under this chapter is not

required to be licensed under Chapter 156 or any other provision

of this code.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.0515. RESIDENTIAL MORTGAGE LOAN ORIGINATOR LICENSE

REQUIRED. (a) In this section, "Nationwide Mortgage Licensing

System and Registry" and "residential mortgage loan originator"

have the meanings assigned by Section 180.002.

(b) Unless exempt under Section 180.003, an individual who acts

as a residential mortgage loan originator in the making,

transacting, or negotiating of a property tax loan for a

principal dwelling must:

(1) be individually licensed to engage in that activity under

this chapter;

(2) be enrolled with the Nationwide Mortgage Licensing System

and Registry as required by Section 180.052; and

(3) comply with other applicable requirements of Chapter 180 and

rules adopted under that chapter.

(c) The finance commission shall adopt rules establishing

procedures for issuing, renewing, and enforcing an individual

license under this section. In adopting rules under this

subsection, the finance commission shall ensure that:

(1) the minimum eligibility requirements for issuance of an

individual license are the same as the requirements of Section

180.055;

(2) the minimum eligibility requirements for renewal of an

individual license are the same as the requirements of Section

180.059; and

(3) the applicant pays:

(A) an investigation fee in a reasonable amount determined by

the commissioner; and

(B) an annual license fee in an amount determined as provided by

Section 14.107.

(d) The finance commission may adopt rules under this chapter as

required to carry out the intentions of the federal Secure and

Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.

110-289).

Added by Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 17, eff. June 19, 2009.

Sec. 351.052. ISSUANCE OF MORE THAN ONE LICENSE FOR PROPERTY TAX

LENDER. (a) The commissioner may issue more than one license to

a property tax lender on compliance with this chapter for each

license.

(b) A person who is required to hold a license under this

chapter must hold a separate license for each office at which

property tax loans are made, negotiated, serviced, held, or

collected under this chapter.

(c) A license is not required under this chapter for a place of

business:

(1) devoted to accounting or other recordkeeping; and

(2) at which property tax loans are not made, negotiated,

serviced, held, or collected under this chapter.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.053. AREA OF BUSINESS; PROPERTY TAX LOANS BY MAIL. (a)

A property tax lender is not limited to making property tax

loans to residents of the community in which the office for which

the license or other authority is granted is located.

(b) A property tax lender may make, negotiate, arrange, and

collect property tax loans by mail from a licensed office.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.054. NOTICE TO TAXING UNIT. (a) A transferee of a tax

lien must include with the sworn document filed with the

collector of a taxing unit under Section 32.06(a-1), Tax Code,

the information required by this section.

(b) If the transferee is licensed under this chapter, the

transferee shall include with the filing the licensee's license

number assigned by the commissioner.

(c) If the transferee is exempt from this chapter under Section

351.051(c)(1), the transferee shall include with the filing an

affidavit stating the entity's type of organization that

qualifies it for the exemption, any charter number assigned by

the governmental authority that issued the entity's charter, and

the address of the entity's main office.

(d) If the transferee is exempt from this chapter under Section

351.051(c)(2), the transferee shall include a certificate issued

by the commissioner indicating the entity's exemption. The

commissioner shall establish procedures for issuance of a

certificate under this subsection, application requirements, and

requirements regarding information that must be submitted with an

application.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE

Sec. 351.101. APPLICATION REQUIREMENTS. (a) The application for

a license under this chapter must:

(1) be under oath;

(2) give the approximate location from which business is to be

conducted;

(3) identify the business's principal parties in interest; and

(4) contain other relevant information that the commissioner

requires for the findings required under Section 351.104.

(b) On the filing of one or more license applications, the

applicant shall pay to the commissioner an investigation fee not

to exceed $200.

(c) On the filing of each license application, the applicant

shall pay to the commissioner for the license's year of issuance

a license fee in an amount determined as provided by Section

14.107.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.102. BOND. (a) If the commissioner requires, an

applicant for a license under this chapter shall file with the

application a bond that is:

(1) in an amount not to exceed the total of:

(A) $50,000 for the first license; and

(B) $10,000 for each additional license;

(2) satisfactory to the commissioner; and

(3) issued by a surety company qualified to do business as a

surety in this state.

(b) The bond must be in favor of this state for the use of this

state and the use of a person who has a cause of action under

this chapter against the license holder.

(c) The bond must be conditioned on:

(1) the license holder's faithful performance under this chapter

and rules adopted under this chapter; and

(2) the payment of all amounts that become due to the state or

another person under this chapter during the calendar year for

which the bond is given.

(d) The aggregate liability of a surety to all persons damaged

by the license holder's violation of this chapter may not exceed

the amount of the bond.

(e) A license holder engaged in the business of making,

transacting, or negotiating a property tax loan for a principal

dwelling must meet the surety bond or recovery fund fee

requirement, as applicable, of the holder's residential mortgage

loan originator under Section 180.058.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 18, eff. June 19, 2009.

Sec. 351.103. INVESTIGATION OF APPLICATION. On the filing of an

application and, if required, a bond, and on payment of the

required fees, the commissioner shall conduct an investigation to

determine whether to issue the license.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.104. APPROVAL OR DENIAL OF APPLICATION. (a) The

commissioner shall approve the application and issue to the

applicant a license to make property tax loans under this chapter

if the commissioner finds that:

(1) the financial responsibility, experience, character, and

general fitness of the applicant are sufficient to:

(A) command the confidence of the public; and

(B) warrant the belief that the business will be operated

lawfully and fairly, within the purposes of this chapter; and

(2) the applicant has net assets of at least $25,000 available

for the operation of the business.

(b) If the commissioner does not find that the eligibility

requirements of Subsection (a) are met, the commissioner shall

notify the applicant.

(c) If an applicant requests a hearing on the application not

later than the 30th day after the date of notification under

Subsection (b), the applicant is entitled to a hearing not later

than the 60th day after the date of the request.

(d) The commissioner shall approve or deny the application not

later than the 60th day after the date of the filing of a

completed application with payment of the required fees, or if a

hearing is held, after the date of the completion of the hearing

on the application. The commissioner and the applicant may agree

to a later date in writing.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.105. DISPOSITION OF FEES ON DENIAL OF APPLICATION. If

the commissioner denies the application, the commissioner shall

retain the investigation fee and shall return to the applicant

the license fee submitted with the application.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

SUBCHAPTER D. LICENSE

Sec. 351.151. NAME AND PLACE ON LICENSE. (a) A license must

state:

(1) the name of the license holder; and

(2) the address of the office from which the business is to be

conducted.

(b) A license holder may not conduct business under this chapter

under a name or at a place of business in this state other than

the name or office stated on the license.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.152. LICENSE DISPLAY. A license holder shall display a

license at the place of business provided on the license.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.153. MINIMUM ASSETS FOR LICENSE. A license holder

shall maintain for each office for which a license is held net

assets of at least $25,000 that are used or readily available for

use in conducting the business of that office.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.154. ANNUAL LICENSE FEE. Not later than December 1, a

license holder shall pay to the commissioner for each license

held an annual fee for the year beginning the next January 1, in

an amount determined as provided by Section 14.107.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.155. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL

FEE. If the annual fee for a license is not paid before the 16th

day after the date on which the written notice of delinquency of

payment has been given to the license holder, the license expires

on the later of:

(1) that day; or

(2) December 31 of the last year for which an annual fee was

paid.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.156. LICENSE SUSPENSION OR REVOCATION. After notice

and a hearing the commissioner may suspend or revoke a license if

the commissioner finds that:

(1) the license holder failed to pay the annual license fee, an

examination fee, an investigation fee, or another charge imposed

by the commissioner under this chapter;

(2) the license holder, knowingly or without the exercise of due

care, violated this chapter or Section 32.06 or 32.065, Tax Code,

or a rule adopted or an order issued under this chapter or

Section 32.06 or 32.065, Tax Code;

(3) a fact or condition exists that, if it had existed or had

been known to exist at the time of the original application for

the license, clearly would have justified the commissioner's

denial of the application; or

(4) the license holder has failed to ensure that an individual

acting as a residential mortgage loan originator, as defined by

Section 180.002, in the making, transacting, or negotiating of a

property tax loan for a principal dwelling is licensed under this

chapter in accordance with Section 351.0515.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1104, Sec. 19, eff. June 19, 2009.

Sec. 351.157. CORPORATE CHARTER FORFEITURE. (a) A license

holder who violates this chapter is subject to revocation of the

holder's license and, if the license holder is a corporation,

forfeiture of its charter.

(b) When the attorney general is notified of a violation of this

chapter and revocation of a license, the attorney general shall

file suit in a district court in Travis County, if the license

holder is a corporation, for forfeiture of the license holder's

charter.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.158. LICENSE SUSPENSION OR REVOCATION FILED WITH PUBLIC

RECORDS. The decision of the commissioner on the suspension or

revocation of a license and the evidence considered by the

commissioner in making the decision shall be filed in the public

records of the commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.159. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF

NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a

suspended license or issue a new license on application to a

person whose license has been revoked if at the time of the

reinstatement or issuance no fact or condition exists that

clearly would have justified the commissioner's denial of an

original application for the license.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.160. SURRENDER OF LICENSE. A license holder may

surrender a license issued under this chapter by delivering to

the commissioner:

(1) the license; and

(2) a written notice of the license's surrender.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.161. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR

SURRENDER. (a) The suspension, revocation, or surrender of a

license issued under this chapter does not affect the obligation

of a contract between the license holder and a debtor entered

into before the revocation, suspension, or surrender.

(b) Surrender of a license does not affect the license holder's

civil or criminal liability for an act committed before

surrender.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.162. MOVING AN OFFICE. (a) A license holder shall

give written notice to the commissioner before the 30th day

preceding the date the license holder moves an office from the

location provided on the license.

(b) The commissioner shall amend a license holder's license

accordingly.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.163. TRANSFER OR ASSIGNMENT OF LICENSE. A license may

be transferred or assigned only with the approval of the

commissioner.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.

Sec. 351.164. REPORTING REQUIREMENT. (a) Each year, a license

holder shall file with the commissioner a report that contains

relevant information concerning its transactions conducted under

this chapter.

(b) A report under this section must be:

(1) under oath; and

(2) in the form prescribed by the commissioner.

(c) A report under this section is confidential.

(d) Annually the commissioner shall prepare and publish a

consolidated analysis and recapitulation of reports filed under

this section.

Added by Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 1, eff. September 1, 2007.