Texas Loan Rules Changed: What’s New?

The Texas Department of Savings and Mortgage Lending is updating its rules for residential mortgage sectors. Key updates include:

1. For Loan Originators and Related Professionals:

•   Mandatory RMLO sponsorship disclosures.
•   Restriction against contacting individuals listed on the Do Not Call registry.
•   Update on advertising guidelines.
•   Enhanced record-keeping for mortgage transactions and lender records.
•   Mandatory reporting of significant incidents like data breaches or the termination of crucial services.
• New registration requirements for master servicers.

2. Specific Changes:

• A new rule chapter (Chapter 55) introduces specifics on RMLO licensing, conduct, compensation, and education, including a 120-day limit on temporary authorizations.
• Revisions for mortgage companies emphasize simplified licensing, accountability through primary company contact notifications, and updated advertising standards.
• New requirements call for streamlined consumer complaint notices, transparent advertising on social media, and comprehensive records on mortgage transactions and corrective actions.
• For reportable incidents, a detailed root cause analysis is now required. Confidentiality protocols are reinforced.
• Adjustments to examination practices and servicer regulations include electronic surety bonds and Regulation Z compliance for periodic statements.

3. General Motivations and Objectives:

• The updates aim to streamline existing regulations for better clarity, incorporate modern practices, and adopt formal policies based on consumer feedback and loophole closures.

These updates, intended for public review by August 30th, reflect a concerted effort to modernize and refine regulatory practices in Texas’s residential mortgage landscape.

Our Opinion:

The increased compliance requirements may disproportionately affect smaller lenders who may not have the resources to keep up with the additional paperwork and reporting obligations. The department should consider providing guidance and support to help lenders navigate these new rules and ensure a level playing field for all market participants.

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