| (a) Purpose. The purpose of this section is to clarify
and establish requirements related to the fiduciary duties owed to
a wrap borrower by a person who collects or receives a payment from
a wrap borrower under the terms of a wrap mortgage loan, as provided
by Finance Code §159.152.
(b) Non-Delegation of Duties. A wrap lender or other
person collecting or receiving a payment from a wrap borrower under
the terms of a wrap mortgage loan may not delegate or assign its fiduciary
duties owed under Finance Code §159.152 to another person except
as a result of the wrap lender selling, assigning, transferring, or
conveying the wrap mortgage loan. Any sale, assignment, transfer,
or conveyance by a wrap lender of a wrap mortgage loan is deemed to
include an assignment of the fiduciary duties owed by the wrap lender
to the wrap borrower under Finance Code §159.152. A sale, assignment,
transfer, or conveyance by a wrap lender of a wrap mortgage loan does
not extinguish the assigning wrap lender's fiduciary duties to the
wrap borrower in connection with amounts collected or received by
the wrap lender from the wrap borrower prior to the effective date
of the sale, assignment, transfer, or conveyance of the wrap mortgage
loan.
(c) Required Accounting. The wrap lender must, either
directly, or through use of a third-party servicer it has contracted
with, maintain, on a current basis, separate written accountings for
each wrap mortgage loan made by the wrap lender sufficient to account
for, track, and retrospectively trace all payments received from the
wrap borrower under the terms of the wrap mortgage loan, and all disbursements,
transfers, or assignments of such funds, including, but not limited
to, disbursements made to a superior lienholder, taxing authority,
or insurance company in connection with the residential real estate
secured by the wrap mortgage loan. The accounting required by this
subsection must be maintained by the wrap lender or its successor-in-interest
until the limitations period for the wrap borrower to bring any cause
of action against the wrap lender arising from a violation of law
in connection with the wrap mortgage loan transaction has lapsed.
To the extent the wrap lender utilizes the services of a third-party
servicer, a wrap lender must establish and maintain policies and procedures
that are reasonably designed to acquire from the third-party servicer
any information or supporting documentation necessary or prudent to
ensure the wrap lender satisfies the accounting required by this subsection.
The accounting required by this subsection may be accomplished through
administration of and the retention of records in connection with
a trust account as provided by §78.302 of this title (relating
to Trust Account; Maintenance of Funds Held in Trust).
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