| (a) Purpose and Applicability. This section establishes
the criteria utilized by the Commissioner and Department staff in
reviewing an individual with a criminal history to determine his or
her eligibility and fitness to be licensed by the Department as an
originator. This section implements the requirements of Tex. Occ.
Code §53.025, requiring the Department to establish guidelines
related to such reviews, including designating particular crimes and
offenses the Department considers to be directly related to the duties
and responsibilities of acting as an originator and may constitute
grounds for denial of licensure. The Commissioner's authority to deny
an application for licensure based on an individual's criminal history
under the Occupations Code is in addition to and augments that arising
from the Finance Code. This section also describes the Commissioner's
other statutory authority arising from the Finance Code for denial
of licensure based on an individual's criminal history, including
outlining certain offenses deemed by this section to be grounds for
denial under the Finance Code.
(b) Ineligibility by Operation of Law. The following
individuals are ineligible for licensure by operation of law due to
his or her criminal history:
(1) an individual who, within the seven years preceding
the date of the application, has been convicted of, or pled guilty
or nolo contendere to, a felony in a court of this state, another
state or territory of the United States, a federal court of the United
States, or other foreign, or military court, in accordance with Tex.
Fin. Code §180.055(a); and
(2) an individual who, at any time, has been convicted
of, or pled guilty or nolo contendere to, a felony offense involving
an act of fraud, dishonesty, breach of trust, or money laundering,
in accordance with Tex. Fin. Code §180.055(a). Any felony offense
listed in the schedule contained in subsection (e) of this section
having a nexus to residential mortgage loan origination arising from
the categories of criminal offenses related to residential mortgage
loan origination under subsection (d)(1) or (2) of this section (concerning
crimes involving fraud, falsification, dishonesty, deception and breach
of trust, and theft or embezzlement, respectively) is deemed to constitute
a crime involving an act of fraud, dishonesty, breach of trust, or
money laundering for purposes of Tex. Fin. Code §180.055(a).
(c) Duties and Responsibilities of a Residential Mortgage
Loan Originator. An originator acts as an intermediary between the
consumer seeking a residential mortgage loan and the underwriter who
ultimately determines whether the consumer qualifies for the loan.
The originator may assist the consumer in reviewing his or her income,
expenses and credit worthiness to determine whether he or she will
qualify for a loan, and on what terms he or she might qualify. The
originator may assist the consumer in making the loan application,
and sometimes directs the consumer to present his or her financial
information in the manner to which the lender or underwriter is accustomed.
A residential mortgage loan often takes place in the context of a
real estate transaction, and as a result, an originator sometimes
advises the consumer of his or her financial ability to purchase residential
real estate, including providing prequalification documents to establish
the consumer's purchasing power while shopping in the marketplace.
Once the loan has entered the underwriting process, the originator
may assist the consumer in resolving any outstanding conditions of
the underwriter to qualify for the loan and obtain approval, including
addressing items of concern on a consumer's credit report, immigration/residency
status, available cash-on-hand for the transaction, and income which
may not be readily established by documentary evidence, such as that
of an independent contractor. The originator communicates to the consumer
the ever-changing loan terms as prevailing rates in the marketplace
fluctuate, and is often a key figure in advising the consumer of when
and how he or she may "lock" the loan in advance of closing and solidify
the loan terms. The originator may serve as communications liaison
between the consumer and various parties to the transaction, including
the lender, the underwriting department or a third-party underwriter,
real estate brokers and sales agents, appraisers, insurance providers,
closing/settlement agents, and representatives of various taxing authorities.
In performing his or her duties, an originator has access to sensitive
information of the consumer, including his or her social security
number, date of birth, immigration/residency status, and all the personal
financial details of the consumer, including employment, income, assets,
and expenses.
(d) Categories of Offenses Related to Residential Mortgage
Loan Origination. The Finance Commission of Texas and the Department's
Commissioner has determined the following categories of criminal offenses
are directly related to the duties and responsibilities of acting
as an originator:
(1) criminal offenses involving fraud, falsification,
dishonesty, deception, and breach of trust;
(2) criminal offenses involving theft or embezzlement;
and
(3) criminal offenses involving intoxication by drugs
or alcohol.
(e) Schedule of Criminal Offenses Determined to be
Directly Related. The Finance Commission of Texas and the Department's
Commissioner has determined the criminal offenses in the following
schedule meet one or more of the categories deemed to relate to residential
mortgage loan origination by subsection (d) of this section, and are
directly related to the duties and responsibilities of an individual
licensed by the Department to act as an originator. The schedule includes
those criminal offenses most likely to be encountered by Department
staff and is made from the perspective of the criminal laws of the
State of Texas and the United States federal government. However,
the schedule is not an exhaustive review of all offenses, and does
not limit the Department from considering a criminal offense not specifically
listed in the schedule. The schedule should be construed to include
any criminal offense meeting one or more of the categories deemed
to relate to residential mortgage loan origination, as provided by
subsection (d) of this section. The schedule should further be construed
to include the substantially similar or functionally equivalent crime
of any state or territory of the United States, violations of the
Texas Code of Military Justice (Government Code Chapter 432), violations
of the Uniform Code of Military Justice, or crimes of a foreign country
or governmental subdivision thereof. In determining whether a criminal
offense of another jurisdiction is substantially similar or functionally
equivalent, an inquiry will be made comparing the subject offense
with an offense on the schedule to determine whether the subject offense
has similar elements, including intent and classification of punishment,
and whether the crime would have been punishable had the acts been
committed in Texas.
Attached Graphic
(f) Factors. Unless the individual is ineligible for
licensure by operation of law as provided by subsection (b) of this
section, in determining whether a criminal offense is directly related
to the duties and responsibilities of an individual licensed by the
Department to act as an originator, the Commissioner will consider:
(1) the nature and seriousness of the crime;
(2) the relationship of the crime to the purposes for
requiring a license to act as an originator;
(3) the extent to which an originator license might
offer an opportunity for the individual to engage in further criminal
activity of the same type as that in which the individual has previously
been involved;
(4) the relationship of the crime to the ability, capacity,
or fitness required to perform the duties and discharge the responsibilities
of a licensed originator; and
(5) any correlation between the elements of the crime
and the duties and responsibilities of licensed originator.
(g) In addition to the factors listed in subsection
(f) of this section, the Commissioner, in determining whether an individual
who has been convicted of a crime (as determined by Tex. Fin. Code §157.0131
and subsection (h) of this section) is unfit and ineligible for licensure,
will consider:
(1) the extent and nature of the individual's past
criminal activity;
(2) the age of the individual when the crime was committed;
(3) the amount of time that has elapsed since the individual's
criminal activity;
(4) the amount of time that has elapsed since the individual's
release from incarceration;
(5) the conduct and work activity of the individual
before and after the criminal activity;
(6) evidence of the individual's rehabilitation or
rehabilitative efforts;
(7) letters of recommendation, signed and dated, by
a current employer, if the individual is employed, or a previous employer,
stating that the employer has specific and complete knowledge of the
individual's criminal history and the reasons the employer is recommending
that the individual be considered fit to be licensed by the Department;
and
(8) any other letters of recommendation, signed and
dated, by an individual familiar with the applicant and his or her
character and fitness, with specific and complete knowledge of the
individual's criminal history, able to offer competent information
about the nature and extent of the applicant's rehabilitative efforts.
(h) Convictions Considered. The determination of whether
a criminal proceeding is considered to have resulted in a conviction
for purposes of this section will be made in accordance with Tex.
Fin. Code §157.0131, which states that an individual is considered
to have been convicted of a criminal offense if:
(1) a sentence is imposed on the individual;
(2) the individual received probation or community
supervision, including deferred adjudication or community service;
or
(3) the court deferred final disposition of the individual's
case.
(i) Consideration of Disciplinary Actions. Unless the
individual is ineligible for licensure by operation of law as provided
by subsection (b) of this section, in addition to the individual's
criminal history, the Commissioner may consider the individual's past
history of disciplinary actions with the Department, or another regulatory
body or official of another jurisdiction regulating residential mortgage
loan origination or other financial services, which may serve as separate
grounds for license ineligibility, or as an aggravating factor rendering
the individual ineligible for licensure.
(j) Consideration of Financial Responsibility, Character
and General Fitness. Unless the individual is ineligible for licensure
by operation of law as provided by subsection (b) of this section,
in addition to the individual's criminal history, the Commissioner
may consider the individual's financial responsibility, and other
evidence of character and general fitness, which may serve as separate
grounds for license ineligibility, or as an aggravating factor rendering
the individual ineligible for licensure. A conviction for a criminal
offense having a nexus to residential mortgage loan origination arising
from the categories of criminal offenses deemed to relate to residential
mortgage loan origination under subsection (d) of this section is
indicative of a failure to demonstrate requisite character and general
fitness to command the confidence of the community in accordance with
Tex. Fin. Code §180.055(a)(3), and honesty, trustworthiness and
integrity in accordance with Tex. Fin. Code §157.012(c)(1).
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