| (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 (12 U.S.C. §2601
et seq.);
(B) Regulation X (12 C.F.R. §1024 et seq.);
(C) Consumer Credit Protection Act, Truth in Lending
Act (15 U.S.C. §1601 et seq.);
(D) Regulation Z (12 C.F.R. §1026 et seq.);
(E) Equal Credit Opportunity Act (15 U.S.C. §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).
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