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Texas S & L issues amendments to mortgage broker regulations.

THE TEXAS SAVINGS AND LOAN DEPARTMENT, Austin, Texas, issued amendments to its mortgage broker regulations on April 19, 2004, relating to the disclosures that a mortgage broker or loan officer must give to a mortgage loan applicant. The amendments include (1) an amended Consumer Complaint Notice and a new Mortgage Broker Recovery Fund Notice, (2) new prohibitions and requirements concerning labeling a fee a discount point and (3) new advertising requirements. The amendments went into effect June 1, 2004.

The amendments provide for a more detailed statement as to how consumers may file complaints, and to more prominently give notice about the Mortgage Broker Recovery Fund, which is administered by the Texas Savings and Loan Department. The new regulations require the Mortgage Broker/Loan Officer Disclosure Form to contain additional information about how a consumer can file a complaint and about the Mortgage Broker Recovery Fund. In addition, the Consumer Complaint and Mortgage Broker Recovery Fund notices must be posted in each registered office or branch office and on each office's Web site.

Under the new regulations, a mortgage broker or loan officer may not label a charge or fee payable to the mortgage broker, loan officer or company affiliate as a "discount point" unless the mortgage broker or loan officer is the lender in the transaction, or the fee is a reimbursement for sums advanced by the broker, officer or affiliate company to the lender to "buy down" the interest rate on the loan. The new rule also states that discount points may be retained and charged only if the loan closes.

The new regulations also require any advertisements for a mortgage loan that are offered by or through a mortgage broker or loan officer to contain the information that a creditor is required to provide in an advertisement under the federal Truth In Lending Act (TILA) and its implementing regulation, Regulation Z, regardless of whether the mortgage broker or loan officer is a creditor for purposes of Regulation Z. Under the new regulations, an advertisement also must disclose the name and license number of the mortgage broker or loan officer or the business entity through which the mortgage broker or loan officer conducts its activities; a physical street address for the mortgage broker, loan officer or business entity; and the license number of the mortgage broker or loan officer.

The Texas Savings and Loan Department has stated that the first violation will result in a notice to correct and will require the entity to confirm that it has implemented the correction. A second violation will result in a monetary penalty, and subsequent violations will result in more severe action.
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Title Annotation:Department of Savings and Loans
Publication:Mortgage Banking
Geographic Code:1USA
Date:Jun 1, 2004
Words:441
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