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RULE §80.202 Prohibition on False, Misleading, or Deceptive Practices and Improper Dealings

Published: 2015

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(a) No company or originator may:
  (1) knowingly misrepresent his or her relationship
to a mortgage applicant or any other party to an actual or proposed
residential mortgage loan transaction;
  (2) knowingly misrepresent or understate any cost,
fee, interest rate, or other expense in connection with a mortgage
applicant's applying for or obtaining a residential mortgage loan;
  (3) disparage any source or potential source of residential
mortgage loan funds in a manner which knowingly disregards the truth
or makes any knowing and material misstatement or omission;
  (4) knowingly participate in or permit 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 its implementing regulations, broker, arrange, or make a residential
mortgage loan in which the company or 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) recommend or encourage default or delinquency or
continuation of an existing default or delinquency by a mortgage applicant
on any existing indebtedness prior to closing a residential mortgage
loan which refinances all or a portion of such existing indebtedness;
  (7) induce or attempt to induce a party to a contract
to breach that contract so the person may make a residential mortgage
  (8) alter any document produced or issued by the department,
unless otherwise permitted by statutory regulation; or
  (9) engage in any other practice which the Commissioner,
by published interpretation, has determined to be false, misleading,
or deceptive.
(b) The term "improper dealings" in Finance Code, §156.303(a)(3)
includes, but is not limited to the following:
  (1) Acting negligently in performing an act for which
a person is required under Finance Code, Chapter 156 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 156 or this chapter including, but not limited to, the following:

    (A) Real Estate Settlement Procedures Act;
    (B) Regulation X;
    (C) Consumer Credit Protection Act, Truth in Lending
    (D) Regulation Z;
    (E) Equal Credit Opportunity Act;
    (F) Regulation B; and
    (G) Texas Constitution, Article XVI, §50.
  (3) Representing to a mortgage applicant that a charge
or fee which is payable to the company or originator is a "discount
point" unless the loan closes and:
    (A) The company or originator is the lender in the
transaction. For purposes of this paragraph, the company or originator
is deemed to be the lender if the company or originator, is the payee
as evidenced on the face of the note or other written evidence of
indebtedness; or
    (B) The company or 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 company
or originator has remitted to the lender on behalf of the mortgage
applicant, to buy down the interest rate on a residential mortgage
    (C) A company or an originator engages in a false,
misleading or deceptive practice or improper dealings when in connection
with the origination of a residential mortgage loan:
      (i) The company or originator offers other goods or
services to a consumer in a separate but related transaction and the
company or originator engages in a false misleading or deceptive practice
in the related transaction; or
      (ii) The sponsor of an originator who offers other
goods or services to a consumer in a separate but related transaction
and the person engages in a false, misleading or deceptive practice
in the related transaction; and the sponsor knew or should have known
of the transaction.
    (D) An originator receiving a verbal or written inquiry
about his or her services shall respond accurately to any questions
about the scope and nature of such services and any costs.

Source Note: The provisions of this §80.202 adopted to be effective July 5, 2012, 37 TexReg 4866; amended to be effective September 5, 2013, 38 TexReg 5702