7.1 SML Commissioner Powers, Policy Oversight, & Rulemaking

Texas does not regulate mortgage origination through a single free-floating bureau. Policy sits with the Finance Commission of Texas. Day-to-day licensing, examination, and enforcement sit with the Department of Savings and Mortgage Lending (SML) for the channels this overlay tests. SML's own homepage states the agency is subject to the oversight and under the jurisdiction of the Finance Commission, and that SML has two key areas of regulatory responsibility: chartering, regulation, and supervision of the state's thrift industry, and licensing, registration, and regulation of the state's mortgage industry.

The Finance Commission: who sits above SML

Finance Code Chapter 11 creates the Finance Commission. § 11.101 says it is composed of 11 members appointed by the governor with the advice and consent of the Senate. Members serve staggered six-year terms, with as near as possible to one-third of the terms expiring February 1 of each even-numbered year. An appointment must be made without regard to race, color, age, sex, religion, disability, or national origin.

§ 11.102 is the composition question the exam will twist. Do not memorize a stale 6-industry / 5-public chart. The current statute requires:

• two banking executives (officers of a state bank with five or more years of executive experience in a bank during the seven years before appointment);
• one savings executive (officer of a state savings association or savings bank with five or more years of that executive experience in the preceding seven years);
• one consumer-credit executive (officer of an entity regulated by the consumer credit commissioner, with five or more years of that experience in the preceding seven years);
• one residential mortgage loan originator licensed under Chapter 156 or 157, with five or more years of RMLO experience in the preceding seven years; and
• six representatives of the general public, at least one of whom must be a certified public accountant.

A public member (or that person's spouse) cannot be licensed in an industry a finance agency regulates, cannot manage or be employed by an entity regulated by or receiving money from a finance agency, cannot own more than a 10 percent interest in such an entity, and cannot take substantial goods, services, or money from a finance agency beyond lawful Commission compensation. Not more than two members may live in the same state senatorial district. Every member must be a Texas registered voter.

The Commission is the policy and rulemaking board for three finance agencies: SML, the Office of Consumer Credit Commissioner (OCCC), and the Department of Banking. § 11.306 expressly authorizes the Commission to adopt residential mortgage loan origination rules as provided by Chapter 156. § 156.102 fills that in: the Commission may adopt and enforce rules necessary for the intent of or to ensure compliance with Chapter 156, may adopt rules to carry out the intentions of the federal SAFE Act, may adopt recovery-fund administration rules on the Commissioner's recommendation, and may adopt books-and-records rules including where records must be kept. The Commission shall consult with the Commissioner when proposing and adopting Chapter 156 rules. Formal rules are adopted under the Texas Administrative Procedure Act, Government Code Chapter 2001, and are then published in Title 7, Part 4 of the Texas Administrative Code.

The Commissioner: appointed, at-will, dual mission

Finance Code § 13.002 makes the Savings and Mortgage Lending Commissioner the chief executive officer of SML. The Finance Commission appoints the Commissioner. The Commissioner serves at the will of the Finance Commission and is subject to its orders and direction. The Commissioner must have not less than five years' experience in the executive management of a savings association or savings bank, or in savings-association or savings-bank supervision, during the 10 years preceding appointment. The Commission sets the Commissioner's compensation, paid from SML money.

SML's public pages, including the homepage, FAQ, laws page, examination page, and Recovery Fund claims page, identify Hector Retta as Commissioner as of 2026-09-12. Name the current holder only from that live source. The office, not the person, is what the statute creates.

SML is not a mortgage-only shop. It charters and supervises thrifts (state savings banks and savings associations) and it licenses or registers the non-depository mortgage industry. That dual mission is why a thrift-experienced Commissioner sits over an agency that also issues RMLO licenses. The mortgage side is what this overlay tests; the thrift side explains why Chapter 13 sits in Title 2 next to the Finance Commission rather than only in Subtitle E of Title 3.

Mortgage statute and rule map (recodified November 23, 2024)

SML's laws page is the map you should be able to redraw from memory. Do not cite 7 TAC Chapter 80 or 81 as current. Those were the pre-November 23, 2024 company and banker chapters.

Dual SML/OCCC reminder (one paragraph, not a Chapter 2 rerun). SML's origination FAQ is explicit that licensing requirements cover a broad range of loan origination and lending activities, including some overlap between SML and OCCC. Typical first-lien origination through an SML-licensed mortgage company or registered mortgage banker is an SML file. Specified secondary-mortgage, property-tax, and manufactured-housing channels sit with OCCC. Overlap does not let an originator pick the friendlier agency, transfer a pending application, or refund fees. If the employer is an OCCC licensee originating products OCCC supervises, that is not this chapter's enforcement ladder. If the sponsor is an SML company or banker, this Commissioner's examination, subpoena, penalty, and Recovery Fund tools apply. Details of who must be licensed, PE hours, and sponsorship belong in Chapter 2; the exam point here is that enforcement follows the license the originator actually holds.

What the Commissioner can actually do

Examinations and investigations. Finance Code § 156.301 (companies and the originators they sponsor) and § 157.021 (originators, including banker-sponsored originators) authorize inspections of books, records, documents, operations, and facilities as the Commissioner determines necessary. The Commissioner may share evidence of criminal activity with state or federal law enforcement. Information obtained during an inspection or investigation is confidential unless disclosure is permitted or required by other law. The Commissioner may share investigation or inspection information with other state or federal agencies (for originators, § 157.021(g) adds that sharing occurs only if the Commissioner determines there is a valid reason). Out-of-state records can trigger examiner-expense reimbursement, with the Finance Commission setting the maximum by rule (§ 156.301(h); § 157.021(h) for originators whose records are out of state and not made available in Texas).

Subpoenas. During an investigation, § 156.3011 and § 157.022 authorize a subpoena addressed to a peace officer or other person who may serve citation. The subpoena may require a deposition, document production, or both. If the person disobeys or refuses to testify, the Commissioner may petition a district court in Travis County for an order requiring obedience. That is court enforcement of an administrative subpoena, not a criminal arrest by the Commissioner.

Covert work is not the default. Both § 156.301(d) and § 157.021(d) allow an undercover or covert investigation only if the Commissioner, after due consideration, determines it is necessary to prevent immediate harm and to carry out the chapter. A routine compliance exam is not a sting.

Rulemaking versus orders. The Finance Commission adopts rules. The Commissioner proposes, implements, and enforces them, issues interpretive practice through examinations and enforcement orders, and may authorize specific employees to conduct hearings and make recommendations in contested cases (§ 156.103(c)). § 156.103(a) lets the Commissioner sue in the Commissioner's name to enjoin a Chapter 156 violation without having to prove that no adequate legal remedy exists or that substantial or irreparable damage would result. No appeal bond is required of the Commissioner (§ 156.103(b)).

Texas SAFE Act enforcement toolkit. § 180.201 is the originator-facing list: a regulatory official may deny, suspend, revoke, condition, or decline to renew a license for a violation of Chapter 180, a rule, or an order; may do the same if the applicant fails Subchapter B qualifications or withholds information or makes a material misstatement; may order restitution; may impose an administrative penalty subject to § 180.202; and may issue orders or directives under § 180.203, including immediate temporary cease-and-desist orders and orders to cease engaging in business under a license granted in error. Chapter 7, Section 7.3 puts dollar caps and hearing clocks on those tools. This section's job is to know who holds them: the Finance Commission writes the rules; the Commissioner, as SML's CEO, uses them.

Worked example

A newly licensed Texas RMLO is sponsored by an SML mortgage company. The originator wants to know whether the Finance Commission or Commissioner Retta will show up to pull loan files. The Commission does not ride along on SES examinations. The Commission appointed the Commissioner, sets SML's direction, and adopts 7 TAC Chapters 55 and 56. The Commissioner's examiners conduct the inspection under § 156.301 and 7 TAC § 55.300, using the company's books required by § 56.204. If the originator later faces a penalty, § 157.023 and § 180.202 are Commissioner orders after notice and opportunity for hearing, not a vote of the 11-member board. If the originator wants to challenge the text of a rule, that fight is with a Finance Commission rule adopted under § 156.102, not with an examiner's finding.

Independent SML-jurisdiction study by OpenExamPrep does not convert this chapter into an SML bulletin. The live sources are Finance Code Chapters 11, 13, 156, 157, and 180, 7 TAC Chapters 55–59, and sml.texas.gov.