If you operate a mortgage or consumer lending business in Texas, you have probably run into the SML versus OCCC question at some point. The two agencies regulate different types of lenders, and the audit requirements for each are not the same. Getting it wrong costs you time and money, especially when license renewal is on the line.
This guide breaks down what separates SML from OCCC, which one applies to your business, and what each regulator needs from your annual CPA audit.
Understanding the Two Regulators: SML & OCCC
Texas splits mortgage and consumer lending oversight across two separate state agencies, which is unusual compared to most states. Both use NMLS for licensing, which is where a lot of the confusion starts, but they are separate regulators with separate rules.
The Texas Department of Savings and Mortgage Lending regulates residential mortgage loan origination and mortgage banking under the Texas Finance Code and the federal SAFE Act framework. The Texas Office of Consumer Credit Commissioner regulates non-depository consumer lenders, businesses that extend credit directly to consumers outside the traditional mortgage and banking world.
Same licensing platform. Very different requirements. Knowing which one covers your business is the first thing to get right.
What the Texas Department of Savings and Mortgage Lending Covers?
What the Texas Office of Consumer Credit Commissioner Covers?
OCCC regulates non-depository consumer lenders in Texas under various chapters of the Texas Finance Code. The most common license type is the Regulated Lender license under Chapter 342, covering businesses that make personal and consumer loans directly to borrowers. OCCC also regulates property tax lenders under Chapter 351, motor vehicle sales finance dealers under Chapter 348, and credit access businesses under Chapter 393.
If your business extends consumer credit and you are not a bank, credit union, or traditional mortgage company, you are most likely under OCCC. Regulated lenders must file annual reports, submit audited financial statements prepared by an independent CPA, and maintain at least $25,000 in net assets.
As of March 1, 2026, annual reports must be filed through OCCC’s new online reporting system. ALECS is gone.
Key Practical Differences Between SML and OCCC Audits
Both regulators require independent CPA audits, but the details differ in ways that matter.
Key Difference | SML | OCCC |
Submission Channel | Audits are submitted through NMLS. | Audits are filed through the OCCC online reporting system using structured financial schedules. |
Deadline | Within 90 days of fiscal year-end. | May 1 each year for Chapter 342-regulated lenders. |
Net Asset Requirement | No comparable standardized net asset threshold. | Requires at least $25,000 in net assets. |
Report Format | Requires GAAP-compliant financial statements. | Requires GAAP-compliant financial statements that also fit the portal’s schedule formats. |
Loan Activity Reporting | Quarterly Mortgage Call Reports are submitted through NMLS. | Annual activity reports are submitted through the OCCC portal. |
What Can Go Wrong When You Confuse the Two?
Misidentifying which regulator covers your business, or assuming your CPA knows the distinction, creates problems that show up at the worst possible time.
- Wrong audit format submitted. A CPA scoped for SML may not produce output compatible with OCCC’s new portal schedules, requiring rework before you can file.
- Wrong deadline missed. SML’s 90-day window and OCCC’s May 1 deadline are different. Confusing the two means you may think you have more time than you do.
- Incomplete packages for dual-licensed companies. One audit does not automatically satisfy both regulators. It depends entirely on how the engagement is scoped.
- Net asset deficiency not anticipated. OCCC’s $25,000 requirement catches newer operations off guard. If your CPA does not flag a borderline position early, you are uploading a justification document at the last minute.
- CPA unfamiliar with the new system. The ALECS to NMLS and portal transition changed how OCCC lenders interact with the agency. A CPA who has not kept up may not know what the new system expects.
Documents to Have Ready Before You Engage a CPA
Whether you are preparing for an SML audit, an OCCC audit, or both, having your records organized before you start saves weeks of back-and-forth. Here is what to pull together:
- General ledger and trial balance for the fiscal year
- Bank statements and reconciliations for all accounts, all 12 months
- Loan origination records, funded loan schedules, and loan portfolio detail
- Net worth and net asset documentation
- Prior year audited financial statements or annual report
- NMLS Company ID and current license status confirmation
- Copies of any regulatory correspondence from your last renewal cycle
- Documentation supporting any material accruals, estimates, or related-party transactions
If your books are not closed and reconciled before you engage your CPA, the audit will take longer than you expect, and your filing deadline gets closer with every day the cleanup runs.
How to Choose a CPA Who Handles Both SML and OCCC?
- Have you worked with both SML and OCCC-regulated lenders? Knowing SML does not mean the CPA knows OCCC’s Chapter 342 requirements or the new annual report portal.
- Are you familiar with OCCC’s new reporting system? A CPA still oriented to ALECS has not kept up with how the submission process has changed.
- Can you scope one audit to satisfy both regulators? A good CPA will walk you through how they structure dual-regulator engagements.
- How do you present net asset calculations for OCCC lenders? The answer should reference the $25,000 threshold and how they handle positions near that level. Read More about the approval or denial of the application.
- Can you meet my specific deadline? SML and OCCC have different deadlines. Your auditor should be planning around your actual statutory due date, not a generic 90-day window.
Special Considerations for Companies Licensed Under Both Agencies
Some Texas lending operations hold licenses under both SML and OCCC, most often when a company originates residential mortgage loans and also makes consumer or property tax loans through the same entity or affiliated companies.
A single audit can satisfy both regulators, but only if the engagement is scoped correctly from the start. It needs to cover the full scope of the entity’s financial activity and produce output formatted for both NMLS and the OCCC’s new reporting portal.
Trying to adapt an SML audit for OCCC submission after the fact creates extra work and delays. Engage a CPA who understands both regulations from day one.
Frequently Asked Questions
SML regulates residential mortgage origination. OCCC regulates non-depository consumer lenders. Both require independent CPA audits but operate under different rules.
Mortgage origination and brokering fall under SML. Personal loans, consumer installment loans, and property tax loans fall under OCCC. Check your NMLS license record if unsure.
Both require a GAAP-compliant independent CPA audit, but the submission channel, deadline, and data requirements differ.
Yes, but only if the engagement is scoped from the start to meet both regulators’ requirements.
At least $25,000 in net assets must be maintained at all times under Chapter 342.
Please note that while this information provides a general understanding of Texas SML and OCCC audit requirements, it is recommended to consult with a licensed CPA for specific guidance related to your situation. If you have any questions, please contact us.
Get the Right Audit for Your Texas License
Whether your business falls under SML, OCCC, or both, the audit requirements are specific to each regulator, and a CPA who knows one does not automatically know the other. Our CPA auditors in Texas works with Texas mortgage bankers and OCCC-regulated consumer lenders to prepare audited financial statements that meet each regulator’s requirements and submit cleanly through the right system.
Fixed-rate pricing. Digital delivery. Responsive turnaround so your renewal deadline never slips.
Mohamed founded Metwally CPA PLLC in 2020 in the Dallas-Fort Worth metropolitan area. He holds active CPA license in the state of Texas and California. Mohamed is the firm’s Executive Director. Mohamed has a Master of Science (M.S.) degree in Accounting from University of Dallas. He has extensive assurance experience in a wide variety of industries, and he also devotes considerable time consulting and working with organizations and CPA firms on internal controls, audit quality, automation, and accounting best practices. He has over 15 years of audit experience.
Prior to founding the firm, Mohamed worked for big 4 and national firms for over than 10 years in the assurance practice. Mohamed worked on private clients as well as public clients and specialized in financial services sector.
He is a member of the Texas CPA Practice Issues, Diversity and Inclusion, and Governmental Accounting and Single Audits Conference Committees of Texas Society of CPAs.
Mohamed is a member of the American Institute of Certified Public Accountants, member of the AICPA small business group, member of the American institute of Certified Management Accountants, and Texas Society of Certified Public Accountants.
