Mortgage brokers and lenders must follow a new law applied in the state of Connecticut. Titled SB 948, the new law requires mortgage lenders and brokers to be bonded and allows the Banking Commissioner to implement regulations for the quantity of the surety bond; it must reflect the dollar amount of loans that the mortgage lender or mortgage broker originated. All mortgage loan originators have to be protected by a surety bond. Should the originator be a former employee or exclusive agent of a broker or lender that was subject to this surety bond obligation, the employer’s surety bond can be used only if coverage for all originators is supplied under the employer’s bond. If the originator acquires a surety bond by itself, the bond quantity must reflect the dollar amount of loans that it originated. The previous law called for a $40,000 bond from lenders and brokers, which was planned to raise the amount to $80,000 on August 1st, 2009. As presented, SB 948 would have demanded brokers and lenders to obtain a surety bond in an amount varying between $100,000 and $500,000. The SFAA cooperated with AIA and members in Connecticut to lessen the surety bond amounts.
Eric is the Webmaster of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog.