Surety Bond News

Legislatures in Texas have enacted a new law directly affecting the surety bond industry. When one looks at the changes included in the bill, it’s hard to see what it actually accomplishes; it raises the question of whether the legislators writing laws affecting the world of surety have adequate knowledge of the industry.
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The surety bond industry has been stubborn when it comes to any kind of change. For the most part, things have been done the same way for years while ignoring technological advances. As of recent, companies have begun to embrace the digital age and have been harnessing it to improve and evolve the industry.
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New York legislators have re-adopted regulations to implement AB 6924 (2009). The New York Banking Department now requires mortgage loan originators to obtain a surety bond. Should the originator be an employee or exclusive agent of an originating entity subject to the present surety bond requirements, then the employer’s bond could be utilized to meet the requirement. The current law requires mortgage brokers to obtain a bond ranging from $10,000 to $100,000 calculated by loan application volume; under the new bill they must acquire a bond ranging from $50,000 to $500,000, which is calculated by the volume of New York closed loans. AB 6924 states that the Superintendent has the ability to require a larger bond if the “nature or business of a [mortgage loan originator] or originating entity requires in the reasonable judgment of the Superintendent such additional protection for consumers.”

Real estate closing agents must abide by new legislation in the state of Iowa. The Iowa Banking Division has modified its regulations to enact SB 2348 (2010). SB 2348 requires real estate closing agents to obtain a $25,000 surety bond in order to be licensed with the state but the Superintendent of the Division of Banking has the ability to require a larger bond. When it comes to mortgage brokers and mortgage bankers, the new law also requires the bond amount to be calculated by the amount of residential mortgage loans serviced; opposed to the current law which calculates the bond amount by the amount of residential mortgage loans made, originated, arranged, brokered, processed, and underwritten.

California mortgage loan servicers have to abide by a new law that was recently passed. The California Department of Corporations implemented a new law enacted under SB 36 and it requires mortgage loan services to obtain a bond that’s equivalent to the bond required of mortgage lenders, which is $50,000. The new law also requires finance lenders and brokers to acquire a minimum $25,000 bond.

The law also allows the Commissioner of Corporations to establish the required bond amount using regulations for residential mortgage lenders, mortgage servicers, finance lenders and finance brokers if the licensee hires one or more mortgage loan originators. The surety bond will be in a quantity calculated by the dollar amount of residential mortgage loans that the licensee and their loan originators accumulate.