1. Arizona Mortgage Broker Bond

    January 23, 2010 by Eric Weisbrot

    ArizonaOn 02/04/2009, a new law was introduced pertaining to Arizonian mortgage brokers. HB 2486 now has commercial mortgage brokers abiding by existing law which regulates residential mortgage brokers. HB 2486 requires licensure as well as a surety bond, which is conditioned on fulfillment of the law. The quantity of the surety bond is calculated by the brokerage’s class of investors. Should the investors be solely institutional investors, the surety bond must be $10,000; if not the bond must be in the amount of $15,000 if some of the investors are non-institutional.

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    Category: Commercial Bonds, Mortgage Broker Bonds, Surety News

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  2. Arizona Mortgage Originator Bond Requirement Update

    January 22, 2010 by Eric Weisbrot

    ArizonaArizona state has written a new bill relating to new mortgage originator requirements. The new bill, HB 2143, requires mortgage originators to be employed by a mortgage banker, mortgage broker or consumer lender and must also be covered by a surety bond obtained by their employer. The originators are subject to licensure following present law.

    HB 2143 also produces a recovery fund. The recovery fund will be supported by fees determined by the Superintendent of Banking for mortgage originators attaining their original license; and fees before license renewal with any year in which there is less than $2 million in the fund. The recovery fund pays for direct out-of-pocket damages, including reasonable attorneys’ fees and litigation costs. A $200,000 per claim limit is set against the fund, plus a $500,000 aggregate limit for any claims against an individual licensee. The superintendent is permitted to appeal the court to prorate all claims against a licensee. If the recovery fund has inadequate funds to pay claims against it, the superintendant can wait until satisfactory funds have been deposited and fulfill due claims, or portions thereof, in the order received, plus interest of 4% per year.

    When originally written, the bill demanded that loan originators submit their employer’s surety bond and pay $100 to the recovery fund in order to acquire their license. The SFAA asked the AIA to amend the bill to illuminate the issue of whether the surety bond or the recovery fund responded first if a claim were to arise against a loan originator. The modification that the SFAA drafted asks the bonds required from mortgage brokers and bankers to be exhausted before a claim is made against the recovery fund. The AIA was victorious in having those requirements incorporated into the bill before it was accepted by the Senate and went back to the Houses for agreement. There were additional final changes to HB 2143; with existing law, mortgage brokers must obtain a $10,000 surety bond, with the bond amount varying from $25,000 to $100,000 which is based on the total assets and unpaid loan balances. HB 2143 also raised the amount of the employer’s surety bond to a minimum of $200,000. The new law includes new requirements for bonding and payments to the recovery fund. Originators are asked to submit their employer’s bond in order to acquire a license, while at the same time allows the originator to pay the quantity that the superintendant directs into the recovery fund or post the employer’s surety bond. HB 2143 also states that if an originator is functioning under the employer’s bond, the originator doesn’t have to pay into the recovery fund. If the employer opts to obtain the smaller license bond amount required for the employer’s licensure, then any of its employees that are licensed as originators will have to pay assessments into the recovery fund. Alternatively, the employer may obtain its own license bond and then pay the required recovery fund assessment on behalf of all its licensed originators to abide by the license requirements. Should the employer choose to post the upper minimum bond amount, which is at least $200,000, to protect all the loan originators it employs, ten of the originators will not have to pay into the recovery fund.

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    Category: Commercial Bonds, Mortgage Broker Bonds

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  3. Arizona Flood Protection Facility Performance Bond

    September 1, 2009 by Tracy Konopka

    ArizonaSB1289, enacted on April 28, 2008 and made effective October 10, 2008, created flood protection districts and a Board of Directors for each district to construct flood protection facilities. The new law states that performance and payment bonds are required for any construction, and clarifies the process for claims against the performance and payment bonds. The surety has 60 days to act upon a contractor found to be in default by the board or the board may re-let the contract. If the costs to complete the project surpass the finances available for payment, the defaulting contractor’s surety has 20 days after mailing of the notice to satisfy the board’s demand for payment of the difference. This demand cannot be more then the penal sum of the bond, and monies must be used to pay for the costs of completing the work. Delivery of writ may be served on the Surety’s principal office or it’s Attorney-In-Fact. If there is no office or Attorney-In-Fact, it may be service on the insurance commissioner.

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    Category: Contract Bonds, Performance Bonds, Surety News

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  4. Arizona Mechanics & Materialmen Liens Bond

    August 28, 2009 by Tracy Konopka

    ArizonaHB 2474 was enacted by the state of Arizona on April 28, 2008 and became effective October 10, 2008. It was created to amend the current mechanic’s lien discharge and discharge bond laws. It is required that bonds for lien releases be in the amount of 150% of the claim under the existing law, and the bonds can be posted by any original contractor, subcontractor or construction lender. This enactment clarified the law so that upon the recording and service of the surety bond discharging the lien, funds withheld with regard to any issued stop notice on the construction project shall be released. The enactment also grants the person filing a stop notice with a lien the permission to post a surety bond (bonded stop notice). The amount of the claim required for a stop-notice bond has been increased from 125% to 150% under the new law.

    Additionally, if the construction lender or any original contractor or subcontractor disputes a stop notice or bonded stop notice, the party can post a bond in the amount of 150% of the claim. This has been increased from 125% by this new law. It also states that a bond provided for the lien release may also be used as the bond for the release of stop notice on a project, as well as for the release of any funds withheld in regards to the stop notice.

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    Category: Contract Bonds, Surety News

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  5. Arizona Notary Bonds

    June 14, 2009 by Lisa Grimsley

    Arizona’s SB 1174 no longer requires bonds to be filed under existing law with the clerk of the superior court in the notary public’s county of residence. They must now be filed with the Secretary of State. This law was enacted on April, 28, 2008.

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    Category: Surety News

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