Effective July 1, 2008, correspondent lenders in Connecticut now follow the same bond requirements as mortgage lenders and brokers, according to the HB 5577 enactment. The bond amount is also increased from $40,000.00 to $80,000.00. There are new regulatory requirements for mortgage brokers and lenders. The law specifies new permissible and prohibited actions for mortgage brokers and lenders. If there are any unpaid costs of an examination of a license, the bond is required to respond to it. The Banking Commissioner is no longer required to automatically suspend the license on the date the license bond is canceled unless it is renewed or replaced. If the licensee does not pay the costs after 30 days of an examination, the license will be suspended.
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Connecticut Correspondent Lenders Bond
September 24, 2009 by Lisa GrimsleyCategory: Commercial Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Surety NewsTags: connecticut, correspondent lender, correspondent lender bond, ct | Comments (0)
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Connecticut Professional Employer Organization (PEO) Bond
September 9, 2009 by Lisa GrimsleyThe new Connecticut amendment HB 5113, effective January 1, 2009, says that PEO’s (Professional Employer Organizations) need a working capital of at least $150,000 or they need to provide a surety bond, a letter of credit, or securities with a market value of $150,000. The surety bond is to ensure that the PEO will pay the taxes, wages, benefits, or entitlements if the PEO does not pay on time. If positive working capital is not shown on the PEO’s financial statements, then the bond must be for $100,000 plus an amount sufficient to cover the deficit of the working capital. The law also states that a covered employee is not an employee of the PEO for purposes of general liability insurance, surety bonds, fidelity bonds, employer’s liability, or employer’s liability insurance. Other states have used these provisions in the past few sessions as well.Category: Commercial Bonds, Surety NewsTags: bond requirements, connecticut, ct, legislation, peo bond, professional employer organization bond, surety bond | Comments (0)
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Changes For Mortgage Broker Bonds & Mortgage Lender Bonds
February 28, 2009 by Rick BredowNew state legislation is changing the way many brokers and lenders will conduct future business, as there have been numerous changes in 2008-2009 timeframe which will affect mortgage brokers and mortgage lenders.
First, a primary change will be the increased required bond amounts along with tighter regulations that will be imposed on business transactions and pre-licensing certifications. Although some of this new state legislation has passed, it seems like many states are set waiting critical decisions from Congress, which is expected to jump start the weakened economy. Many states are taking a back seat to changing regulations until they see how the new president’s economic stimulus package will affect the mortgage industry, as well as being afraid to move too quickly to adopt new legislation, since remembering the demise of the sub-prime mortgage crisis which left many small mortgage brokers and lenders out of business or severely crippled. In addition, many states are looking to the government for their proposed solution to the housing crisis. The combination issues of the current economy & housing crisis may result in a decrease of licensing for brokers and lender in this upcoming year. New legislation passed that went into effect mid 2008 and are effective for all renewals in 2009 & introduced in the following states: Connecticut, Iowa, and Maryland which have all increased the required bond amounts.
• Connecticut has increased their required bond amount from $40,000 to $80,000 effective August 1st, 2009.
• Iowa increased the required bond amount from $50,000 to $100,000 effective 12/31/08.
• Maryland has made increases in the bond amounts based on the volume of loans. Their $25,000 requirement has increased to $50,000, the $50,000 requirement has increased to $100,000, and their $75,000 requirement has increased to $150,000.
In addition, four (4) other states attempted to pass legislation that would increase the required bond amount and impose tighter requirements for mortgage brokers and lenders in 2008. Those states included Hawaii, Missouri, Oregon, and South Carolina, all which rejected the proposed increases and thereby postponing any decisions at this time. These states have concluded to revisit this legislation in 2009 once the economic situation is further determined for 2009. The state of Alabama had a proposal on the table to enact legislation requiring a bond for mortgage brokers and bankers for the 2009 license period. This legislation did not pass and will be revisited in mid 2009.It is further expected that we will see many changes in 2009 to the legislation and bond requirements that affect mortgage brokers and lenders. The primary focus of the state legislation is expected to reduce the amount of claims and keep business owners working honestly and ethically. Keep in mind, that with the economy in crisis there will be many changes in the future that will affect your license and your bond. To remain best advised of these current changes, keep in contact with your state licensing agency.
Category: Commercial Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Surety NewsTags: connecticut, Hawaii, iowa, legislation, maryland, Missouri, mortgage broker, mortgage crisis, Oregon, South Carolina | Comments (1)
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The Uniform Trust Act
February 22, 2009 by Matt GerdesIn recent years trusts have been used more frequently, both in family estate planning as well as commercially in transactions. Along with the greater use of trusts came the understanding that trust laws were varied greatly from state to state and were considered thin at best. In an attempt to codify generally practiced and accepted common law principles regarding trusts, the National Conference of Commissioners on Uniform State Laws created the Uniform Trust Code (UTC) in regards to the creation of a uniform code for all fifty states.
Most law governing the regulation of creation and administrative duties of trusts in the United States have become statutory at the level of the state. The Uniform Trust generally involves three parties in its creation as well as its regulation of administrative duties. The first is the grantor or settler who is the individual that has created the trust; a trustee who oversees and manages the trust and its assets; and a beneficiary who, much like the title suggests, receives the benefit of the administrated trust.The Grantor of a trust is simply the individual who has decided to create the trust by making a trust agreement which outlines the terms and conditions of the trust. Generally such a trust is revocable in that the Grantor retains the ability alter, change or revoke the trust at any time unless the terms of the trust specifically mentions otherwise.
The Trustee is the person or persons who manage the trust and all of the duties that are required to make the trust function properly. Unlike the Grantor position, a trust may have only one trustee or multiple trustees. This position is responsible collect trust assets, pay expenses and enforce or defend claims in its interests.
The Beneficiary as defined by the Uniform Trust Code is the person that has a present or future beneficial interest in the trust. These individuals are the holders of equitable title of trust assets and receive all the benefits of the trust property. The Beneficiary is also subject of the Trustee’s legal title ownership as well as control under the terms and conditions of the trust agreement dictated by that of the Grantor.To date, twenty states have adopted some substantive form of the Uniform Trust Code and executed the laws as they see fit. Despite the fact that an attempt has been made to make all participating states uniform in regards to the handling of these trusts, each state has adapted the law as they see fit. The three most recent states that have tried to pass this new bill would also require a bond from the trustee to regulate their duties if the court decides on the necessity of protecting the interests of the Beneficiary. The court would also be granted the ability to set the price of the bond, the terms of liability and alter or terminate the bond at any time. Only Arizona has passed and enacted this bill, while Connecticut and Oklahoma defeated it.
Category: General Bonding, Other, Surety NewsTags: arizona, connecticut, court bond, oklahoma, uniform trust act | Comments (0)
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Connecticut Increases Mortgage Bond Requirements
January 30, 2009 by Rick BredowThe Connecticut House Bill 5577 increases the mortgage bond requirements in the State of Connecticut by doubling the amount of existing bonds. This Bill became effective on July 1, 2008. The passing of this Bill is not good news for licensed Mortgage Brokers and Lenders in the State of Connecticut, since this Bill requires that all Mortgage Brokers and Lenders carry a bond for $80,000. All licensed Brokers and Lender must be compliant by August 1, 2009.
What will this mean to the thousands of Mortgage Brokers and Lender in the state of Connecticut? Bottom-line financially, they will be paying more for their Surety Bonds to be compliant with the state guidelines. The Surety Companies will be looking a bit closer at applications and increases for bonds in Connecticut due to the now large requirement of $80,000. Surety underwriters will be looking a bit closer at Net Worth of the business and the owners of the company. They will want to make sure there will be enough cash in reserves to handle any claims that could arise. Due to the increased bond requirements, the affect on Mortgage Brokers and Lenders that may have issues with personal credit will result in difficulty securing lower rates for these bonds. The bill allows for in increase in personal net worth from $25,000 to $50,000. There will be a few markets that will be positioned to write these
bonds, but overall it can be expected that they will be looking for larger premiums, due to the increased financial risks. In addition, this bill will combine existing “First� and “Second� mortgage expert licenses into one combined license that will cover all activities and require that all applicants are using the Nationwide Mortgage Licensing System (NMLS). The state will also require that the license have an expiration date of December 31st of the following year.
To summarize further changes in the Bill, the State of Connecticut requires each licensee to contact the state license center, if any of the following occur:
• Licensee experiences a bankruptcy
• Criminal Indictment of any type
• Provide notice of license denial, cease and desist, license suspension, and or fines from any other licensing entity
• Notification by any agency of the Attorney General
• Any revocation of a warehouse line of credit
• Notification of any license holders owning over 10% of the company filing bankruptcy
• Notification of ownership changesNeglecting to report any of the occurrences above could result in suspension or revocation of a license.
With all these changes in the State of Connecticut, we can expect the Surety Companies to tighten their guidelines and underwriting practices and these bonds will not be as easy to get as they have been in the past. For specific rules and regulations, it is strongly recommended visiting the Connecticut State Website for more specific licensing requirements.
Category: Commercial Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Surety NewsTags: bond reuirements, connecticut, legislation, mortgage broker | Comments (0)
