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District of Columbia Mortgage Broker Bond

February 8, 2010 by Eric Weisbrot

District of Columbia A new bill was enacted in Washington, D.C. relating to mortgage brokers, lenders and originators. The new bill, which is titled Bill 133, has developed into law as it passed the Congressional review time without any action from Congress. The bill is indistinguishable from the emergency act that was enacted close to the conclusion of 2008 for mortgage brokers, lenders and originators, permanently implementing the Mortgage Lender and Broker Emergency Amendment Act of 2008; it applied a net worth requirement to mortgage brokers as well as the license bond requirement under present law. The Emergency Amendment Act also allows the broker to pay into a recovery fund as the Commissioner of the Department of Insurance, Securities and Banking precribes in place of meeting the net worth and bonding requirements. The SFAA effectively had Bill 133 altered to bound the surety’s liability to the penal sum of the surety bond despite of the amount of years the surety bond stays in effect, the amount of premiums paid, the amount of renewals of the license, or the amount of claims filed. Bill 133 also authorizes direct actions on the surety bond. The new bill became active after receiving approval from Congress on July 18th, 2009.

D.C. Mortgage Broker\Lender Bond Amendment

January 3, 2010 by Eric Weisbrot

Mortgage brokers and lenders must recognize a new act in the District of Columbia. The new act which is named B 1020 is the Mortgage Lender and Broker Emergency Amendment Act of 2008. The new law requires a net worth requirement on mortgage brokers while inducing the license bond requirement under present law. B 1020 also authorizes the broker to pay into a recovery fund as the Commissioner of the Department of Insurance, Securities and Banking imposes in lieu of meeting the net worth and bonding requirements. The current law bases the bond amount on the loan volume of the broker with a minimum amount of $12,500 and a maximum amount of $50,000. The law was introduced behind schedule in the session and was enacted after 11 hours. The bill adds a new federal law enacted under H.R. 3221 (2008), which asks the Secretary of Housing and Urban Development to institute licensing and bonding requirement standards for all mortgage loan originators and brokers. While under the federal structure, all state licensing laws must contain a surety bond or a minimum net worth requirement. The federal law requires the surety bond amounts or the net worth levels to be based on the volume of loans. H.R. 3221 also permits the utilization of recovery funds in place of bonding or a minimum net worth. All states have 24 months to apply the federal standards, or the secretary’s federal program will apply. The District of Columbia has chosen to ask for both a surety bond and a net worth standard, and also authorizes for a recovery fund payment. B 1020 also revoked the present requirements for the bond amount. The Commissioner of the Department of Insurance, Securities, and Banking will establish all requirements for the surety bond under the new law.