Surety Bond News

New legislation was introduced on April 27th, 2009 in the state of Louisiana relating to credit service organizations. The new bill is referred to as SB 110 and terminated the requirement which was the surety bond required of credit service organizations; it must be active for two years following the halt of organization operations in the State or after the organization has filed notice with the Attorney General, whichever is later. SB 110 was enacted on 06/18/2009.

Louisiana State added new legislation regarding mortgage brokers. Referred to as HB 810, it substitutes the present regulatory system for mortgage professionals with a new system based on the federal requirements. The previous law required mortgage lenders and brokers to attain a $50,000 license bond. As presented, this bill would have required mortgage lenders, brokers and originators to acquire a surety bond with an amount that is calculated using the total amount of loans originated. The lenders surety bond amount would have varied from $100,000 to $500,000; for brokers and originators the surety bond quantity would have ranged from $25,000 to $150,000.

When the bill was amended and enacted, the surety bond that must be attained with an application for a license as a mortgage lender, broker or loan originator must be $45,000 if the loan volume in the pervious year was $99,999,999 or less and $50,000 if the loan volume was $100 million or greater. The mortgage originators that are the workers of a mortgage lender or broker can use their employer’s surety bond to comply with the proposed requirements. In place of the surety bond, a licensee can deposit a quantity equivalent to the surety bond requirement in a federal insured depository establishment in Louisiana.

HB 704 is a new law that was put in to place in the state of Louisiana regarding home service contract providers. The new law requires home service contract providers to supply a financial security deposit in a quantity equivalent to 5% of the gross consideration received on the sale of every service contract, less any claims paid. The deposit must be at least $25,000. Surety bonds, cash or securities are authorized to satisfy the requirement. In place of a security deposit, the service contract provider has the option to sustain a funded reserve account.

A new bill was introduced on April 27th, 2009 concerning Insurance Code in the state of Louisiana. HB 369 amended the Insurance Code to establish separate definitions for surety and fidelity as lines of insurance. The previous law characterized both fidelity and surety as one line of insurance. HB 369 was put in to action on July 6th, 2009.

A new law regarding public officials was enacted in the state of Louisiana. Named HB 1067, the new law allows an affidavit from the obligee of record to replace a promissory note for identification with a mortgage or act creating a vendor’s privilege on fixed property if the note was misplaced or damaged. HB 1067 states that both the clerk of the court, ex-officio recorder of mortgages and the surety on his or her bond do not have any accountability for any damages that any individual or entity suffered as a result of terminating the inscription of a mortgage or vendor’s privilege pursuant to such an affidavit. The legislation is indistinguishable to legislation that the past Governor Blanco prohibited in 2007.