Surety Bond News

HB 2031/SB 1171 is new legislation that was enacted relating to mortgage originators in the State of Virginia. The new legislation adopts the federal S.A.F.E. Mortgage Licensing Act; which includes the federal definition of a mortgage originator and requires such individuals to acquire a surety bond if the mortgage originator is not a member of staff or exclusive agent of a mortgage broker or a mortgage lender. The mortgage originators that are the employee or agent of a lender/broker have to be covered under their employer’s surety bond. The surety bond has to be in a minimum amount of $25,000 or a larger sum that the Commissioner of the Bureau of Financial Institutions establishes that is calculated by the sum amount of mortgage loans originated in the preceding calendar year. The present law requires a surety bond in the quantity of $25,000 for mortgage brokers and lenders, and this new law states that those bonds may be utilized to fulfill the new bonding requirements if the quantity agrees with the schedule that the Commissioner will promulgate. HB 2031/SB 1171 provides for direct actions on the individual mortgage originator’s surety bond, but restricts the aggregate liability of the surety to the penal sum of the bond. Present law includes these same requirements for the existing mortgage broker and mortgage lender license bonds. The new legislation also states that the mortgage originator’s surety bond will be conditioned on the execution of all written agreements with borrowers or prospective borrowers, the accurate and exact accounting of all finances received in the course of the licensee’s business procedures, and conduct in compliance with the new law and all applicable laws and policies.

Texas State presented new legislation relating to mortgage originators. The new law is named HB 2779 and affects mortgage originators that are employees of licensed mortgage bankers, which are described as entities that accept submissions or make residential mortgage loans and that are approved as: 1) a mortgage with direct endorsement underwriting authority fro, the U.S. Department of Housing and Urban Development; 2) a servicer of the Federal National Mortgage Association for the Federal Home Loan Mortgage Corporation, or 3) an issuer for the Government National Mortgage Association lenders. HB 2779 demands these mortgage originators to be licensed and to fulfill the requirements of Chapter 180 of the Finance Code; which is a new segment to the Code ratified under HB 10. The modifications to the Code would require mortgage loan originators that are staff of mortgage bankers to either pay a fee into a recovery fund or acquire a surety bond. The new legislation became active on April 1st, 2010.

Utah State presented a new bill relating to mortgage originators. The new bill is named HB 286 and inserts the federal definition of mortgage originators to a new segment in Utah law, and requires originators to be licensed and bonded to apply the S.A.F.E. Mortgage Licensing Act. The Utah legislation includes minimal provisions to put the federal law in to practice. Legislation requires the banking commissioner to institute minimum surety bond requirements that mirror the dollar amount of the loans originated by the originator. Should the employer of the originator acquire a surety bond on behalf of the originator, the surety bond must cover the actions of the originator.

Mortgage originators are affected by a new bill in Texas State concerning a surety bond requirement. The new bill is labeled HB 10 and requires mortgage originators to be licensed and to pay a fee into a recovery fund or attain a surety bond. The new bill is relevant to all mortgage originators. HB 10 also pertains to credit unions. The state banking regulators will promulgate concerning the surety bond requirements and the recovery fund procedures. This new bill makes the surety bond or recovery fund payments relevant to a license holder that partakes: 1) in the sale of a motor vehicle to be used as a principal dwelling; or 2) in the industry of making, transacting, or negotiating property tax loan for a principal dwelling. HB 10 also pertains to a registered creditor that participates in the procedures of originating a residential mortgage loan.

North Dakota state has written a new law concerning mortgage originators. The new law, which is referred to as SB 1260, requires mortgage loan originators to be covered by a surety bond. The originator must acquire a surety bond or has the option to use the surety bond of their employer. When the law was originally drafted, the surety bond would have been in the quantity of $50,000, but the law was modified to require the Commissioner of Financial Institutions to establish the amount required through policy, which must mirror the sum dollar amount of loans originated in the prior year. SB 1260 authorizes the Commissioner of Financial Institutions to raise the surety bond amount required should the protection of the public interest require it. A minimum net worth of $25,000 also must be sustained as well as the surety bond.