Surety Bond News

Motor vehicle title lenders in Virginia State are affected by a new bill which is referred to as SB 606. The new bill requires motor vehicle title lenders to acquire a surety bond in a quantity of $50,000 for each location, but cannot surpass $500,000. The surety bond is conditioned on the licensee executing all written agreements with borrowers correctly accounting for all funds accepted by the applicant or licensee in its licensed business; including cooperation with all pertinent legislation relating to operating their business. SB 606 authorizes direct actions on the surety bond, but the surety’s aggregate liability is restricted to the surety bond quantity.

SB 606 is a new law that was presented in Virginia State concerning motor vehicle title lenders. The new law requires motor vehicle title lenders to be licensed and to acquire a surety bond in the quantity of $50,000 for each location, but can not surpass $500,000. Initially, the bill would have required a surety bond in the quantity of $10,000 for each location, not to surpass $50,000; the bill was exchanged for a larger surety bond. The surety bond would be conditioned on the licensee executing all written agreements with borrowers or potential borrowers, properly and accurately accounting for all funds received by the applicant/licensee in its licensed business, and the cooperation with all related legislation in managing their business. The bill would authorize direct actions on the surety bond, but the surety’s aggregate liability would be restricted to the surety bond quantity.

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.

The state of Virginia has set forth a new law intended for Indian tribes named HB 96/SB 359. The law requires Indian tribes to follow the same benefit and tax payment laws as non-profit and governmental organizations. Indian tribes that choose to finance employee benefits through payments into a fund in lieu of taxes are required to make a deposit of cash/securities or post a surety bond. The new law became active upon enactment.

Virginia enacted a new law referred to as SB 149. The new law raises the required license bond amount for settlement agents to no less than $200,000. The previous law required a bond of at least $100,000. SB 149 became effective upon enactment.