Mortgage Lender Bond Guide

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Why do you need a mortgage lender bond?

You need a bond to protect your clients. If you don’t follow the provisions of your bond, your clients can make claims against it which you’re responsible to pay. For example, if you charge a client undisclosed additional fees on their mortgage loan, a claim can be made.

Frequent Questions

Costs are a percentage of the bond amount that’s required of you, which is based on your personal credit. Use our bond pricing tool to get a quick ballpark estimate or an exact quote.

Submit an application online, receive an instant quote, sign the indemnity agreement, pay online, and then we will ship the bond out to you.

No. Similar to mortgage broker bonds, you will need a separate bond for every state you operate in that requires the bond. Some states may require multiple bonds of your company and or employees.

You most likely do. Many states require bankers and supervised lenders to obtain a bond before they get their license. However, not all states have the same requirements. Please view our state requirement list or contact the states in which you wish to operate.

No. The premium fee is for the risk the surety undertakes when financially backing your bond. Should you cancel your bond, first year bond premiums are "fully earned". However, after the first year, a bond cancellation can result in a pro-rated returned premium depending on the bond cancellation language.

It depends on the state. Some states require separate bonds of the company and individual originators within the company. Others only require a bond of the company, not the individuals.

View our state requirement list to see the bond requirements of the states you operate in. If they are not listed, contact the state to determine if there are any new requirements, as they may have changed.

Yes. We are licensed in all 50 states and offer higher surety credit limits than most other bond agencies. This typically means you can get bonds in every state .


Tips to Decrease Your Mortgage Lender Bond Costs

The most effective way to lower your bond costs is to take care of personal credit issues (costs are primarily based on personal credit). Providing your bond agency strong financials and having your U.S. citizenship will also help lower your mortgage lender bond costs.

Bond Claims Can Put Your Assets at Risk

You must pay bond claims in full which can be as large as the full bond amount (including legal costs). The indemnity agreement you must sign to obtain your mortgage lender bond is a legal contract that pledges your corporate and personal assets in the event of claims. Watch our video for an explanation of how bond claims work. Unfortunately, most bond agents won’t take the time to explain how claims can put you at risk and how to avoid them; if this happens when working with a bond you should reconsider doing business with them. Your bond agent should be your first line of defense against bond claims.

How to Avoid Bond Claims

Operate your business professionally, while following the rules of your bond. Remember, you’re responsible to pay for claims on your bond. If you need help understanding exactly what your bond guarantees you will and will not do, please contact a bond professional.

Mortgage Lender Bond Process: Three Step Guide

#1: Determine Your Requirements

Research your bond requirements by selecting your state from the map below. Some states will require you to obtain separate mortgage lender bonds for the company and the individual originators within the company, while others may only require a bond for the company which covers all employed originators. If you want to operate in multiple states, you must obtain separate mortgage lender bonds in each state that requires them. If you need help determining your bond requirements, please contact a bond professional.

Select Your State

In addition to a bond, most states will require mortgage lenders to pass a written qualified test, complete pre-licensure education courses and obtain Errors and Omissions (E&O) Insurance. To determine the pre-licensure education requirements you must meet, you’ll need to visit the NMLS website where you will find the pre-licensure education FAQ’s and the approved course provider list.

#2: Get Approved for Your Bond

Your next step is to apply for your mortgage lender bond and get instantly approved.

#3: Sign and Submit Your Bond to the State

Once you receive your mortgage lender bond from your bond agency, you’ll have to:

  • Sign your bond
  • Make a copy for your records
  • Send the signed bond to the state (along with any other important paperwork provided by the state or bond agency)

After you send your signed mortgage lender bond to the state and meet all other NMLS requirements, the state will ship your license to you. Obtaining your license can take anywhere from one to three weeks, depending on the specific state.

Obtaining Mortgage Lender Bonds with Bad Credit

It’s possible to obtain mortgage lender bonds with credit issues, but not all bond agencies will approve you. Personal credit is the primary item that is considered when you apply for a bond. Things like unpaid collections or tax liens on your credit report are a negative reflection of how you handle your finances, and can prevent you from getting your mortgage lender bond if you partner with the wrong bond agency. Unfortunately, even if you get approved for your mortgage lender bond with credit issues, your costs will likely increase. Try our free estimate tool to find out what your bond will cost.

Mortgage Lender Bonds Benefit You Too

Your bond protects your clients first and foremost. However, your mortgage lender bond benefits you too, as the surety bond alternatives have several disadvantages.

Things You Need Besides a Mortgage Lender Bond

After you obtain your mortgage lender bond, you’ll need to complete a criminal background check and fulfill continuing education requirements. Learn about what else is required of you and valuable strategies to beat out your local competitors.

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