The Colorado Association of Mortgage Brokers’ has proposed a requirement of a $100,000 surety bond to be filed with mortgage brokers’ licenses. The state is one of few that do not currently require a bond. Most are welcoming the idea with open arms, as it should help protect the state and it’s citizens against mortgage fraud.
There are not many states left that do not require a bond. Off hand I can only think of Nevada, Montana and Massachussetts. Pennsylvania does not require the bond unless the broker wants to collect payment up front ($100,000 bond is then required). What is the reasoning that these states do not require a bond? Your guess is as good as mine. You would think the legislatures would want to protect their citizens against fraud, especially when it is the largest investment most will make. Perhaps Colorado’s new proposal will make the remaining unprotected states open their eyes.
Colorado also did the right thing by requiring large enough of a bond. Many states only require a $10,000 bond, Oklahoma only requires $5,000. If a broker is fradulent, they more than likely fraudulent with many, not just in just one instance. With the recent real estate boom, one claim could wipe out the full bond amount, leaving many victims of fraud unprotected.
It is time for states that do not require bond to wake up, it is time to protect your citizens against fraud! States that require minimal bond amounts need to think about real world situations and realize their bond requirements will not protect many.
You can see our current list of mortgage broker bond requirements.
You can also obtain a quote online for a mortgage broker bond.