A new bill titled SB 342 was introduced in New Mexico concerning mortgage brokers. The new bill requires mortgage lenders and mortgage originators to be bonded and to apply the S.A.F.E. Mortgage Licensing Act. The original surety bond required of mortgage originators is $50,000. Upon renewal, the bill provides for a surety bond amount calculated by the quantity of loans originated in New Mexico on a yearly basis. The surety bond quantities would be $50,000 (under $3 million in loans), $100,000 ($3-$10 million in loans) and $150,000 (over $10 million in loans). Should the loan originator be an employee or exclusive agent of a mortgage loan business, the surety bond of the employer can be used to fulfill the surety bond requirement. The mortgage loan companies’ initial surety bond amount is $50,000 and the penal sum of the bond adjusts to mirror the sum dollar amount of loans originated yearly with the same method and quantity as the mortgage broker bond. The present law authorizes direct actions on the surety bond for individuals who have been injured and restricts the aggregate liability of the surety to all people, cumulative or otherwise, to the quantity specified in the bond. The bill was amended in the 11th hour to contain a private right of action in which persons can take legal action against mortgage loan originators for intrusion of the new law and an enforcement procedure that the Attorney General can commence against the originator for violations that have taken place or that are about to transpire.
Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog.