New legislation was presented in the state of South Dakota concerning mortgage brokers and originators. The new law is titled HB 1060 and implements the S.A.F.E. Mortgage Licensing Act. The law attaches the federal definition of a mortgage originator and alters the present definition of mortgage broker so that the distinction between the two terms is that a mortgage broker is a mortgage originator that has at least a 10% interest in a mortgage brokerage. The previous law required a $25,000 license bond for both mortgage brokers and lenders. HB 1060 requires each mortgage lender, mortgage brokerage, mortgage broker and originator to sustain a surety bond that mirrors the sum dollar amount of loans originated by the licensee and all its staff and agents, but can not be less than $25,000. The new law states that each mortgage broker and originator must be covered by a surety bond. Should they be an employee of an individual or entity subject to licensing and bonding, the employer’s surety bond can be utilized in place of the mortgage broker/originator’s bond obligation. The employer’s surety bond must cover each mortgage broker and originator in a quantity set by this law. There is a 30 day termination stipulation in the present law. Fulfillment of the latest requirements becomes obligatory for licensure on July 31st, 2010 for a mortgage lender, mortgage brokerage, and a mortgage broker; on December 31st, 2010, for individuals licensed as a mortgage loan originator as of July 1st, 2009.
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.