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.
Eric is the Webmaster of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog.