Mortgage Broker Bonds Process
#1: Determine Your Requirements
Find out your bond requirements by selecting your state from the list below. Some states require separate mortgage broker bonds for branch locations and each loan originator. Also, if you want to operate in several states, you’ll have to obtain a mortgage broker bond in each state that requires them.
Select Your State
to Find a Surety Bond
If you need assistance determining which bond you need, it is best to contact a bond professional. In addition to getting a mortgage broker bond, most states will require mortgage brokers to pass a written qualified test, complete pre-licensure education courses and obtain Errors and Omissions (E&O) Insurance. Make sure you visit the Nationwide Mortgage Licensing System & Registry (NMLS) website to find out what pre-licensure education requirements you need to meet, view the approved course provider list and see the pre-licensure education FAQ’s.
#2: Get Approved for Your Bond
Once you determine the bond requirements you must meet, your next step is to apply for your mortgage broker bond and get instantly approved.
#3: Sign and Submit Your Bond to the State
After you receive your surety bond, you must:
- 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)
Once you send your signed bond to the state, they will send you your mortgage broker license. This process can take anywhere from one to three weeks depending on the state and its workload.
What Do Mortgage Broker Surety Bonds Cost?
Costs are a percentage of the bond amount required of you, which is based on personal credit. Read our guide to learn more about how your bond costs are determined, or use our bond premium calculator tool to get an instant estimate. Our company can get you bonded nationwide, as we can approve you for the larger bond limits needed to do so. Also, if you currently have bonds with collateral requirements, we can likely help you get them approved without it to free up your funds.
Why Do You Need a Mortgage Broker Surety Bond?
You need a bond to protect your clients. If you break the rules of your bond, your clients can make claims against it which you’re responsible to pay. For example, if you approve a client for a loan you know they cannot repay, a claim can be filed. Depending on the state’s requirements, loan originators may also need to obtain an individual mortgage loan originator surety bond in addition to the mortgage broker bond their company holds.
Bond Claims Can Put Your Assets at Risk
You’re responsible to 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 broker bond is a legal contract that pledges your corporate and personal assets in the event of bond claims. Watch our video for an explanation of how bond claims work. Unfortunately, most bond agencies 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 agent it should be a big red flag to re-evaluate doing business with them.
Save Money on Bond Claims
Your bond agent should be your first line of defense against bond claims. In order to avoid bond claims, ensure you conduct your business professionally and ethically, while following the rules of your bond. Remember, you’re responsible to pay for bond claims that you cause. Learn how our company can save you money on claims. If you need help understanding exactly what your bond guarantees you will and will not do, please contact a bond professional.
Getting Mortgage Broker Bonds with Bad Credit
You can obtain mortgage broker bonds with credit issues. However, not all bond agencies will be able to approve you. Your personal credit is the primary item that is considered when you apply for your bond, as it’s used to get an idea of your probability of causing claims and your ability to pay them. Things like unpaid collections or tax liens on your credit report are a negative reflection of how you handle your finances, and can result in getting declined for a bond if you work with the wrong bond agency. Unfortunately, even if you get approved for your mortgage broker bond with credit issues, your costs will likely be higher. Use our free bond premium estimate tool to get an instant ball park estimate.
How Mortgage Broker Bonds Benefit You (and your clients)
Your bond protects your clients. If you break the law or any other rules while operating as a mortgage brokerage, your clients can file claims on your bond. However, your bond benefits you as well, as the surety bond alternatives have several disadvantages.