Michigan Mortgage License Bond

The Michigan Department of Insurance and Financial Services is responsible for mortgage broker, lender and servicer licensing. Per Michigan Act 173 of 1987 and the Secondary Mortgage Act, licensees must meet the state’s established requirement for a surety bond. 

This surety bond is an agreement between three parties: 

• Principal: The mortgage broker or lender that needs to get the bond.
• Obligee: Entity requiring the principal to get bonded.
• Surety: The company that issues the bond.

The surety bond ensures that anyone affected by a mortgage broker’s, lender’s or servicer’s violation of the established regulations is financially compensated. After the surety compensates the claimant, the principal must reimburse the surety for the claim’s full amount. 

Avoiding claims against the bond is easily accomplished by following the required regulations, according to our customers.

The cost of a Michigan mortgage broker, lender, and servicer bond ranges from $250 to $12,500, with bond amounts between $25,000 and $125,000. Mortgage brokers and lenders are required to have a $25,000 bond, while mortgage servicers must have a $125,000 bond.

For mortgage loan originator bonds, the cost for individuals ranges from $100 to $5,000, with bond amounts between $10,000 and $50,000, depending on loan volume. For companies, the cost ranges from $500 to $25,000, with required bond amounts between $50,000 and $250,000.

The bond rate is between 1% and 10% of the bond amount. This defines the bond premium or cost of the bond.

Our customers often ask which factors affect how much a bond costs? The factors that impact the cost of the bond are the applicant’s finances, bond history and industry experience.

1. Apply For Your Bond

The process for obtaining a Michigan mortgage broker, lender and service bond involves three easy steps. To begin, take advantage of our two convenient application options.

1. Apply for a bond online – Our online application is accessible 24/7, and many of our customers complete the short form in a few minutes. 
2. Call us at (888)-592-6631 – For answers to your bond questions and to submit your application information by phone, our bond experts are ready to help. 

When applying, you will need:

• Bond name (First Mortgage Broker, Lender and/or Servicer Bond or Secondary Mortgage Broker, Lender and/or Servicer Bond)
• Bond amount ($25,000 - $125,000)
• Email and contact information

2. Get a Quote

Our customers benefit from getting an instant bond quote delivered to their inboxes. For assistance reviewing your quote, please get in touch with our bond specialists. 

3. Purchase Your Bond

As you review your bond, reach out to us if you identify any errors. The documents are available online for you to sign without hassle. After you pay the invoice and sign the required items, we will email the original bond to you. 

When applying for a Michigan mortgage broker license or a combination broker, lender and servicer license, an electronic surety bond must be submitted through the NMLS. The requirements for a mortgage broker or lender license are enforced by the Michigan Department of Insurance and Financial Services, which include the First Mortgage Broker, Lender and/or Servicer Bond and Secondary Mortgage Broker, Lender and/or Servicer Bond.

First-time loan originators must meet a $10,000 requirement for the Mortgage Loan Originator Individual Bond, while for others, the bond amount is based on loan volume, ranging from $10,000 to $50,000 for individuals
 

Companies are required to obtain a Mortgage Loan Originator Company Bond, with amounts ranging from $25,000 to $125,000 depending also on loan amounts.

This bond is continuous and remains active until the surety provides a 60-day written cancellation notice to the principal and obligee.

If you have any questions regarding the definition and role of mortgage brokers, lenders and servicers, the required bond amount, etc., please contact us. 

When one of our customers contacted us recently, he needed clarification about the bond requirements for mortgage brokers, lenders and servicers in Michigan. We took time explaining the requirements to him and assisted him with his application. He appreciated how simple and quick it was to meet the state’s bond requirement.

To complete the licensing process for Michigan mortgage brokers, lenders and servicers, applicants must submit the required documentation to the Nationwide Mortgage License System. The required items include:

• Application
• Surety bond
• Registered agent
• Financial statements
• Business Relationships
• Description of business servicing
• Business Plan
• Certificate of Authority/Good Standing
• Formation documents
• Management chart
• Organizational chart
• Direct ownership verification
• Mortgage loan originator list

Nationwide Mortgage Licensing System. (n.d.). Checklist compiler.
https://mortgage.nationwidelicensingsystem.org/slr/SitePages/Checklist-Compiler.aspx

Michigan Department of Insurance and Financial Services. (n.d.). Consumer finance and mortgage.
https://www.michigan.gov/difs/industry/con-finance-mortgage

Michigan Department of Insurance and Financial Services. (n.d.). First mortgage broker, lender, and servicer license surety bond form. Michigan Department of Insurance and Financial Services.
https://mortgage.nationwidelicensingsystem.org/slr/StateForms/MI_1st%20Mortgage%20Broker-Lender-Servicer%20License%20ESB_V1.pdf

Michigan Department of Insurance and Financial Services. (n.d.). Second mortgage broker, lender, and servicer license surety bond form. Michigan Department of Insurance and Financial Services.
https://mortgage.nationwidelicensingsystem.org/slr/StateForms/MI_2nd%20Mortgage%20Broker-Lender-Servicer%20License%20ESB_V1.pdf

Michigan Legislature. (n.d.). Act 173 of 1987: Mortgage brokers, lenders, and servicers licensing act. Michigan Legislature. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-Act-173-of-1987

Michigan Legislature. (n.d.). Act 125 of 1981: Secondary mortgage loan act. Michigan Legislature. https://legislature.mi.gov/Laws/MCL?objectName=mcl-Act-125-of-1981