What is a mortgage broker surety bond?
A mortgage broker surety bond is a license and permit bond that mortgage brokers must obtain before getting their professional license. The bond is a legally binding agreement that holds brokers accountable to state laws and industry regulations. It helps ensure that mortgage brokers run honest and ethical businesses.
Who needs a mortgage bond?
If you want to become a mortgage broker in the United States, you will need a surety bond. It’s one of the requirements for getting your license. If you’re another type of mortgage professional, you may also need a bond. Here are the main bond types required in the mortgage industry:
- Mortgage brokers bonds
- Loan originators bonds
- Loan broker bonds
- Mortgage lender bonds
- Mortgage servicers bonds
Contact ZipBonds if you need any type of bond for your mortgage business.
Get Your Mortgage Broker Bond:
- A mortgage broker surety bond is a license and permit bond that mortgage brokers must obtain before getting their professional license.
- The bond protects consumers and the state from potential losses due to unethical or illegal business activities.
- Mortgage bonds are required in most states, but requirements can vary greatly.
- Some states have a standard requirement for all mortgage professionals, while others may base requirements on a professional’s loan volume.
How do mortgage broker bonds work?
Mortgage bonds are contracts between three parties:
- Obligee: The state agency that requires the bond
- Principal: The mortgage broker or brokerage that much post the bond
- Surety: The company that issues and underwrites the bond for the principal
A mortgage broker bond protects consumers and the state from potential losses due to unethical or illegal business activities. If a mortgage broker violates the law and costs a homeowner money, the homeowner may file a claim against the surety bond. The state may also file a claim against the broker if it suspects the broker has acted unlawfully. If the claim is valid, the claimant should receive financial compensation for their losses.
The surety will investigate to determine if the claim is valid. If it is, the surety will settle the claim if the broker cannot. The broker will then be held responsible for repaying the surety in full.
How much do mortgage broker bonds cost?
Mortgage bonds are required in most states, but requirements can vary greatly. You may need a $10,000 bond in one state and a $100,000 bond in another. Some states have a standard requirement for all mortgage professionals, while others may base requirements on a professional’s loan volume.
Your premium rate also depends on various factors, including your financial history and credit score. If you have good credit, you could pay as low as 1-4% of the bond amount. If you have poor credit, you might pay more. For example, if your bond requirement is $50,000 and you pay 1% for your annual premium, the cost would be $500.
Before you obtain a license to work as a professional mortgage broker in your state, you must show proof of having a surety bond. Your bond must remain active throughout your career to maintain your license.
- Complete required training and education.
- Pass the NMLS exam.
- Establish and register your business legally.
- Identify the specific requirements for obtaining your mortgage broker license in your state. This will include posting a surety bond.
- You may need to participate in continuing education.
- Maintain your license and surety bond.
Get a Mortgage Bond in Your State
We can help you find the right surety bond for your mortgage business. ZipBonds offers the fastest and most secure option for getting bonded. Our all-digital platform is intuitive and straightforward. Apply online or call 888-435-4191 to speak with one of our agents directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.