What is a Mortgage Broker Bond?
Photo by Binyamin Mellish
Originally Posted On: https://ameriprosuretybonds.com/license-permit-bonds/mortgage-broker-bond/
A mortgage broker bond is a license and permit bond which states require to become properly licensed and which is also required to protect the public from wrongful acts committed by a mortgage broker.
States have differing amounts of a mortgage broker bond. A California mortgage broker bond, for instance, will be $25,000. A Massachusetts mortgage broker bond is for $75,000. And a New York mortgage broker bond will have varying amounts depending on the volume of business performed by the mortgage brokerage.
The premium for these bonds is contingent upon the applicant’s credit score (we do provide assistance for clients with challenged credit!), but are typically between 1-3% of the face value of the bond amount. These bonds renew annually.
Mortgage Broker Bond for Bad Credit
Applicants with challenged credit scores may pay a significantly higher amount; however, we will work with you to get you bonded. Please do NOT be embarrassed by your credit situation. At AmeriPro Surety Bonds, we are here to help you today, and not judge you for real or wrongly ‘credited’ past mistakes!
A Mortgage Broker Bond is NOT an Insurance Policy
It is important to point out that a mortgage broker bond is not insurance for the mortgage broker; it is a protection, required by the licensing entity (the Obligee) on behalf of consumers. Unlike insurance, if a claim is paid out on a bond, the surety company expects the principal (see below) to reimburse all related costs and expenses. Think, if you will, of a mortgage broker bond as an insurance policy that you are required to purchase on behalf of others.
Another thing to note is that if a mortgage broker conducts business in multiple states, a mortgage broker bond is required for each individual state in which that mortgage broker conducts mortgage-related operations.
The Three Sides to a Mortgage Broker Bond
Surety bonds have 3 sides, and a mortgage broker bond is no different.
There is the principal, who in this case, is the person who is required to purchase the mortgage broker bond.
There is the obligee, again, who is the licensing entity, who is requiring the principal to purchase a mortgage bond on its behalf (and that of the consumer public). The obligees, then, are both the licensing entity and the consumer public.
The surety is the insurance company which issues the mortgage broker bond and has the financial capacity to ensure its payment should that be required.
In short, you (the principal) purchase a mortgage broker bond from a surety to ensure compliance with and protect the obligee.
More About AmeriPro Surety Bonds:
AmeriPro Surety Bonds will help you obtain your mortgage broker bond at the best available price.
Once the bond has been issued, you will need to provide it to your licensing entity.
Fill out our form on our main page; or, better yet, contact us and we’ll walk you through the steps for your mortgage bond today. In many instances, your mortgage broker bond can be purchased in as little as a few hours—if that.