How to Obtain an Auction License in Louisiana

Oct 1 Posted on

Is a Dealer�s License Required?

The Louisiana Used Motor Vehicle Commission (LUMVC) licenses and regulates participants in the state�s used motor vehicle industry, including auction dealers who broker and sell used cars to the public, to wholesale dealers, or for salvage.

Is There a Bonding Requirement?

One mandatory step in becoming licensed to auction used cars in Louisiana is to purchase a surety bond in the amount of $50,000 from a surety company licensed to issue bonds in Louisiana.

Auto auction bonds protect the state and consumers from financial loss attributable to the unlawful or unethical actions of a used car auctioneer. For example, claims can be filed against a bond to cover a loss to the LUMVC resulting from nonpayment of taxes or license fees, or loss, damage, or expenses incurred by car buyers due to an auctioneer�s failure to deliver a certificate of title or to remit to LUMVC taxes or registration fees paid by the buyer.

Unlike insurance, which protects the policyholder against financial loss, auto auction bonds provide protection for those who are harmed financially by the bonded auction dealer.

How Do Auto Auction Bonds Work?

All surety bond agreements bring together three parties in a legally binding contract, specifying the legal rights and responsibilities of each party. In the case of an auto auction bond, these parties are:

  • The obligee requiring the purchase of the bond (LUMVC)
  • The principal purchasing the bond (the auctioneer or auction company)
  • The surety underwriting and issuing the bond (the Louisiana-licensed surety bond company)

The terms of the bond specify the laws, regulations, and industry standards the principal must abide by to avoid claims being filed against the bond. When a violation occurs and a claim is filed, the surety will investigate to ensure that the claim is legitimate.

While the principal is legally responsible for paying all valid claims, the surety typically will pay a claim in advance to give the principal time to liquidate assets if necessary. The indemnification clause included in all surety bond contracts requires the principal to reimburse the surety for all claims payments made on the principal�s behalf so that the surety is held �harmless.�

The bond must remain in force and be renewed annually to prevent suspension or revocation of the auction dealer�s license.

Unbiased Pricing Breakdown for Customers

Like insurance policies, surety bonds are purchased by paying a premium to the issuing company. The annual premium for an auction bond is a small percentage of the $50,000 required bond amount (also referred to as the bond�s penal amount). While the obligee establishes the bond amount, the surety sets the premium rate on a case-by-case basis, based largely on each applicant�s personal credit score.

Applicants with good credit usually pay the standard market rate of between 1% and 3% of the $50,000 required bond amount, or $500 to $1,500 per year. Applicants with poor credit may still be able to get bonded, but will likely pay a higher premium rate.

Get Bonded Today

Request an online quote from Single Source Insurance today, or give us a call to discuss your auto auction bonding needs.

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How to Obtain a Car Auction License in California

Oct 1 Posted on

Is a License Required?

California does require vehicle auctioneers and auction companies to be licensed in order to operate legally within its borders.

Is There a Bonding Requirement?

One of the requirements for obtaining an auctioneer license from the California Secretary of State is posting an auctioneer surety bond, also referred to as an auto auction bond.

Anyone who plans to auction new or used vehicles in the state of California must purchase a $20,000 California auctioneer bond as an essential step in the license application process.

This bond protects the state and an auctioneer�s customers, not the auctioneer. The bond is an auctioneer�s guarantee to comply with the California Civil Code and relevant ethical standards. Any infraction can result in a claim filed against the bond by a party who has suffered a financial loss as a result of that infraction.

How Do Auctioneer Bonds Work?

Every surety bond agreement is a legally binding contract that brings together three parties:

  • The obligee, the party requiring the bond, is the California Secretary of State.
  • The principal, the party required to purchase the bond, is the auctioneer or auction company.
  • The surety is the California-licensed surety bond company that underwrites and issues the bond.

Some of the more common violations committed by auto auctioneers include:

  • Failing to account for payments from customers
  • Mishandling of funds
  • False or misleading advertising
  • Misrepresentation of vehicles up for auction

There are plenty of other ways in which an auctioneer or auction company can cause consumers to suffer a financial loss through unethical or fraudulent business practices.

Any violation of the terms and conditions of an auto auctioneer bond can result in a claim being filed against the bond by the injured party. In most cases, the surety will pay a valid claim, then collect reimbursement from the principal. In effect, the surety makes a short-term loan to the principal, which must be repaid. The principal is ultimately responsible for paying claims or reimbursing the surety.

Unbiased Pricing Breakdown for Customers

The state of California has established the required bond amount as $20,000. But the principal pays an annual premium that is only a small percentage of that amount. The primary factor the surety considers in setting the premium rate for a given bond applicant is the applicant�s personal credit score, though the individual�s financial history and industry experience can also enter into the picture.

The premium rate for applicants with good credit is between 1% and 3% of the bond amount, or as little as $200 for the $20,000 bond. Those with poor credit may pay a higher premium rate to compensate for the higher risk to the surety.

Get The Bond You Need

Apply online with Single Source Insurance today for the auto auctioneer bond you need to obtain or renew your auctioneer.

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How to Obtain a Car Auction License in Texas

Oct 1 Posted on

What Type of License is Required?

In Texas, there is no dedicated auto auction license. Auctioneering is treated the same way as any other form of sales activity from a dealer licensing standpoint.

Independent dealer�s licenses issued in Texas are referred to as GDN licenses. If you plan to auction used vehicles to wholesale dealers, you will need an Independent Wholesaler Dealer�s GDN license. If you will be selling to the public, you will need an Independent Motor Vehicle Dealer�s GDN License.

Is There a Bonding Requirement?

In either case, you will need to purchase a two-year surety bond in the amount of $25,000, but it is not specifically referred to as an auto auction bond.

Auto dealer bonds of any sort provide protection for the state and for consumers against financial loss stemming from the unlawful or unethical actions of a licensed motor vehicle dealer. Surety bonds play an important role in maintaining a fair and orderly motor vehicle marketplace. In purchasing a surety bond, a dealer is pledging to conduct business in accordance with all applicable laws and industry standards.

How Do They Work?

All surety bond agreements are legally binding contracts that involve three parties. In the case of a bond that will enable you to auction motor vehicles in Texas:

  • The obligee, the party that requires the bond, is the Texas Department of Transportation.
  • The principal, the party that must purchase the bond, is the dealer.
  • The surety is the company that underwrites and issues the bond.

If an auto auctioneer violates the terms of the bond�for example, by mishandling customers� funds, misrepresenting a vehicle, or failing to transmit sales tax payments to the state�consumers who suffer a financial loss can file a claim against the bond.

When a claim is filed by an injured party, the surety will first investigate to make sure that the claim is valid. Most often, the surety will pay valid claims in advance, on behalf of the principal, to give the principal a little breathing room to liquidate assets if necessary and gather the necessary funds to cover the claim. The principal must then reimburse the surety, who is indemnified by a clause in the surety bond contract, which makes the principal solely responsible for the cost of claims against the bond.

Unbiased Pricing Breakdown for Customers

The Texas Department of Transportation, as the bond�s obligee, has established the required bond amount as $25,000. This covers the principal for the two-year period before the license must be renewed. The premium the principal will pay for the bond, however, is a small percentage of that amount. The surety will set a premium rate for each bond applicant based primarily on the applicant�s personal credit score.

Bond applicants with good credit will usually pay a premium rate that is between 1% and 3% of the bond amount. However, because of the greater risk the surety is assuming, applicants with poor credit may pay a higher premium rate.

Get The Bond You Need

At Single Source Insurance, our experienced surety bond professionals will get you the best possible deal on the bond you need to begin auctioning vehicles in Texas.

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How to Obtain a Car Auction License in Washington

Oct 1 Posted on

What Type of License is Required?

Not all states require auto auctioneers to be licensed as auto dealers, but Washington is one of the states that does.

In the state of Washington, auctioneers are considered to be a type of vehicle broker, which requires a Class D auto dealer license. Auto auctioneers do not have any title to or interest in the vehicles they sell, and it is illegal to sell any car that is not registered to you without a dealer license.

Is There a Bonding Requirement?

In states that require auto auctioneers to be licensed, purchasing an auto auction bond, also known as an auto auctioneer bond, is often part of the process. That�s why auction bonds are categorized as a type of license and permit surety bond.

Anyone who wants to auction new or used cars, trucks, or mobile homes in the state of Washington must first purchase a Washington auto auction bond as a prerequisite for licensing. To obtain a Class D auto dealer license, the applicant must purchase a $10,000 continuous auto auction surety bond and pay a $75 license fee to the state.

These bonds protect consumers from financial loss due to any unlawful or unethical actions on the part of a professional auctioneer. In purchasing the bond, an auctioneer is guaranteeing to abide by applicable state and local laws, refraining from such practices as misrepresenting the condition and value of vehicles being auctioned.

How Do Auto Auction Bonds Work?

There are three parties to every surety bond contract: the obligee, the principal, and the surety. For a Washington auto auction bond, the obligee (the party requiring the bond) is the state of Washington, Department of Revenue. The principal is the auctioneer or auction company applying for a Class D license. And the surety is the surety company that underwrites and issues the bond. The surety must be licensed to do business in Washington.

The terms and conditions of the surety bond contract specify what the principal must do (or not do) to avoid violations that could result in a claim on the bond. Anyone who experiences a financial loss due to the unlawful or unethical actions of the principal (such as substituting vehicles or misrepresenting them), can file a claim against the bond.

The surety will typically pay the claim, but only as an advance to give the principal time to gather the funds to cover the claim amount. The bond contract indemnifies the surety and requires the principal to reimburse the surety for any claims paid on behalf of the principal.

Unbiased Pricing Breakdown for Customers

The principal will pay an annual premium that is a small percentage of the $10,000 bond amount. The surety establishes this percentage, or premium rate, on a case-by-case basis, taking into account the principal�s personal credit score, financial history, and industry experience.

Applicants with good credit typically pay between 1% and 3% of the bond amount, or as little as $100 for the $10,000 bond. Those with poor credit may pay a higher premium rate.

Get The Bond You Need

At Single Source Insurance, our experienced bond professionals know exactly how to get you the best possible rate on the surety bond you need to work as an auto auctioneer in Washington. Apply online today!

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How to Become a Mortgage Broker in Missouri

Sep 16 Posted on

What Types of Broker Licenses Are Issued in Missouri?

The residential mortgage business in Missouri is regulated by the Missouri Division of Finance, which issues both new and renewal licenses to residential mortgage loan brokerage firms. This includes sole proprietorships that are headquartered in Missouri. The Division also licenses individual mortgage loan originators.

Residential mortgage loan brokers, both companies and sole proprietorships, headquartered outside of Missouri need to apply for Missouri registration in order to operate within the state. This article focuses on the licensing process for brokers based in Missouri.

What Does the Licensing Process Involve?

To become licensed as a residential mortgage loan broker in Missouri, a company or sole proprietorship must:

  • Maintain a full-service, staffed office in Missouri that is open to the public
  • Have relevant industry experience
  • Agree to criminal background and credit checks
  • Purchase a Missouri Mortgage Loan Broker Bond in an amount of at least $50,000 (but no more than $1 million, based on loan volume
  • Pay a one-time application fee (currently $300)
  • Pay an annual license fee (currently $600)

There is no educational or examination requirement for those applying for licensure or registration as a residential mortgage loan broker.

License applications are submitted through and processed by the Nationwide Mortgage Licensing System (NMLS), though the surety bond and certain other documents must be mailed to the Missouri Division of Finance, Mortgage Licensing Section in Jefferson City.

Why Is a Surety Bond Required?

The surety bond requirement helps ensure that licensees conduct their business in compliance with state law and industry standards by making them legally liable for financial losses resulting from their unlawful or unethical actions. The bond provides financial protection for both the state and consumers, not for the mortgage loan broker.

The surety bond agreement is a legally binding contract between three parties:

  • The Missouri Division of Finance requires the bond and is known as the “obligee.”
  • The mortgage broker required to purchase the bond is the “principal.”
  • The company that issues the bond is the “surety.”

If the principal violates any of the terms of the contract, a party who suffers a financial loss as a result has the right to file a claim against the bond and seek compensation

What Happens if a Claim is Filed?

The first thing that happens when a claim is filed against the licensee�s bond is an investigation. The surety will work to make sure that the claim is valid. The surety will attempt to settle a valid claim, but if that is unsuccessful, the surety will go ahead and pay the claim to avoid legal action.

But that�s not the end of the story. The principal, not the surety, is legally responsible for paying claims. Any payment to a claimant by the surety is merely an advance to the principal, to provide a little breathing room for the principal to gather the necessary funds. The principal must then reimburse the surety or face legal action.

What Does It Cost?

The annual premium for a Missouri Mortgage Broker Bond is a small percentage of the required bond amount. Although the minimum bond amount for a new licensee is $50,000, the minimum amount is recalculated at each renewal, based on the broker�s previous year�s loan volume.

The percentage of the loan amount that a given applicant will pay (i.e., the premium rate) is set by the surety, based on the applicant�s personal credit score and financial status. Applicants with good credit will typically pay a premium rate of 1% to 3%, while those with credit issues will likely pay a higher rate because of the higher risk the surety is assuming.

Get The Bond You Need

At Single Source Insurance, we stand ready to help you purchase the bond you need to get your new or renewal license as a Missouri residential mortgage loan broker. Apply online today!

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How to Become a Mortgage Broker in Tennessee

Sep 16 Posted on

What Types of Mortgage Licenses Are Issued in Tennessee?

The Tennessee Department of Financial Institutions (DFI), which regulates the mortgage and real estate industries, issues mortgage licenses to companies, branch offices, and individuals. The same mortgage license is granted to brokers, lenders, and mortgage servicers. Applicants specify which one or which combination of these types of work they will be doing under their Tennessee mortgage license.

What Does the Licensing Process Involve?

Mortgage license applications are submitted to and processed online by the Nationwide Mortgage Licensing System (NMLS). However, the originals of some DFI-specific documents must be mailed directly to the Tennessee Department of Financial Institutions, Compliance Division, Tennessee Tower, 312 Rosa L. Parks Avenue, Nashville, TN 37243.

Tennessee does not require applicants for a mortgage license to take a pre-licensure course or pass an exam before applying for a Tennessee mortgage license, but NMLS does. There are other DFI requirements that must be met:

  • Surety Bonds. Brokers must provide a $90,000 surety bond. Mortgage lenders and servicers, and anyone serving in two or more of these roles must purchase a bond in the amount of $200,000.
  • Fees. All applicants must pay both a licensing fee to the state of Tennessee and an NMLS processing fee.
  • Business Information. Mortgage brokers must prove a minimum net worth of $25,000, provide an accounting of their business/employment history for the preceding 10 years, and disclose any criminal history or negative financial facts—all of which will be verified by DFI.

Why Is a Surety Bond Required?

All license bonds, including Tennessee mortgage license bonds, are designed to guarantee that licensees will conduct business in accordance with all applicable laws, rules, regulations, and industry standards. License bonds provide financial protection for consumers who suffer a loss due to the unlawful or unethical business practices and actions of the licensee.

A Tennessee mortgage license bond specifies the conduct required of the licensee. Any violation of the terms of the surety bond contract can result in a claim being filed against the bond by the party who has experienced a financial loss because of that violation.

What Happens if a Claim is Filed?

Understand that a surety bond agreement is a legally binding contract involving three parties:

  • The Tennessee Department of Financial Institutions is the obligee, the party requiring the bond.
  • The license applicant is the principal, the party required to purchase the bond.
  • The company that underwrites and issues the bond is the surety.

When a claim is filed against the bond, the surety will first investigate the circumstances and make sure that the claim is valid. If it�s possible, the surety will then negotiate a settlement that the principal will pay. However, if that negotiation is unsuccessful, the surety will pay the claim.

That payment from the surety, however, is only an advance that must be repaid by the principal. In effect, the surety is lending money to the principal to give the principal time to liquidate assets or otherwise gather the funds needed to cover the claim amount. The terms of the surety bond contract indemnify the surety and obligate the principal to reimburse any such advance.

What Does It Cost?

The cost of any surety bond is typically a small percentage of the required bond amount. That percentage, the annual premium rate, is based largely on the applicant�s personal credit score and financial strength. The surety is assuming a financial risk and needs to know that the applicant is creditworthy enough to reimburse the surety for any claims paid on his or her behalf.

Bond applicants with good credit typically pay no more than 3% of the required bond amount. Applicants with poor credit may pay a higher premium rate.

Get Bonded Today

If you need a mortgage license bond to get or renew your Tennessee Mortgage License, request a quote online or give us a call today.

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How to Become a Mortgage Broker in Texas

Sep 16 Posted on

Types of Mortgage Broker Licenses in Texas

In Texas, individuals and companies working in the mortgage industry operate under the supervision of the Department of Savings and Mortgage Lending (SML) and are licensed through the Department�s Division of Licensing. The one exception to this is the licensing of individuals as residential mortgage loan originators, which is handled through the Office of the Consumer Credit Commissioner.

The Department of Savings and Mortgage Lending issues several different licenses and registrations depending on the nature of the work to be performed and the type of entity applying. This article focuses on the process for obtaining an SML license for a mortgage company or sole proprietorship.

The Licensing Process

Texas mortgage company licenses are processed through the Nationwide Mortgage Lending System (NMLS). Still, certain documents need to be submitted by mail or fax to SML. Failure to do so in a timely manner can cause serious delays in NMLS processing on your application. Instructions and information related to applying for an SML license are available on the NMLS website.

Applicants for a Mortgage Company license must complete 20 hours of NMLS-approved pre-licensure educational requirements and pass an exam, as required by the Texas Safe Act. Once licensed, a certain number of hours of continuing education must be completed every year in order for the license to be renewed.

In addition to completing educational requirements, applicants for a new mortgage company license from SML must:

  • Maintain a physical office in the state of Texas
  • Submit the application and upload or mail all required documents, including personal financial statements and evidence of experience and/or education in the real estate mortgage industry
  • Agree to a credit check
  • Pay a licensing fee and an NMLS processing fee
  • Obtain a $50,000 surety bond

Why Is a Surety Bond Required?

State agencies require license bonds for certain types of businesses and professions as a way to protect consumers against financial loss caused by the unlawful or unethical actions of licensees. A mortgage company license bond (also known as a mortgage broker bond), is a licensee�s pledge to abide by all applicable laws, rules, and regulations.

A surety bond agreement brings together three different parties�the obligee, the principal, and the surety�in a legally binding contract:

  • The Department of Savings and Mortgage Lending is the obligee, the party requiring the bond.
  • The license applicant required to purchase the bond is the principal.
  • The company underwriting the bond is the surety.

The obligee establishes the required bond amount at $50,000, which is the maximum amount that can be claimed by a party who has suffered a financial loss due to the actions of the principal. This is also referred to as the bond�s �penal� amount.

What Happens if a Claim is Filed?

Upon receipt of a claim, the surety will investigate to make sure it is valid and will attempt to negotiate a settlement with the claimant. If no agreement can be reached, the surety will pay the claim on the principal�s behalf. Any such payment is essentially a short-term loan to the principal, who is legally responsible for paying claims against the license bond. Surety bond contracts contain a clause indemnifying the surety and placing the responsibility for paying claims firmly on the shoulders of the principal.

What Does It Cost?

The applicant for a surety bond will pay an annual premium that is a small percentage of the required $50,000 bond amount.

The surety establishes the premium rate on the Applicant�s personal credit score and financial circumstances. Applicants with good credit typically pay a premium of between 1% and 3% of the required bond amount. Applicants with poor credit will pay a higher premium rate.

Get Bonded Today

Our surety bond experts have the knowledge and experience to advise you and help you get the bond you need to submit as part of the process of obtaining an Texas mortgage broker license.

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How to Become a Mortgage Broker in Virginia

Sep 16 Posted on

Types of Licenses Issued in Virginia

In Virginia, mortgage brokers are licensed by the Virginia Bureau of Financial Institutions (BFI), which regulates and supervises licensed mortgage brokers, lenders, and loan originators. Companies, branches, and individuals all must be licensed to engage in this kind of work.

This article focuses on the process for obtaining a Virginia mortgage broker license, which allows companies and sole proprietorships to engage in finding, negotiating, and placing:

  • First and second mortgages
  • Home equity lines of credit
  • Reverse mortgages
  • High-cost mortgages
  • Mortgage loan modifications

The Licensing Process

Nationwide, all mortgage-related license applications are submitted through the National Mortgage Licensing System (NMLS). While most documents can be uploaded through NMLS, some documents required by the Virginia Bureau of Financial Institutions must be mailed directly to the Bureau.

Licensing requirements specific to Virginia mortgage broker licenses include:

  • A criminal background check
  • A credit check and evidence of financial responsibility, character, reputation, industry experience, and general fitness
  • Payment of a non-refundable NMLS processing fee ($100) in addition to a non-refundable BFI application fee ($500) and fees for a state criminal background check ($25) and credit check ($15)
  • A surety bond in the amount of $25,000.

Why Is a Bond Required?

A surety bond required for licensure in a given profession is classified as a license and permit bond. License and permit bonds are commonly required for businesses and professions that serve consumers. They guarantee that licensees operate in a legal and ethical manner, abiding by state laws and industry standards, as specified in the terms of the bond.

A surety bond agreement is a legally binding contract between three parties:

  • As the entity requiring the bond, the Virginia Bureau of Financial Institutions is the �obligee.�
  • As the party required to purchase the bond as part of the licensing process, the mortgage broker is the �principal.�
  • The company issuing the bond is the �surety.�

The roles and responsibilities of all three parties are spelled out in the surety bond contract. If the principal violates the terms of the contract and causes someone to suffer a financial loss, that party can file a claim against the mortgage broker bond.

What Happens if a Claim is Filed?

When a claim is first received, the surety will conduct an investigation into its validity. If the claim is found to be valid, the surety will attempt to negotiate a settlement. If no settlement can be reached, the surety typically pays the claim and then seeks reimbursement from the principal.

An indemnification clause in the surety bond contract relieves the surety of any obligation to pay claims. That obligation belongs solely to the principal.

What Does the Bond Cost?

The principal will pay an annual premium that is a small percentage of the required bond amount. The surety determines the premium rate on a case-by-case basis, depending largely on the principal�s personal credit score and financial circumstances. Applicants with good credit will usually pay the standard market rate of 1% to 3% of the $25,000 bond amount. Those with poor credit will likely pay a higher premium rate because of the greater risk to the surety.

Get Bonded Today

Request an online quote today, or give us a call to discuss your mortgage broker bonding needs.

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How to Become a Mortgage Broker in Alabama

Sep 9 Posted on

Mortgage Broker Licenses Issued in Alabama

Alabama mortgage brokers and loan originators are licensed by the State Banking Department under the Alabama Mortgage Brokers Licensing Act. A mortgage broker license enables the licensee to solicit, negotiate, and process residential mortgage loans (both first and second mortgages) on properties located within Alabama.

Mortgage broker licenses are issued to companies and sole proprietors. Mortgage loan originators who work for a mortgage broker must also be licensed by the State Banking Department.

What Does the Licensing Process Involve?

Mortgage broker license applications are submitted to and processed by the Nationwide Mortgage Licensing System (NMLS), but hard copies of certain required documents are mailed directly to:

State Banking Department of Alabama, Bureau of Loans

P.O. Box 4600

Montgomery, AL 36103-4600

If the required documents aren�t received within 5 days of the date that the application was submitted to NMLS, your application can be administratively withdrawn by the Department.

One important document that must be mailed to the State Banking Department is a mortgage broker surety bond. The bond must be in an amount that is based on the volume of residential loans closed in the previous year:

Previous Year�s Loan Volume

Required Bond Amount

$0 to $25 million

$25,000

More than $20 million to $100 million

$50,000

In excess of $100 million

$75,000

For applicants lacking a history upon which to base the required bond amount, the Department will set the amount.

Why Is a Surety Bond Required?

Nationwide, state licensing authorities require license applicants in many professions to purchase a license and permit surety bond. The bond serves as a guarantee that licensees will conduct business in compliance with all applicable laws, rules, regulations, and industry standards.

The mortgage broker bond required by the State Banking Department in Alabama provides protection for those who could suffer a financial loss due to the unlawful or unethical actions of a licensed mortgage broker. The mortgage broker surety bond agreement spells out the behavior required of mortgage brokers in order to avoid claims being filed against the bond.

What Happens if a Claim is Filed?

There are three parties to every surety bond agreement, which is a legally binding contract:

  • The obligee, the party requiring the bond, is the State Banking Department.
  • The principal, the party required to purchase the bond, is the applicant for a mortgage broker license.
  • The surety is the company underwriting and issuing the bond.

The first thing that happens when a claim is filed is for the surety to investigate to ensure that the claim is valid. The surety then typically tries to settle the claim, but if that�s unsuccessful, the surety will pay the claim.

However, the surety bond contract indemnifies the surety and makes the principal solely responsible for paying claims. So any advance payment to a claimant is essentially a loan to the principal�a loan that must be repaid by the principal.

What Does a Mortgage Broker Bond Cost?

The annual premium for a mortgage broker bond is a small percentage of the required bond amount. Because the principal must reimburse the surety for claims paid in advance by the surety, the surety must be relatively confident that the principal is creditworthy. So, the surety�s top concern in determining what premium rate the principal will pay is the principal�s personal credit score.

Bond applicants with good credit typically pay the standard market rate of between 1% and 3% of the required bond amount. Applicants with poor credit will pay a higher premium rate.

Get Bonded Today

We�re here to help you get the surety bond you need in order to obtain or renew your Alabama mortgage broker license.

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How to Become a Mortgage Broker in Georgia

Sep 9 Posted on

What Types of Broker Licenses Are Issued in Georgia?

The Georgia Department of Banking and Finance, Non-Depository Financial Institution (NDFI) Division regulates and licenses mortgage brokers and lenders�companies and branches as well as individuals.

  • The Georgia Mortgage Broker/Processor License permits the solicitation, processing, placement, and negotiation of residential mortgage loans.
  • The Georgia Mortgage Lender License permits the origination, making, servicing, and purchase of residential mortgage loans.

What Does the Licensing Process Involve?

License applications are submitted through the Nationwide Mortgage Licensing System (NMLS), but all other licensing requirements must first be met. If you submit your application without all the required documents, the Department will request that you provide the missing documents, and you�ll only have five days from the original submission date to do that before your application is administratively withdrawn.

Be aware that any license approved between January 1 and October 31 must be renewed during the annual license renewal/registration period, which runs from November 1 to December 31.

Applicants must submit proof of having purchased a mortgage broker surety bond in the proper amount for their application to be considered complete. Those amounts are:

  • $150,000 for a mortgage broker/processor license
  • $250,000 for a mortgage lender license

Why Is a Surety Bond Required?

It�s common for states to require people becoming licensed in certain professions to purchase a surety bond as a guarantee that the licensee will conduct business in accordance with all applicable state laws and industry standards. Those requirements are spelled out in the terms of the surety bond contract.

Every surety bond contract is a legally binding agreement between three parties:

  • The entity requiring the contract, in this case, NDFI, is the obligee
  • The mortgage broker purchasing the contract is the principal
  • The company issuing the bond is the surety

License bonds, such as a mortgage broker bond or mortgage lender bond provide financial protection for those who could suffer a loss if the licensee, the principal, acts in an unlawful or unethical manner. Any violation of the terms of the surety bond by the principal can result in a claim being filed against the bond.

What Happens if a Claim is Filed?

The surety will first investigate to make sure that the claim against the bond is valid. If the surety is unable to settle a valid claim, the company will pay it as an advance on behalf of the principal to avoid legal action.

However, the principal is legally responsible for paying claims and must reimburse the surety. The advance payment of a claim is in effect a loan from the surety to the principal, to give the principal time to gather the funds and then reimburse the surety.

What Does a Mortgage Broker/Processor Bond Cost?

The annual premium for a mortgage broker bond (or mortgage lender bond) is a small percentage of the required bond amount. The surety company sets the premium rate for each applicant based on his or her personal credit score and financials. The rate is generally between 1% and 3% for applicants with good credit, and higher for applicants with poor credit.

Get Bonded Today

Request a quote today, and let us get you the surety bond you�ll need to obtain your Georgia mortgage broker/processor license.

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