What Types of Mortgage Broker Licenses Are Issued in Arizona?
Arizona issues mortgage broker licenses that allow licensees to broker loans on both commercial and residential properties. Mortgage broker licenses are issued to both individuals and companies that find, compare, and negotiate loans for real estate purchases within the state of Arizona. Those who deal with commercial real estate clients should apply for a Commercial Mortgage Broker license.
There are three types of Arizona mortgage broker licenses: company, branch, and individual.
What Does the Licensing Process Involve?
In Arizona, mortgage brokers are licensed at the state level by the Arizona Department of Financial Institutions (AzDFI). Applications are processed through the Nationwide Mortgage Licensing System (NMLS), but hard copies of the documents required to support the application are mailed directly to AzDFI.
Applicants for licensing as a mortgage broker must meet experiential and residency requirements, complete 24 hours of pre-licensing education, and pass both a school exam and a state exam. The AzDFI application fee and NMLS processing fees are both collected through NMLS. There are also fees for taking the required class and taking the required exams.
Applicants who have completed the educational requirements and are ready to proceed with licensing must purchase a Mortgage Broker surety bond. The required bond amount depends on whether the applicant will be working with only institutional investors ($10,000) or with both institutional and non-institutional investors ($15,000).
Why Is a Surety Bond Required?
States require surety bonds before issuing licenses for individuals or companies in professions that have the potential to result in financial loss for clients if those professionals engage in unlawful or unethical conduct. Arizona�s surety bond requirement for mortgage brokers obligates those licensees to comply with all applicable state laws as well as the rules and regulations of AzDFI.
A mortgage broker surety bond is a licensee�s guarantee to abide by the law and behave ethically and responsibly in all of their dealings with clients and investors, as spelled out in the terms and conditions of the surety bond agreement. Any violation can result in a claim being filed against the surety bond�claims for which the licensee is legally responsible for paying.
What Happens if a Claim is Filed?
First, understand that a surety bond brings together three parties in a legally binding agreement:
- The obligee is the state agency requiring the bond, in this case, AzDFI.
- The principal is the party applying for a mortgage broker license and required to purchase the bond.
- The surety is the company underwriting and issuing the bond.
When a claim is filed, the surety will first conduct an investigation to ascertain its validity. If the claim is valid, the surety will typically attempt to negotiate a settlement. If that is unsuccessful, the surety will pay the claim, but only as an advance that the principal must then reimburse. Remember, it�s the principal, not the surety, that is legally responsible for paying claims.
What Does a Mortgage Broker Bond Cost?
As with all surety bonds, the premium you will pay is only a small percentage of the total required bond amount. The surety decides what that percentage, the premium rate, will be based on the applicant�s personal credit and financial situation. The better the applicant�s credit, the lower the premium rate will be. Those with good credit will pay the standard market rate of between 1% and 3% of the total bond amount, while those with poor credit will pay a higher rate.
Get Bonded Today
Let the surety experts at Single Source Insurance help you get the bond you need to secure your Arizona mortgage broker license.