Learn how to become a mortgage broker in Louisiana, and contact Single Source Insurance today to get the mortgage broker bond you need.
Mortgage Broker Licenses in Louisiana
In Louisiana, companies and sole proprietorships that provide mortgage brokering and lending services, and the individuals working for them as loan originators, are licensed by the Louisiana Office of Financial Institutions (OFI). �The most common licenses are the:
- Residential Mortgage Lending License, which permits mortgage brokers, lenders, or services to engage in making, originating, negotiating, and placing residential mortgage loans, and the
- Mortgage Loan Originator License, which allows their employees (sponsored mortgage loan originators) to take applications for residential mortgage loans and offer or negotiate mortgage loan terms.
What Does the Licensing Process Involve?
Applicants for either of these licenses must complete certain pre-licensure educational requirements and pass an exam. Once licensed, a certain number of hours of continuing education must be completed annually as a condition of license renewal. License applicants must also undergo a criminal background check and credit check.
License applications (for new licenses, renewals, and updates) are submitted through and processed by the Nationwide Mortgage Licensing System (NMLS). The NMLS website is your source for detailed information about and instructions for applying for the various licenses issued to mortgage professionals in Louisiana. Licensing and testing fees are paid, educational courses are approved, and testing is scheduled through NMLS as well.
While most of the documents required when applying for a mortgage lending or mortgage loan originator license are uploaded to NMLS, some agency-specific documents, including a required surety bond, must be mailed directly to OFI.
Surety Bond Requirement
There is a category of surety bonds�License and Permit bonds�that are required at the state level for certain kinds of businesses to protect the public against financial loss due to the unlawful or unethical behavior. These bonds guarantee that licensees operate in accordance with all applicable laws, rules, and regulations�or pay the price.
The surety bond contract is a legally binding agreement that establishes the roles and responsibilities of three parties:
- As the agency requiring the bond, OFI is the obligee.
- As the party required to purchase the bond, the license applicant is the principal.
- As the party underwriting and issuing the bond, the surety company is referred to simply as the surety.
The obligee establishes the required bond amount and what the principal must do to remain in compliance with the terms of the surety bond and avoid claims against the bond. The required amount is either $25,000 or $50,000 for both brokers/lenders and loan originators, depending on the applicant�s loan volume in the previous year. That is the maximum amount of money that a party who has been financially harmed by the licensee’s actions can claim against the bond and is referred to as the bond’s “penal” amount.
What Happens if a Claim is Filed?
When a party files a claim, the surety will investigate to make sure the claim is valid. If the surety is unable to negotiate a settlement with the claimant, the surety will pay the claim as an advance on the principal�s behalf.
Surety bond contracts indemnify the surety company against any legal responsibility for paying claims. Ultimately, the principal bears the full burden of paying claims and must reimburse the surety in full for advance payments made by the surety.
What Does a Mortgage Broker Bond Cost?
The annual premium for a Mortgage Lender or Mortgage Originator license is a small percentage of the required bond amount. The surety bases that percentage, the premium rate, on the principal�s personal credit score and financial strength. Applicants with good credit will usually pay the standard market rate of between 1% and 3% of the required bond amount. Credit-challenged applicants will pay a higher premium rate.
Get Your Surety Bond Today to Become a Louisiana Mortgage Broker
At Single Source Insurance, our surety experts will help you obtain the mortgage bond you need to become licensed as a Louisiana mortgage professional or to renew your existing license.