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.
Costs of Becoming a Licensed Mortgage Broker in Missouri
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!