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Arizona mortgage brokers, commercial and non-commercial, need a license and a surety bond. Find out how to get licensed and some more information about the surety bond.
Commercial vs. non-commercial mortgage brokers
The two titles mean exactly what they sound like: commercial mortgage brokers negotiate commercial mortgages, while non-commercial brokers negotiate non-commercial mortgages. The licensing process for commercial and non-commercial mortgage brokers is nearly the same and is conducted through the Nationwide Multistate Licensing System (NMLS), as it is for financial professionals in many states.
Some of the information required of both kinds of mortgage broker applicants includes:
- DBAs or any other trade names
- Resident/registered agent information on file with the Arkansas Corporation Commission
- Qualifying/responsible individual (Commercial and noncommercial brokers have different criteria for qualifying individual eligibility.)
- Verification of Experience for qualifying individual
- Background checks for direct owners and qualifying individuals
- $10,000 or $15,000 surety bond
- $36.26 fee per background check
- $800 nonrefundable application fee
- $100 nonrefundable processing fee
This list is not complete, so read your commercial or non-commercial mortgage broker application carefully. These licenses expire annually on December 31, and need to be renewed on or before that date to avoid $25-per-day late fees and eventual license cancellation.
How do mortgage brokers know their surety bond amount?
Commercial and non-commercial mortgage brokers’ bond amount depends on the brokers’ investors. Investors are the entities that lend or invest the money in the mortgage loans. There are two kinds of investors, as defined by Arizona law:
- Institutional investors�State or national banks, savings banks, and credit unions; state or federal savings and loan associations; federal or quasi-federal government agencies; financial enterprises; licensed real estate brokers or salesmen; profit-sharing or pension trusts; insurance agencies
- Non-institutional investors�Anyone who does not fall under the above definition, who provides funds to be used in the making of a mortgage loan, or who purchases mortgages that have already been negotiated by a broker
Mortgage brokers with only institutional lenders need to get a $10,000 surety bond, and those with both or only non-institutional lenders need a $15,000 surety bond. The surety bond is brokers’ promise that they will adhere to laws for mortgage professionals in the Arizona Revised Statutes. This protects customers from fraud, misrepresentation, and other illegal actions on the mortgage broker’s part. The bond also protects the state of Arizona; should a claim be filed on the surety bond, the surety pays the claim and then the bondholder reimburses them, with no loss to the state.