What is a Mortgage Surety Bond?
A mortage surety bond or mortgage broker bond is an insurance policy that guarantees that a mortgage broker will fulfill their obligations to their clients. Mortgage surety bonds are required by law, although the type of bond a broker will need may vary from one state to the next. They are essentially put in place to protect consumers who are in the process of obtaining mortgages for their homes, and mortgage brokers need them if they are to be licensed in their state. Most mortgage professionals will require a surety bond, but the actual requirements may vary from state to state. It will be up to you to determine what kind of mortgage surety bond you will need, but there are also enough resources to help you make that decision.
How Does a Mortgage Surety Bond Work?
A mortgage surety bond is a three-way contract between the mortgage broker, the consumer who wishes to obtain a mortgage, and the surety who sold the bond to the broker. If a mortgage broker fails to fulfill their obligations to a client, the client can then file a claim against the bond. If the claim is proven to be valid, the surety reimburses the client financially according to the terms of the bond. It is then up to the mortgage broker to reimburse the surety for anything that was paid out to the client.
Even though it may seem like mortgage broker bonds only protect clients from any wrongdoing on the part of the mortgage broker, they also benefit mortgage brokers. Not only are the required of anybody who needs a license to work as a mortgage broker, but they act as a guarantee that a broker will fulfill all of their obligations faithfully. In other words, a mortgage broker bond can act as a show of good faith for both brokers and clients. Even if you aren’t technically required to purchase a mortgage bond, it is always in your best interest to do so, as not having one could mean paying out of your own pocket for any claims made against you. This can also greatly damage your reputation and credit, which will make it more difficult to obtain a bond or a license.
Who Needs a Mortgage Surety Bond?
To answer that question in the broadest possible terms, almost anyone who wishes to work within the mortgage industry needs to obtain a mortgage surety bond. There are many different kinds of surety bonds out there though, and it will take some work to determine which ones are right for you. Depending on what kinds of services you offer, you might not even be required to purchase a mortgage surety bond at all. In any case, here is a run-down of the kinds of professionals who will need a mortage surety bond if they are to legally operate in their state.
- Mortgage Brokers – We’ve already talked about this at great length, but mortgage brokers absolutely need mortgage surety bonds if they are to be licensed in their state. These bonds protect consumers and ensure that brokers can faithfully render their services to consumers.
- Mortgage Lenders – A mortgage lender or mortgage banker is someone who loans money to someone for the purpose of purchasing a mortgage. Much like mortgage brokers, mortgage lenders require a mortage surety bond to be licensed and to guarantee compliance with state laws surrounding the mortgage business.
- Mortgage Originators – Mortgage originators or mortgage loan officers work closely with borrowers to complete a mortgage transaction. They are typically the main point of contact for borrowers who are trying to close a mortgage transaction. Mortgage originators interview mortgage applicants, analyze preliminary loan requests, gather necessary background finanical information on applicants, and monitor the progress of a loan. Seeing as they are such an important part of the mortgage application process, they most definitely need a mortgage sureties in order to operate according to the laws in their state.
- Mortgage Servicers – A mortgage servicer is the company responsible for managing the day-to-day tasks of managing a mortgage loan. Mortgage servicers are the ones who send mortgage statements to consumers, and they are usually the ones who collect any payments that are made on a mortgage.
Every one of these professionals will need to purchase a mortgage broker surety bond, both to remain licensed to operate in their state, and to protect consumers from any fraud or other wrongdoing. The type of mortgage sureties that is required can vary depending on the state in which you operate. It will be largely up to you to determine what bonds you will need, but there is always assistance available if you need it.
How to Obtain a Mortgage Bond
As with other kinds of surety bonds, there are insurance agencies who specialize in selling mortgage surety bonds of all kinds throughout the United States. Some of these are more affordable than others, and not all of them may be able to sell you the mortgage sureties that you require. If you are unsure what kinds of bonds you will need, we will be happy to help you. We sell surety bonds of all kinds to our clients, and we will be more than happy to help you decide if you need a mortgage surety bond and make sure you purchase the one that is right for you. For more information about our surety bonds and how we can help you keep your license, contact us today.
Mortgage Broker Bonds
NFP Surety wants to be your “go to” insurance agency for mortgage broker bonds Nationwide. We have been a leader in providing these types of bonds for many years. We are well aware of requirements in all States. Since mortgage broker bonds are underwritten very carefully, it is important that you use an agency that can quickly determine where best to place your bond, without shopping excessively, thereby adversely affecting your credit.
Mortgage broker bonds are required by most States and the requirements are determined by the State in which you are being licensed. These bonds go by several different names such as lender bonds, residential loan bonds, and mortgage company bonds.
A mortgage broker works to facilitate a loan between borrowers and lenders. A mortgage broker can work either with a firm or may work independently. Mortgage brokers assist borrowers in finding mortgage loans. Usually, a mortgage broker will attempt to match the right lender with the right borrower. Brokers are generally well equipped to assist borrowers with special needs, like credit issues.
Mortgage Bond Meaning
Mortgage broker bonds are usually required before a mortgage broker license will be issued by the State. Mortgage broker bonds protect consumers against unlawful acts made by a mortgage company or loan officer, although the laws and bond form requirements for this type of bond vary by State.
NFP Surety can assist you with a wide variety of bonding requirements. A common request is lien bonds to enable a title company transfer ownership in a property, or mobile home title bond. Our staff is familiar with the bond you need and will provide it affordably and on the bond form that is required.
Please contact us with any questions you may have. Our phone number is (800) 863-3210. You are also invited to complete a secure online application, or download an application to fax or email to our agency for a free quote.
Thank you. We appreciate having the opportunity to serve with all of your bonding needs.