Who is Protected by Mortgage Broker Bonds?

When securing, providing, or servicing mortgage loans, nearly all states mandate a mortgage broker bond for licensure. The Merchants Bonding Company Hub streamlines bond issuance with instant pricing, live form previews, and secure document uploads.

Who Needs a Bond?

Professionals engaged in mortgage loans, from brokers to lenders, are typically obligated to obtain a mortgage broker bond for licensure. Individuals who may need bonds:

  • Mortgage Broker - Independent consultant facilitating borrower-lender interaction, ensuring optimal interest rates for borrowers
  • Mortgage Banker - Direct/indirect provider of mortgage loans funded from their own or borrowed resources, secured by lien interests
  • Mortgage Loan Originator - Facilitates loan applications/negotiates residential mortgage terms
  • Mortgage Lender - Engaged in offering mortgage loans/commitments
  • Mortgage Servicer - Manages loans post-issuance, handling payments

Mortgage broker bonds safeguard consumers in case a licensee breaches regulations. These bonds ensure recovery of expenses, fines, restitution, fees, and address losses or damages incurred due to non-compliance with state requirements.

Bond Amount

The bond's amount varies per state, often based on annual aggregate mortgage loan volume. The amount of premium due is a percentage of the bond amount.

Appointed insurance agents can find individual bond requirements by signing in to the Hub, Merchants' intuitive and efficient bonding website. Use our Find an Agent tool to locate an experienced insurance agent near you.

Underwriting Mortgage Broker Bonds

Merchants' underwriting on mortgage broker bonds often requires a signed application and a credit check. Depending on state, bond penalty, and aggregate liability, personal and business financial statements may be needed. Merchants does not require indemnity signatures for bonds up to $75,000.

Transition to Electronic Surety Bonds with NMLS

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act) standardized mortgage provider tracking via the National Mortgage Licensing System (NMLS). The S.A.F.E. Act mandated registration for residential mortgage providers, including surety bonds. The majority of states shifted to electronic surety bonds (ESB) tracked on NMLS, streamlining bonding procedures.

Merchants Bonding Company operates within the NMLS ESB system, simplifying bond management while retaining traditional underwriting processes.

Navigating Claim Procedures

All certificate of title bonds operate on a basic premise: If the bondholder violates the bond's terms, a claim can be filed for compensation. If valid, the surety will pay the claim, but the bondholder must reimburse the surety in full.

Simplifying the Bonding Experience

Merchants Bonding Company's expertise and simplified bonding process ensure that professionals in the mortgage industry can meet licensing requirements seamlessly.

How Do I Get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

What is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.

All information provided is subject to change without notice.