A California mortgage broker bond is a type of surety bond that is required by the California Department of Business Oversight (DBO) for individuals or companies seeking to obtain a mortgage broker license in the state of California. The bond serves as a form of protection for consumers in case the broker engages in fraudulent or unethical practices during the mortgage application process. In the event of such misconduct, the bond provides financial compensation to affected parties up to the bond's specified limit. The bond amount is determined based on the mortgage broker's loan volume, and it must be renewed annually.
California Mortgage Broker Bonds are required by California's Division of Financial Institutions to obtain your Mortgage Broker license. The California Mortgage Broker Bond amount is set at $25,000. This license endorsement is required for any sole proprietor that, for compensation or gain, or in the expectation of compensation or gain, directly or indirectly accepts or offers to accept an application for a mortgage loan, solicits or offers to solicit a mortgage loan on behalf of a borrower, or negotiates or offers to negotiate the terms and conditions of a mortgage loan on behalf of a lender for residential property in California.
-$0 and $1,000,000 requires a $25,000 surety bond
-$1,000,001 and $50,000,000 requires a $50,000 surety bond
-$50,000,001 and $500,000,000 requires a $100,000 surety bond
-$500,000,001 requires a $200,000 surety bond
There are 3 parts to a Mortgage broker surety bond. The Principal "YOU", The Surety Company, and the Obligee. The Principal is the business or individual applying for the Mortgage Broker Surety Bond. The Obligee is the individual or entity requiring the Surety Bond and the Surety Company is the company who provides the Surety Bond coverage.
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