A Massachusetts mortgage broker bond is a type of surety bond that is required by the Massachusetts Division of Banks for mortgage brokers operating within the state. The bond serves as a guarantee that the broker will comply with all state laws and regulations, as well as ethical standards, in their business practices. It provides financial protection for clients and other affected parties in case the broker engages in fraudulent activities, breaches their contract, or fails to fulfill their obligations. The bond amount is determined by the Division of Banks and must be obtained before the broker can obtain their license.
Massachusetts Mortgage Broker Bonds are required by Massachusetts’s Division of Banks to obtain your Mortgage Broker license. The Massachusetts Mortgage Broker Bond amount is set at $100,000. This license is required of any company or sole proprietorship, who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on Massachusetts residential property for others.
a minimum requirement of a $100,000 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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Pursuant to the Division's regulation 209 CMR 42.03(2)(a)(2), as a condition of obtaining and holding a mortgage lender license, a mortgage lender must establish and maintain a corporate surety bond in a sum to be based on the volume of its mortgage loan business in Massachusetts, but in no event shall the sum of the corporate surety bond be less than $100,000, up to a maximum of $500,000. The sum of such bond may be increased by the Commissioner of Banks at any time to such amount as shall be shown to be necessary, up to the $500,000 maximum.