Mortgage Broker Bond/Mortgage Banker bond
A mortgage broker bond is a license and permit bond that state regulators require before they license a mortgage broker, lender or both. The bond guarantees that you will follow your state's mortgage lending laws, and it gives borrowers and others a way to recover money if your business practices cause them a loss. Bond amounts and rules vary by state and sometimes by your loan volume.
How a mortgage broker bond works
The bond is an agreement among three parties: you, the mortgage broker or lender (principal); the state agency that licenses you (obligee); and the surety that issues it. For example, if you misrepresent a loan's terms or fees and a borrower loses money as a result, the borrower may be able to make a claim against your bond. The surety investigates, and a valid claim is paid up to the bond amount. If the surety pays a claim, you must repay the surety.
Mortgage broker bonds vs. mortgage bonds
The names sound alike, but they are very different. A mortgage broker bond is a surety bond you need to be licensed and do business. A mortgage bond is an investment backed by a pool of home loans, sold in the bond market. If you are a broker or lender applying for a license, you need the surety bond.
Bond amount and your premium
Your state sets the bond amount. Some states require a flat amount, while others scale it to your loan volume. In California, for example, finance lenders and brokers who originate residential mortgages need a $25,000 bond for up to $1 million in loans the previous year, rising to $50,000 for up to $50 million, $100,000 for up to $500 million and $200,000 above that. New applicants use a good-faith estimate. That amount is the coverage required, not the price you pay. Your premium depends on the surety's underwriting, including your credit, experience and business finances. Request a quote rather than relying on a fixed rate.
How to apply
Apply for the bond as part of your license application, since your state won't issue the license until the bond is on file. Many states require the bond to be filed electronically through the Nationwide Multistate Licensing System (NMLS). Start the online application with your business information, NMLS ID and the bond amount your state requires. WWIS will review your submission and help you with the quote, filing and issuance. Approval and timing depend on the surety and a complete application.
Information needed to apply
- Your state and license type, such as mortgage broker, mortgage lender or both.
- Your company's NMLS ID number, if your state uses NMLS for bond filing.
- Your loan volume for the previous year, or a good-faith estimate, if your state scales the bond amount.
- Business and owner information, plus financial statements if the surety requests them.
Mortgage broker bond amounts by state
There is no single mortgage broker bond accepted nationwide. Each state sets its own amount, and a few don't require a bond for brokers at all. Select your state for more details.
| State | Bond amount |
|---|---|
| Alabama | $25,000–$75,000 |
| Alaska | $75,000 |
| Arizona | $10,000–$15,000 broker; $25,000–$100,000 banker |
| Arkansas | $100,000–$200,000 |
| California | $25,000–$200,000 |
| Colorado | $25,000–$200,000 |
| Connecticut | $50,000–$150,000 |
| DC | $12,500–$50,000 per office |
| Delaware | $25,000–$200,000 |
| Georgia | $150,000 broker; $250,000 lender |
| Illinois | $25,000–$150,000 |
| Indiana | $50,000–$75,000 |
| Iowa | $100,000–$150,000 |
| Kansas | $50,000–$125,000 |
| Kentucky | $50,000 broker; $250,000 lender |
| Louisiana | $25,000–$50,000 |
| Maine | $25,000 |
| Maryland | $50,000–$150,000 |
| Massachusetts | $75,000 broker; $100,000–$500,000 lender |
| Michigan | $25,000; $50,000–$250,000 if covering loan originators |
| Minnesota | $100,000–$200,000 |
| Mississippi | $15,000–$25,000 |
| Missouri | $50,000–$250,000 |
| Montana | $25,000–$100,000 |
| Nebraska | $100,000–$200,000 |
| Nevada | $50,000–$75,000 |
| New Hampshire | $50,000 broker; $100,000 lender |
| New Jersey | $150,000–$300,000 |
| New Mexico | $50,000–$150,000 |
| New York | $10,000–$100,000 |
| North Carolina | $75,000–$250,000 |
| North Dakota | $25,000 |
| Ohio | $50,000–$150,000 |
| Oregon | $50,000–$200,000 |
| Pennsylvania | $50,000–$150,000 |
| Rhode Island | $20,000, plus $5,000 per branch |
| South Carolina | $25,000–$55,000 |
| South Dakota | $25,000–$50,000 |
| Tennessee | $45,000–$135,000 |
| Texas | $50,000 (one of several financial responsibility options) |
| Utah | $25,000–$100,000 |
| Vermont | $25,000–$100,000 |
| Virginia | $25,000–$150,000 |
| Washington | $20,000–$60,000 |
| West Virginia | $50,000–$150,000 |
| Wisconsin | $120,000, plus $10,000 per branch over five |
| Wyoming | $25,000–$100,000 |
Ranges reflect tiers based on loan volume, license type or locations. Requirements change often, so confirm the current amount for your license with your state regulator or NMLS before you apply.
Keeping your bond in force
Mortgage broker bonds usually renew each year with your license, and you pay a premium at each renewal. If your loan volume grows into a higher tier, or you add locations in a state that requires more coverage for them, you may need to increase your bond. Letting the bond lapse can lead to suspension of your license.
Get help with your application
Call 888-518-8011 or email [email protected] for help selecting the bond and completing your application.
If you or your business needs help in obtaining a surety bond or commercial insurance give us a call!