What is a Michigan Mortgage Loan Originator Bond?
The State of Michigan Office of Financial and Insurance Regulation requires mortgage loan originators (both company and individual) to post a surety bond as part of their licensure requirements.
The Mortgage Loan Originator Bond guarantees that mortgage loan originators will comply with each provision of the Michigan Mortgage Loan Originator Licensing Act.
The bond financially compensates harmed parties suffering from losses due to unethical behavior and unlawful violations committed by the mortgage loan originator.
According to Michigan Statutes, a “mortgage loan originator” refers to any person(s) who for profit or gain takes a residential mortgage loan application and/or provides or negotiates terms of a residential mortgage loan.
What are the bond conditions?
- The bond must be issued by a Surety that is approved and authorized to write surety bonds in the State of Michigan.
- The BOND FORM FIS 2137 must be submitted in lieu of FIS 2135 by a person (Sponsoring Company) if the individual loan originator is an employee or exclusive agent of said Sponsoring Company.
- The BOND FORM FIS 2135 is to be submitted by an individual that is not covered by the company bond FIS 2137.
- The expiration date of each bond is on December 31 of the current or subsequent year.
- The cancellation clause allowing the cancellation of the surety bond before the Expiration Date is not acceptable.
- The bond must be signed by the Attorney in Fact and an officer of the Sponsoring Company/individual loan originator (Principal).
- The original surety bond is to be submitted to DIFS with the Surety Power of Attorney to the Michigan Department of Insurance and Financial Services, Consumer Finance Division.
What is the bond amount?
For a company:
$50,000 – if the sum of mortgage loans closed or modified in the previous calendar year is less than $12,000,000.
$150,000 – if the sum of mortgage loans closed or modified in the previous calendar year is $12,000,000 or more and less than $24,000,000.
$250,000 – if the sum of mortgage loans closed or modified in the previous calendar year is $24,000,000 or more.
For an individual:
$10,000 – if the individual is applying for a loan originator license for the first time.
$10,000 – if the individual is currently licensed as a loan originator that did not close any mortgage loans in the previous calendar year, or the sum of mortgage loans closed in the previous calendar year is less than $12,000,000.
$25,000 – if the sum of mortgage loans closed in the previous calendar year is $12,000,000 or more and less than $24,000,000.
$50,000 – if the sum of mortgage loans closed in the previous calendar year is $24,000,000 or more.
The cost of the bond is determined by the Surety, which is a percentage of the bond amount (1%-5%).
How do I obtain a Mortgage Loan Originator Bond?
To secure this type of bond, you must seek the assistance of a surety bond company.
You will be asked to apply for this bond. Know your bond costs and requirements by requesting your FREE quote HERE!
Once the application is received, the surety bond company will immediately process it. In our case, one of our expert surety bond agents will guide you through the whole process from the time you applied for the bond. We will make sure that you understand all the conditions before we issue the bond.
An underwriter will then evaluate the following:
- Your financial strength
- Your job/business performance history
- Your credit score
- Your copy of the BOND FORM – for a company or an individual
Once the prequalification process is fulfilled, we will execute the bond and send it to you!
Contact us at 800-333-7800!