Mortgage Broker Bonds: a Deeper Understanding
Many states require that a mortgage broker obtains a surety bond before they can become licensed in the state. It offers a level of protection to clients against unethical business practices by mortgage brokers. Some examples of this could include:
- Encouraging the client to lie on their application
- Deliberately approves the client for a higher loan amount than he or she can pay back
- Charging unnecessary additional fees
- Setting an interest rate that is not based solely on the client’s credit history
- Pressuring clients into a high-risk or high-rate loan
- Targeting at-risk buyers
If any of these things, or other misconduct on the part of the mortgage broker, takes place, then a client is entitled to file a claim against the mortgage broker bond. It is hoped that such a penalty will discourage any wrongdoing from mortgage brokers in the home buying process.
What is the cost of a mortgage broker bond?
The state sets the bond requirements, so the amount that you will pay for a mortgage broker bond varies from state to state. Mortgage brokers pay a percentage of the total bond amount to obtain the bond. We offer fast and free quotes for mortgage broker bonds. Fill out our simple request form and we will be able to get you an accurate quote for the bond.
How do I get a mortgage broker bond?
Once you request your free quote, we will be able to get you started on the bonding process. We will need basic business information and will tell you if there are any additional documents needed to complete your paperwork so that we can get you finished and ready to complete your licensing requirements. Once we have all of your paperwork complete and payment is received, we will send out your bond to you right away.
What happens if someone files a claim against the bond?
If the state or a client feels that there has been some wrongdoing from your mortgage broker firm, they will be able to file a claim against the bond. The surety company will investigate the claim and if it is found to be legitimate, they will make a payment to the complainant. This payment will not exceed the total amount of the bond. You will be required to repay the amount of the claim so that the surety company is made whole again.