SB 141/HB 1222: License Bond – Debt Management Service Providers
This will enact the uniform Debt Management Services Act of the National Conference of Commissioners on Uniform State Laws. Debt management service providers must register and post a $50,000 surety bond through this bill. The amount of the bond is determined by the Consumer Credit Commissioner basing the amount on certain conditions of the provider. The surety company issuing the bond must be “A” rated from a nationally recognized rating service and must be licensed in that state. The bond was created for the states benefit and individuals who enter into agreements with the provider. The bond will need to be in effect for an additional two years after the registrant stops performing debt management services in Texas.
HB 1138: License Bond – Private Detective Agencies
This bill will require private detective agencies to be licensed. They must also post a 50K surety bond from a surety company that is authorized to do business in the state of South Dakota. The bond is instilled to recover against the principal and any of its servants, officers, agents and employees by reason of its wrongful or illegal acts in conducting business licensed under this act. The bill will provide direct actions pertaining to the bond.
HB 2712: License Bond – Mixed Martial Arts Contest Promoters
This bill will re-write existing law pertaining to the State Athletic Commission, which regulates boxing contests. Through this bill their authority will be expanded to cover mixed martial arts contests. Under current regulations boxing promoters are required to be licensed and post a $10,000 surety bond. The Commission determines the bond requirements. The bill will codify the requirements for promoters in the statue instead of the regulations A surety bond no less than $100,000 will have to be posted by boxing and mixed martial arts contest promoters. A larger bond is able to be required by the Commission through regulations.
The bond amount for employment agencies will be increased through this bill. This is under existing law from $5,000 to $20,000. A surety bond is required or a letter of credit. This is to secure that the agency is compliant with the law and will pay all sums due to consumers and their employees.
Bond requirements for money brokers will be revised through this bill. Under current law a $25,000 surety bond is required to be posted. Through the new bill requirements there must be a minimum $25,000 bond with the amount to be determined by rules. The money broker’s loan origination volume in the previous year will determine the amount of the bond. A larger bond may be required by the Commissioner of Financial Institutions. This is only if he or she determines it necessary in order to protect the public interest.
Pre-paid calling services would be regulated under this bill requiring such providers of this service to post a surety bond or other security in the amount of $50,000. They must also obtain a certificate to operate in the state with this bond requirement. Distributors of prepaid calling cars must also post a surety bond. The bond must be in the amount of at least $10,000. Sales exceeding $50,000 by the distributors are then required to post a bond in the amount of $25,000.
HB 262: License Bond – Process Server Companies
This House Bill will regulate all process server companies. This will also require licensure and a surety bond to be posted in the amount of 10K from a bonding company authorized to do business in the State. Individual process serves that are not covered under a company’s blanket bond would have to post their own bond for $10,000 in connection with licensure.
AB 3408: Professional Employer Organizations
This Assembly Bill would revise the current law for employee leasing companies, including the financial requirements. Under existing law companies need to maintain a minimum net worth of $100,000. Under the new bill to be passed the $100,000 net worth requirement will be substituted for a surety bond in the amount of $75,000. Now instead of meeting the minimum net worth requirement the bill would require the company to maintain a positive working capital. If the company fails to do that then it could post a bond, irrevocable letter of credit or securities with a minimum market value that is equal to the amount required for achieving a positive working capital, plus $100,000.
SB 45: Miscellaneous Bond – Internet Gambling
This bill will authorize intrastate Internet gambling and would require the Department of Justice to issue a request for proposals (RFP) to enter into contracts with up to three hub operators to host internet gambling games to registered players in California. These contracts would last for a period of 20 years. This bill will require a surety bond to be posted by the hub applicant through the RFP. This will become immediately due and owing to the state when the applicants proposal is accepted. If any documentation of the applicant was submitted in connection with the RFP is found to be false the bill will provide that the bond will have to be forfeited to the state.
SB 151: Miscellaneous Bond – Notary Course Providers
This requires providers of instruction and training to prepare for the Louisiana notary public examination to register. If the provider is not an educational institution they must post a surety bond in the amount of $25,000. This bond with ensure the delivery of the providers services. All surety companies licensed in Louisiana must provide this bond.
SB 110: License Bond – Credit Repair Services
This revokes the previous requirement that a surety bond must be posted for credit service organizations for 2 years after the organization ceases operations in the state or after it has filed notice with the Attorney General.
Home Food Service Plans Act SB 117 requires sellers of this plan to be licensed and to always post a surety bond from a surety company licensed in the state of Colorado. The Commissioner of Agriculture will determine the exact bond amount needed, but it will not be set beyond $50,000.
Arkansas no longer has a surety bond requirement for a proposed insurer to obtain certification from the Insurance Department. The Department still accepts other forms of security.
Arkansas changed their current law regarding Money Transmitters. The State eliminated any other form of security besides a surety bond. Surety Bonds are now a requirement for money transmitters to be in compliance with the state.
Arkansas revised their current law for combative sports events which now requests a surety bond in the amount of $1,000. The combative sports that fall under this category are semi-professional and amateur wrestling, kick-boxing, boxing and martial arts.
Lance Surety can help you get approved for this bond type within just minutes, regardless of whether you have good or bad credit. You can apply online, by selecting this bond under the “Sports Permit” category, or give us a call if you need any assistance.
Effective on March 25, 2009, Arkansas now requires performance bonds, or more specifically lottery bonds (or lotto bonds), from vendors to stay in accordance with the Arkansas Lottery Commission. The Commission will determine the bond amount for each specific vendor. Retailers must also place a lottery bond in the amount equal to two billing periods’ average ticket sales.
Surety bonds must also be obtained for Arkansas Lottery Commission employees who handle lottery revenue or the Commission’s funds. The Commission will determine the bond amount necessary for these employees.
Effective as of November 21, 2009, a surety bond is now required for consumer lenders in the state of Alabama. The surety bond is needed if the lender does not meet net worth requirements of the state. The State Banking Department will determine the actual bond amount.
Be sure to check with the state (obligee) for more specific details and requirements.
Public Officials in Alabama are required, as of May 22, 2009, to post a surety bond to the County Treasury, instead of to the State as it has been previously. County employees, member or employee of public boards or commissions, or county directors may be required to post a bond as well. The bond must be in the amount of 0.5% of the yearly budget for that official, but cannot exceed $50,000. The actual bond amount is to be determined by the county commission.
Alabama has passed a new bill requiring proprietary schools to acquire a $20,000 surety bond. This school bond is to ensure the students will receive the instruction that they had paid tuition for. This bill was enacted on August 1, 2009.
To apply for this type of surety bond, visit our online application.
In each of the 50 states, individuals who sell or serve as brokers for the sale of real estate are required to obtain both the pertinent licenses and real estate agent bonds and/or real estate broker bonds in order to legally conduct business. For these types of surety bonds, the respective state is the obligee (entity requiring the surety bond), while the real estate agent or broker becomes the principal by the nature of them being required to post the bond.
What exactly do they guarantee?
States require these surety bonds in order to guarantee that real estate agents and brokers will abide by all applicable laws governing real estate sales. They also guarantee that agents and brokers will correctly account for and remit money held in trust for their customers. Furthermore, real estate agents and brokers bonds provide protection for the public against any misrepresentation or fraud attempts.
Are real estate agent and broker bonds written freely?
While real estate agent bonds and real estate broker bonds are written frequently, underwriters do apply necessary scrutiny when writing these types of surety bonds. As with most bond types, underwriters are required to conduct a thorough review of both the applicant’s business and personal financial statements. They also take a look at the agent or broker’s business experience, their reputation with their local real estate board, and their procedures for handling and account for customer funds.
Effective upon the March 25, 2009 enactment of HB 1002/SB 26, all vendors in the state of Arkansas are now required to either obtain a lottery and lotto bond (type of surety bond), a letter of credit, or securities for contracts with the Arkansas Lottery Commission. All surety bond amounts shall be determined by the Commission.
The following surety bond requirement is outlined in Alabama HB 428.
As of August 1, 2009, all proprietary schools in the state of Alabama are required by law to post a surety bond in the amount of $20,000. This commercial bond is conditioned on any payments required when a student paid tuition and or fees to the proprietary school, but did not receive the level of instruction or quality of teaching that they paid for. Such damages would only be paid if a court determines such allegations to be truthful.
The Uniform Trust Code (UTC) was created by the National Conference of Commissioners on Uniform State Laws in order to create a uniform code for common law principles pertaining to trusts for all fifty states (i.e. for commericial transactions, as well as family estate planning). To better understand how a Uniform Trust works, I will briefly define the three parties involved with the creation and administrative duties. The person who created the trust is the “grantor” (or “settler”). The person who agrees to manage and oversee the trust and all of its assets is known as the “trustee”. Lastly, the person that is slated to receive the benefits of a trust is referred to as the “beneficiary”.
Thus far, 20 states have adopted the UTC in some form, and have begun to executed its laws. In 2008, the UTC was introduced in a number of states as well. Under these recent bills, trustees are only required to obtain a surety bond to guarantee the performance of their duties when the court deems such a bond necessary to protect the beneficiaries interests. A surety bond may also be needed if outlined in the terms of the trust, and court has not done away with the requirement.
At first glance, some people may assume that mortgage bonds (mortgage banker bonds, and mortgage broker bonds) are all the same. While there are some similarities between the two types of commercial bonds mentioned above, there are also some clear differences which this article will outline.
Mortgage Banker vs. Mortgage Broker: Most surety bond companies classify mortgage banker and mortgage broker bonds in a similar fashion, but there are some operational elements to each that differentiate the two. Mortgage brokers serve as a “middleman” by bringing principals together with banks that end up loaning qualified principals funds. Mortgage bankers (also referred to as mortgage lenders) are the entities that actually lend money to the principals, and they act as both the banker and broker for the loan. Understanding the difference between a mortgage broker and a mortgage banker (or lender) is the first step toward understanding similarities and differences between mortgage broker and banker bonds.
Bond Amounts: Perhaps the most obvious difference between the two types of bonds lies in the amounts in which they are commonly written for. Mortgage banker bonds are typically much larger, or written for much more money, than mortgage broker bonds are, and can be two to three times the size of mortgage broker bonds. Therefore, qualifying for mortgage banker bonds can be much more challenging for a prospective principal.
Bond Forms: Every state will have a separate bond form for mortgage banker and broker bonds, which will spell out exactly that the specific bond guarantees. The bond forms may differ depending on the language of each state. While any given state’s bond forms for each type may appear similar, it is important to carefully read the bond form, or work with a knowledgeable bond agent, to ensure you understand exactly what is being guaranteed.
Similar Risk for Mortgage Bankers and Brokers: Contrary to popular belief mortgage banker and mortgage broker bonds both have very similar risk factors. Seeing that the bond amounts for mortgage banker bonds are on average significantly higher than those of mortgage broker bonds, most people would think that mortgage bankers face more risk, however that assumption is not necessarily accurate. While the nature of a mortgage banker’s job makes the risk they face obvious to most, the many challenges mortgage brokers face seem to level the playing field when it comes to risk. Recent studies have further proven that the claims ratios for both types of bonds are comparable.
Over the past decade, the surety bond industry has seen some significant changes that have changed the industry landscape, particularly when it comes to high risk bond programs. Companies that were dropped by their bond companies as a result of bad credit, etc, have been forced to find new bond agents in order to help them attain new surety bonds. This created a slew of challenges for agents, as they now have to find markets for these customers with credit problems, and will typically require significant collateral in order to write a bond for someone with bad credit. To serve these types of principals, Bad Credit Surety Bond Programs came into play.
High Risk = Higher Premium: Before there were high risk bond programs, underwriters of surety bonds would only write bonds for customers (or principals) that presented little to no risk of having a claim arise against them. In other words, they went after a “0% loss ratio”, and the bond companies were in a position to do so. With Bad Credit Surety Bond Programs, the underwriters of bonds are able and willing to write bonds for principals that are higher risk (of having a claim), and can do this by approving them at higher premiums. Similar to insurance companies, surety bond underwriters can approve a wider array of customers, but approval for those more likely of having a claim is obviously comes at a cost to the principal… higher rates.
Collateral vs. Increased Premiums: Early on in the process, Bad Credit Surety Bond Programs brought about a need for bond companies to require collateral from principals. This tends to be a cumbersome, time-consuming process that involves a lot of administrative effort, and therefore many bond companies decided to avoid the collateral requirement by offering higher premium rates to their principals. Customer preference depended on the specific principal’s financial situation. Typically, however, the bond programs that offered higher premiums vice collateral were less expensive for the first year of the bond, but over time those that required collateral proved to be less expensive. This was due to the fact that the collateral would eventually be returned to the customer (roughly a year after the bond’s release) if no claims arose.
Knowing Your Options: It is important for principals with bad credit to understand what all of their options are. While many Bad Credit Surety Bond Programs are designed to meet the needs of customers with poor credit, and often times prove to be the most cost-effective option, they are the only option available. For example, an Irrevocable Line of Credit (ILOC) is an alternative whereby the bank will freeze liquid assets of a principal in an amount equal to the total amount of the surety bond they would need to purchase. This would only be more preferable for principals with enough liquid assets to comfortably have the amount of the ILOC frozen by a bank. For customers that truly value their liquidity, and ability to quickly have cash on hand, an ILOC is probably not a viable option. While ILOCs have traditionally had services of around 1% the cost of the line of credit, the money market rate will have an impact on that as well, and can significantly raise the annual rate of the ILOC for the customer. For example, if the money market rate is 5%, and the service fee for the LOC is just 1%, the actual annual rate the principal pays for the ILOC is 6%. Customers must understand the choices available to them, and should choose the option that best fits their specific needs.
Outlook: High Risk Surety Bond Programs have been around for more than 5 years now, and it does not appear that they are going anywhere in the foreseeable future. More and more companies are willing to write surety bonds for principals with bad credits, and those that carry some sort of risk of having a claim arise. While increased premiums are part of what makes bonding companies willing to do this, the increasing number of bonding companies writing high risk has created competition. Competition is obviously a good thing for the customers, in this case the principals with bad credit, because it will eventually drive premium rates down, making Bad Credit Surety Bonds more affordable.
On 1 July 2009, California State Assembly Bill 180 will become operative, and will set forth tighter laws governing the state’s Foreclosure Consultants.
AB 180 allows homeowners the right to cancel on a contract up to 5 business days, as opposed to 3 business days, as was previously the case, and also makes delivery of a cancellation notice easier than before. Furthermore, the bill prevents foreclosure consultants from getting a power of attorney from the homeowner, regardless of the purpose.
In July 2009, upon becoming operative, the bill will require allCaliforniaforeclosure consultants to register with the Department of Justice, and also to purchase a $100,000 surety bond (commercial bond) in order to guarantee they all foreclosure consultants follow state law. The Department of Justice will then have proper oversight of the foreclosure consultants throughout the state of CA. The surety bond requirement was put in place to benefit/protect homeowners.