Lance Surety Bond Associates, Inc.

HB 4178: License Bonds – Mortgage Loan Originators

Mortgage Loan Originators must be covered under a surety bond in the amount based on the loans originated. Licensees that are the employee or exclusive agent of a person subject to the existing bond requirement may be able to use their employers bond to fulfill this requirement. Mortgage lenders must obtain a bond in the amount no less than $100,000 under current regulations. The amount of the lenders aggregate loans are what regulate the amount of the bond, and it must be capped at $500,000. Under the new law the Commissioner of Banks is authorized to promulgate regulations to implement the bond requirement. This law became effective as of July 31, 2009.

CONNECTICUT SB 1110

With bill will revise the existing licensing laws for mortgage lenders, brokers and originators. Under existing law a surety bond was required to be posted in the minimum amount of $40,000. This was enlisted to regulate the bond amount by the licensee’s loan origination volume. The revised bill will require mortgage lenders and correspondent mortgage lenders to post a the minimum of $100,000 surety bond and mortgage brokers would be required to post a minimum $50,000 bond. The licensee would have to obtain a bond that covers all loan originators that the licensee sponsors at all locations after the initial bond that covers the license for the main office.

SB 355: License Bond – Mortgage Originators

This law requires mortgage originators to be covered by a surety bond. If this is not feasible this new law will permit the Superintendent of Banking to establish a recovery fund. The new law requires that the surety bond that is covering the mortgage loan originators must be posted in an amount that reflects the dollar amount of loans originated according to the Superintendent’s determination. The originator can be covered underneath of their employer’s surety bond or if they are the exclusive agent of a mortgage broker, mortgage banker, industrial lender or a consumer lender. Those positions are subject to bond requirements under existing law, the employer’s bond will suffice for the bond requirements for originators. The bond amount must reflect the dollar amount of the loans originated for an employer’s bond.

HB 1646 License Bond – Mortgage Loan Brokers

This law requires loan brokers, mortgage loan originators and principal managers to be licensed. Also under this new law requires that a surety bond must be posted to cover originators and principal managers who are employees of the loan broker. The surety bond amount that will be posted is determined upon the total amount of residential mortgage loans originated in the previous calendar year. If the total is not greater than $5 million the bond amount will be $50,000. If the total amount is between $5 million and $20 million the bond amount posted will be $60,000. Any amounts that exceed $20 million will be posted in the amount of $75,000. This law became effective on January 1, 2010.

HB 169: License Bond—Mortgage Brokers and Lenders

This will repeal the existing bond requirements for mortgage lender and brokers. The previous law required a surety bond to be posted in the amount of $25,000 plus another $10,000 per branch. The State now has a mortgage recovery fund under the new law instead of a surety bond. This law became effective July 1, 2009.

SB 1218: License Bond – Mortgage Brokers

This bill will incorporate the federal definition that a mortgage loan originator will be required to be covered by a surety bond in an amount of the loans originated. The loan originator is also covered if he/she is an employee or an exclusive agent of a licensee; this will fulfill the bonding requirements as well. Under this new law it will require that the bond must provide coverage for all originators. This bill became a law because the Governor vetoed the bill and the legislature overrode the veto.

Arkansas revised its law for mortgage brokers, bankers, and servicers.  HB 1881 now states that there is no set bond amount.  The Securities Commissioner now determines the bond amount based on the loan activity in the past year of the broker, banker, servicer.  This needs to be of a minimum of $100,000.  These bonds will also cover the employees of the broker, banker or servicer.  Cash or other securities are no longer accepted in lieu of the surety bond.

Effective June 1, 2009, Alabama Mortgage Loan Originators are required to be licensed and to obtain a surety bond.  They may be covered under their employers’ bond who is subject to the Alabama Consumer Credit Act or the Mortgage Brokers Licensing Act.  The surety bond must include an amount for the loan originator equal to the amount of loans originated.

Effective as of November 21, 2009, a surety bond is now required for mortgage brokers in the state of Alabama.  The surety bond is needed if the broker does not meet net worth requirements of the state.  The State Banking Department will determine the actual bond amount.

Arkansas Mortgage Brokers and Mortgage Lenders have a minimum surety bond requirement of $100,000. The specific bond amount for each company/individual will be set by the state’s regulations.