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.

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.

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.

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 on October 2, 2009, Arizona House Bill (HB) 2143 mandates that all mortgage loan originators operating in the state must be officially employed by either a consumer lender, mortgage banker or a mortgage broker. These mortgage loan originators must also be covered by their employer

Alabama SB 249, which was enacted on May 21, 2009, created a licensing requirement for all mortgage loan originators, as well as a requirement for them to be covered by a surety bond. However, the law does allow mortgage loan originators to use the surety bond of someone whom they are an employee or an exclusive agent of, as long as that person is subject to the Mortgage Brokers License Act (SB 232) or the Alabama Consumer Credit Act (SB 234). This license bond needs to provide ample coverage for each mortgage loan originator in an amount equal to the amount of the originated loans.

This new law became effective in Alabama on June 1, 2009, but the licensing requirements will not go effective until June 1 of this current year.