New Licensing and Bonding Requirements Enacted for Montana Mortgage Servicers
Mortgage servicers in Montana have to meet new licensing and bonding rules after a new piece of legislation was passed in March 2019.
House Bill 107 revises the Montana Mortgage Act, which impacts all types of mortgage professionals in the state. In the case of mortgage servicers, the new law brings changes to the mortgage servicer bond and minimum net worth requirements necessary for licensing.
You can get acquainted with the main changes in the bill in the sections below, so that you make the needed steps to fulfill the new criteria.
The changes for mortgage servicers in House Bill 107
House Bill 107 was signed by Governor Steve Bullock on March 19th, 2019. Mortgage servicers have to comply with the new rules as of October 1st, 2019. The goal of the revised law is to ensure that mortgage professionals in the state operate in accordance with a stricter legal framework.
Montana mortgage servicers now have to provide different surety bond amounts during the licensing process with the state Division of Banking and Financial Institutions. According to the old legislation, the bond requirement was fixed at $100,000 for all applicants.
The new law sets that the bond amount has to be between $75,000 and $350,000. It is based on the total unpaid principal balance of residential mortgage loans that a servicer has on December 31st of the year.
The bond amounts according to the unpaid balance per year are listed below:
- Less than $25 million – $75,000
- Between $25 million and $100 million – $150,000
- Between $100 million and $500 million – $250,000
- More than $500 million – $350,000
Thus, servicers with an unpaid balance below $25 million have to meet a lower bond requirement than previously. However, licensees with higher unpaid balances per year experience a rise in the bond amount requirements.
The other major change that the new law introduces for mortgage servicers relates to the net worth requirements needed for licensing. Servicers who work only with non‑government sponsored enterprise loans now have to keep a $1 million minimum tangible net worth. If a licensee cannot fulfill the capital criterion, they can provide a $1 million surety bond instead.
How to get your business bonded
The purpose of the surety bond requirement for mortgage servicers is to protect the state and the general public. Functioning as a safety net, the bond counteracts potential illegal activities that may harm servicers’ customers. The bond amount that a licensee obtains is the maximum penal sum that a party can seek as reimbursement for suffered damages.
In order to obtain a mortgage servicer bond for your business, you need to cover a small fraction of the bond amount that is required from you. The rates are between 0.75% and 5% for applicants with stable finances. The exact bond price that you have to pay is determined on the basis of your personal and company finances.
Your costs will be lower if your finances are in good shape. Thus, for the highest bond amount of $350,000, your bond cost can be between $2,625 and $17,500 if you can showcase a good financial profile.
Do you have any further questions about the new requirements for Montana mortgage servicers? You can speak to our bonding experts by calling us at 877.514.5146