Arizona Mortgage Broker Bonds Explained
Mortgage brokers in Arizona have to get a state license that allows legal operations in the state. As a part of the process, you need to obtain a mortgage broker bond. That bond will either need to be $10,000 or $15,000 depending on the type of investors.
The bonding provides an additional layer of safety for the state and its citizens. It guarantees that you will comply with all applicable rules and regulations, thus protecting the rights of your customers.
In essence, the bond is a contract between your mortgage brokering business (as the principal), the Arizona Department of Financial Institutions (as the obligee) and the surety bond provider.
Questions about Mortgage Broker Bonds in Arizona
When is the bond required?
In order to obtain an Arizona residential mortgage broker license, you have to get bonded. The bonding amounts are $10,000 and $15,000. The licensing is conducted through the Nationwide Multistate Licensing System & Registry (NMLS), while the state Department of Financial Institutions is the state authority that sets the criteria. The bond ensures you will follow applicable state legislation, including the Arizona Revised Statutes, Title 6, Chapter 9.
How much does the bond cost?
Mortgage brokers in Arizona who work only with institutional investors have to post a $10,000 surety bond. Those working also with non-institutional investors have to provide a $15,000 bond. Based on this required bond amount, you have to pay a small percentage called the bond premium. The typical rates range between 1% and 5%.
Your surety needs to examine a range of factors to determine your surety bond cost. Among them are your personal credit score, business financials, and any assets and liquidity you may have. In this way, it can measure the bonding risk involved and thus set a bond price. It is likely to be lower if your finances are in good shape.
|Arizona Mortgage Broker Bond Cost Based on Credit Score|
|Arizona mortgage broker bond||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Working only with institutional investors||$10,000||$100-$125||$100-$150||$200-$500||$500-$1,000|
|With non-institutional investors||$15,000||$100-$187.5||$112.5-$225||$300-$750||$750-$1,500|
Is it possible to get bonded with bad credit?
It may be tough to get bonded if you're struggling with problematic finances. That's why Lance Surety Bond operates its Bad Credit Surety Bonds program for applicants with low credit scores, tax liens, bankruptcies, and civil judgments.
As the bonding risk is higher, the premiums are between 5%-10%. Still, you are guaranteed a top bonding option with us due to our partnerships with numerous A-rated and T-listed surety companies.
How do I get bonded?
Keen on learning more about the bonding process? You can learn the nitty-gritty details on our How to Get Bonded page.
Need more information or help with your bond application? You can contact us at (877) 514-5146 to speak with our bonding experts.
How are bond claims handled for mortgage brokers?
Your mortgage broker bond serves as a safety mechanism for the state and your customers, ensuring your legal compliance. If you fail to follow the law and a party suffers damages, this can lead to a claim against your bond.
Proven claims are a serious financial threat for your business. You need to reimburse the claimants up to the bond amount you have posted. While the surety may cover the initial cost, you will have to repay it back. This means all liability still remains with you. Thus, it's best to avoid situations that can give rise to claims.
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What Our Clients Have To Say?
Kimberlee AblesQuick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!
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