Illinois Mortgage Broker Bonds Explained
Mortgage brokers in Illinois have to obtain a state license prior to launching their operations legally. Among one of the requirements that you have to satisfy, is to secure a mortgage broker bond.
Its purpose is to ensure your legal compliance in the role of a mortgage broker. The bond functions as a safety net for the state and for your customers in situations when you transgress from your obligations under the law.
In practical terms, a mortgage broker bond is a contract between your business as the principal and two more entities. The Illinois Department of Financial and Professional Regulation is the obligee that requires you to get bonded, while the surety is the party that provides it.
Questions about Mortgage Broker Bonds in Illinois
When do you have to get this bond?
In order to obtain an Illinois residential mortgage broker license, you have to post a surety bond between $25,000 and $150,000. The Illinois Department of Financial and Professional Regulation sets the amount depending on your yearly volume of loans. The licensing is handled via the Nationwide Multistate Licensing System & Registry (NMLS). The bond ensures your compliance with the Illinois Residential Mortgage License Act of 1987.
What is the bond cost?
The bonding that you have to provide as an Illinois mortgage broker is between $25,000 and $150,000, which represents the bond amount. On the basis of this amount, your bond cost is formed.
The actual bonding entails that you only pay a percentage of it called the bond premium. Typically, you can expect rates between 1% and 5%, if your finances are stable.
|Illinois mortgage broker bond amount|
|Yearly business volume||Bond amount required|
|Below $5 million||$25,000|
|Between $5 million and $20 million||$50,000|
|Between $20 million and $50 million||$75,000|
|Between $50 million and $100 million||$100,000|
|Above $100 million||$150,000|
Your surety bond cost depends on a number of factors relating to your personal and business finances. Your surety needs to assess your personal credit score, business finances, as well as any assets and liquidity in order to measure the level of bonding risk. The lower it is, the less you will pay for getting bonded.
|Illinois Mortgage Broker Bond Cost Based on Credit Score|
|Mortgage broker bonds based on yearly business volume||Bond amount||Credit Score|
|Illinois mortgage broker bond||$25,000||Above 700||Between 650-699||Between 600-649||Below 599|
|Below $5 million||$25,000||$125-$312.5||$187.5-$375||$500-$1,250||$1,250-$2,500|
|Between $5 million and $20 million||$50,000||$250-$625||$375-$750||$1,000-$2,500||$2,500-$5,000|
|Between $20 million and $50 million||$75,000||$375-$937.5||$562.5-$1,125||$1,500-$3,750||$3,750-$7,500|
|Between $50 million and $100 million||$100,000||$500-$625||$750-$1,500||$2,000-$5,000||$5,000-$10,000|
|Above $100 million||$150,000||$750-$1,875||$1,125-$2,250||$3,000-$7,500||$7,500-$15,000|
Can I get bonded with problematic credit?
Yes, even though it's harder to get bonded with bad credit, it is still possible with Lance Surety Bonds. We operate our Bad Credit Surety Bonds program for applicants with a low credit score, tax liens, bankruptcies, and civil judgements.
If the bonding risk is higher, you can expect rates to be slightly increased in the range of 5%-10%. Nevertheless, you are guaranteed a top rate with us due to our collaboration with a number of A-rated, T-listed surety bond companies.
How do I get bonded?
The steps to getting your Illinois mortgage broker bond are as follows:
You will receive a free, no-obligation quote
If it's a go for you, you can purchase your bond online
Receive both a digital and hard copy of your bond
Want to learn more about the bonding process? You can consult our extended How to Get Bonded page.
For more questions, or if you need help with your bond application, just contact us directly at (877) 514-5146.
What happens in case of a bond claim?
The goal of the surety bond that you acquire is to guarantee that you will rightfully follow the Illinois law under which you operate as a mortgage broker. If you fail to do so, you can receive a claim against your bond. This is how affected parties can demand a reimbursement.
The surety may cover the costs of paid claims initially, but you will still need to repay it afterward. The maximum compensation you may owe is up to the bond amount you have posted. Thus, the sums can be considerable. Claims are harmful to your business, so the best course of action is to avoid them altogether.