Louisiana Mortgage Broker Bonds Explained
Mortgage brokers in Louisiana are required to go through a licensing procedure before launching operations in the state. In order to obtain your license, you need to post a mortgage broker bond. The licensure and bonding are also needed for mortgage lenders and servicers.
The bonding provides an additional layer of protection for the state and its citizens against potential illegal activities committed by licensees. Thus, it ensures your legal compliance.
The surety bond constitutes a contract between three entities. Your business is the principal that needs to obtain the bond. The obligee is the Louisiana Office of Financial Institutions which imposes the requirement. The surety is the third party, which backs your company with the bonding.
Questions about Mortgage Broker Bonds in Louisiana
Who has to provide this bond?
In order to get a Louisiana mortgage broker license, you have to meet the surety bond requirement, which is either $25,000 or $50,000, depending on your yearly loan volume. The same applies to obtaining a license as a mortgage lender or servicer in the state. The bond guarantees you will follow the Louisiana Revised Statutes, Title 6, Chapter 14, and any other applicable laws.
The licensing body in the state is the Office of Financial Institutions, but you have to apply through the Nationwide Multistate Licensing System & Registry. The form you have to use is known as Louisiana Residential Mortgage application.
How much does the bond cost?
Louisiana mortgage brokers, lenders and servicers have to provide a $25,000 or $50,000 surety bond to get state licensing. This is the bond amount, but you have to cover only a bond premium, which is a small fraction of it.
When you apply with a surety, it has to assess different factors in order to estimate your surety bond cost. The major indicators are your personal credit score, business paperwork, and fixed and liquid assets that you may have. This is how the bonding risk is evaluated. Applicants with stable profiles typically get rates between 0.5% and 5%.
|Louisiana Mortgage Broker Bond Cost Based on Credit Score|
|Annual application volume||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|$0 - $99,999,999||$25,000||$125-$312.5||$187.5-$375||$500-$1,250||$1,250-$2,500|
|$100,000,000 or more||$50,000||$250-$625||$375-$750||$1,000-$2,500||$2,500-$5,000|
Is bad credit bonding possible?
Yes, you can get bonded with Lance Surety Bonds despite your financial difficulties. Our Bad Credit Surety Bonds program is designed for applicants with low credit scores, tax liens, bankruptcies, and civil judgments.
The rates for bad credit bonds are between 5% to 10%. They are higher because of the increased bonding risk. Our partnerships with numerous A-rated, T-listed surety companies allow us to offer you the best matching bonding option for your case.
How do I apply for my bond?
You can get started by filling out our online application form (it takes 5min). Once we have your complete paperwork, we can issue your exact price. Then you can buy your bond online and get a digital and paper version of it.
Would you like to discover more details about how bonding works? You can delve in our extensive How to Get Bonded guide.
In case you need help with your application or have more questions, you can reach us at (877) 514-5146.
How are bond claims handled for mortgage professionals?
Your surety bond protects your customers against unlawful actions on your part. It does not safeguard the interests of your mortgage business. Thus, you can receive a claim against the bond if you don't follow your legal obligations.
In such cases, claimants can seek compensation up to the bond amount you have posted. If the claim is proven, your surety may step in to pay the costs. You have to reimburse it fully afterward, as determined in the bond indemnity agreement. This means that bond claims should be avoided, as they can substantially hurt your business.