Mortgage Broker Bonds in Maryland Explained
As in most states across the country, mortgage brokers in Maryland are required to obtain a state license in order to get the right to operate legally. As a part of this process, you need a mortgage broker bond.
Its goal is to ensure you will comply with all legal requirements and obligations as a mortgage broker in the state. The bonding provides an extra layer of protection for your customers against potential fraud and misuse on your side.
Your mortgage broker bond works like a three-party contractual agreement with your business as the principal. The Maryland Department of Labor, Licensing and Regulation is the obligee requiring the bonding, while the surety is the third entity that backs your business.
Questions about Mortgage Broker Bonds in Maryland
Who is required to obtain a mortgage broker bond in Maryland?
If you want to work in the mortgage lending industry in Maryland as a broker, lender or servicer, you need to obtain a mortgage lender license from the state Department of Labor, Licensing and Regulation. The licensing is handled via the Nationwide Multistate Licensing System & Registry (NMLS). You need to provide a surety bond as a part of the process in an amount between $50,000 and $150,000, depending on your yearly volume of business. The bond ensures your compliance with the Maryland Mortgage Lender Law.
How much does it cost to get a mortgage broker bond in Maryland?
In order to obtain a Maryland mortgage lender license, you need to post a bond in the amount between $50,000 and $150,000, as shown in the table below.
|Yearly business volume||Bond amount required|
|Below $3 million||$50,000|
|Between $3 million and $10 million||$100,000|
|Above $10 million||$150,000|
Your actual surety bond cost is a small percentage of the required bond amount that is called the bond premium. It is based on the strength of your finances. You can expect rates between 0.5% and 5% if your finances are in good shape.
The most important factors that affect your bond cost include your personal credit score, business financials, and assets and liquidity that you can showcase. Your surety needs to examine these criteria in order to assess the stability of your finances. If they are deemed so, your bond premium is likely to be lower, as the bonding risk is perceived as low.
|Mortgage broker bonds based on yearly business volume||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Volume below $3 million||$50,000||$250-$312.5||$375-$750||$1,000-$2,500||$2,500-$5,000|
|Volume between $3 million and $10 million||$100,000||$500-$625||$750-$1,500||$2,000-$5,000||$5,000-$10,000|
|Volume above $10 million||$150,000||$750-$1,875||$1,125-$2,250||$3,000-$7,500||$7,500-$15,000|
Can I get bonded with problematic finances?
Lance Surety Bond has designed its Bad Credit Surety Bonds program for applicants with issues such as a low credit score, tax liens, bankruptcies, and civil judgements. If you are struggling with such issues, you can benefit from this option.
In order to compensate for the higher bonding risk, the bond rates are higher, in the range of 5% to 10%. Still, due to our close partnerships with a number of A-rated, T-listed surety companies, we can offer you a top bonding option.
How do I get bonded?
Would you like to explore the bonding process in-depth? You can consult our detailed How to Get Bonded page for further information.
Have more queries or need help with your bond application? Just contact us at (877) 514-5146 to speak to our bonding experts.
What happens if I get a claim against my mortgage broker bond?
The goal of your surety bond is to protect the state and your customers. It can be used as a safety mechanism in case you transgress from your legal obligations as a mortgage broker in Maryland. If a party suffers damages as a result, they can file a claim against your bond.
For proven cases, you have to pay a reimbursement up to the penal sum of your bond. Initially, your surety may cover the costs in order to ensure fast compensation. However, you are fully liable to repay it afterward. Bond claims are a serious financial and reputational threat, so it’s best to stay away from situations that can lead to them.