New York Mortgage Broker Bonds Explained
New York mortgage brokers have to undergo a licensing procedure prior to launching operations in the state. If you want to start your brokering business, you will need to post a mortgage broker bond.
The goal of the bonding is to provide an additional layer of security for your customers. It protects them against potential unlawful activities that you may commit in the capacity of a mortgage broker.
The bond represents a contract between three parties, with the principal being your company that has to get bonded. The obligee that sets the requirements is the New York State Department of Financial Services. The third entity is the surety, which bonds your business.
Questions about Mortgage Broker Bonds in New York
When do I need this bond?
If you want to obtain a NY mortgage broker license, you have to provide a surety bond in an amount between $10,000 and $100,000. The licensing authority is the New York State Department of Financial Services, but the procedure is conducted via the Nationwide Multistate Licensing System & Registry. The bond ensures your compliance with Article 12D of the New York Laws.
What is the price of the bonding?
If you want to obtain a license as a New York mortgage broker, you will need a surety bond. The bond amount is between $10,000 and $100,000 and depends on your annual volume of applications in the state. In order to get bonded, however, you have to cover only a small percentage of this amount, called the bond premium.
What factors shape your surety bond cost? The most important ones include your personal credit score, company finances, and any fixed and liquid assets that you demonstrate. Your surety needs to assess the risk involved in the bonding. The bond premium corresponds to it. Applicants with stable finances get rates between 0.5% and 5%.
|New York Mortgage Broker Bond Cost Based on Credit Score|
|Annual NY application volume||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
Can I obtain the bonding if my credit is bad?
You can still get bonded with Lance Surety Bonds even if you are facing financial issues. We operate our Bad Credit Surety Bonds program for applicants with low credit scores, tax liens, bankruptcies, and civil judgments.
As the risk is higher, the bonding rates are also increased and are in the range of 5% to 10%. You can still count on a top bonding option from us, as we collaborate with a long list of A-rated, T-listed surety companies.
How do I apply for my bond?
You can start your bonding by completing our online application form (it takes 5min). You need to attach additional paperwork, so that we can issue an exact quote for you. Then you can purchase the bond online straight away. We will deliver to you a digital and a paper version.
Want to know more about the intricacies of the bonding process? Don't miss the in-depth How to Get Bonded guide.
If you have further questions or concerns, you can call us at (877) 514-5146.
How are bond claims handled?
You can end up with a claim against your surety bond if you fail to follow applicable state laws. This is the mechanism through which a harmed party can demand fair compensation for losses and damages caused by illegal activities on your side.
The maximum penal sum is the bond amount that you have posted. If the claim is proven, you are liable to cover the costs. The surety that bonded you may do so at first, but then you have to reimburse it. Claims can seriously damage your business, so it is best to avoid them as much as possible.