North Carolina Mortgage Broker Bonds Explained
Similarly to other states, North Carolina mortgage brokers have to go through a licensing process that ensures their compliance with the law. Posting a mortgage broker bond is one of the main requirements you have to meet.
The bonding guarantees that you will follow your legal obligations. It serves as a protection mechanism for the state in which you operate and your customers.
Your mortgage broker bond is a three-party agreement between your business as the principal, the North Carolina Commissioner of Banks as the obligee, and the surety as the bond provider.
Questions about Mortgage Broker Bonds in North Carolina
Who is required to obtain this bond?
In order to obtain a North Carolina residential mortgage broker license, you have to post a bond between $75,000 and $250,000. The licensing process is done via the Nationwide Multistate Licensing System & Registry (NMLS), while the state authority is the North Carolina Commissioner of Banks. The bond ensures you will comply with the North Carolina Secure and Fair Enforcement (S.A.F.E.) Mortgage Licensing Act.
What is the cost of mortgage broker bonds in North Carolina?
The bond amount that you have to provide depends on the volume of originated mortgage loans in the past calendar year.
$75,000 - for volume below $10 million
$125,000 - between $10 million and $50 million
$250,000 - more than $50 million
The surety bond cost that you have to cover to get bonded is a fraction of the required amount. It is called the bond premium and is typically between 1% and 5% for applicants with stable finances.
A number of factors influence your bond price. Your surety has to consider your personal credit score, business finances, and assets and liquidity in order to assess the strength of your finances. This is needed in order to determine the bonding risk level. The stronger your overall profile is, the smaller your bond cost is likely to be.
|North Carolina Mortgage Broker Bond Cost Based on Credit Score|
|Mortgage broker bonds based on yearly business volume||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Volume below $10 million||$50,000||$250-$625||$375-$750||$1,000-$2,500||$2,500-$5,000|
|Volume between $10 million and $50 million||$125,000||$625-$1562.5||$937.5-$1,875||$2,500-$6,250||$6,250-$12,500|
|Volume above $50 million||$250,000||$1,250-$3,125||$1,875-$3,750||$5,000-$12,500||$12,500-$25,000|
What if I have problematic finances?
Often applicants with bad credit struggle with getting bonded. That's why Lance Surety Bond runs its Bad Credit Surety Bonds program. If you have a low credit score, tax liens, bankruptcies, and civil judgements, this is a good option for you.
The typical rates are between 5%-10% to compensate for the higher bonding risk. However, due to our close partnerships with a number of A-rated, T-listed surety companies, we can still secure a top bonding rate.
How do I apply for my bond?
Interested in learning further details about the bonding process? Our How to Get Bonded page is an extensive resource that you can consult.
Our bonding experts are here to help with your queries or bond application. Just contact us at (877) 514-5146.
What happens if I receive a bond claim?
If you fail to follow your obligations under the law and a party suffers damages due to your illegal or fraudulent actions, you can receive a claim against your bond. This is the mechanism through which a fair reimbursement can be sought.
Claimants can demand a compensation of up to the bond amount that you have posted. At first, your surety may cover these costs to ensure a fast process. As per the bond indemnity agreement you have signed, however, you have to reimburse it fully. Thus, bond claims can lead to serious financial losses and are best to be avoided.