What Is a Texas Mortgage Broker Bond?
Mortgage brokers in Texas are required to obtain a Texas mortgage broker license to function legally in the state. The Texas mortgage broker bond is one of the main prerequisites for getting your license.
The goal of these license bonds is to safeguard the state– and your clients– from fraud and misuse on the side of your brokerage. In this sense, they are an extra layer of guarantee that you will follow the law.
Similarly to the rest of surety bonds, your mortgage broker bond is a contract between three parties. Your brokering business is the principal that has to get bonded. The licensing authority is the obligee that requires the bond. The surety is the bond underwriter that backs your brokerage.
Questions about Mortgage Broker Bonds 2
Who needs to post a Texas mortgage broker bond?
Mortgage brokers in Texas must get licensed with the Texas Department of Savings and Mortgage Lending. Posting a $50,000 broker bond is often a requirement in this process. The condition for bonding is to either maintain a $25,000 net worth throughout their licensing period, or to post the bond.
The mortgage broker bond does not protect your brokerage, but rather your clients. It guarantees that you will follow applicable regulations and will deliver high quality and ethical services in your brokering.
How much does a Texas mortgage broker bond cost?
The surety bond price you need to pay is dependent on the bond amount you have to post. In the case of Texas mortgage broker bonds, the bond amount is $50,000.
Your bond premium, however, is only a fraction of this bond amount. If you qualify for the standard bonding market, you can expect rates between 0.5% and 5% of the bond amount. For a $50,000 bond, this means anywhere between $250 and $2,500.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Texas Mortgage Broker Bond||$50,000||$112.5-$225||$150-$450||$375-$750||$750-$1,500|
How is your bond cost determined? When you apply for your bond, your surety will examine your personal credit score, business finances, assets and liquidity and professional know-how. On this basis, it will assess the risk of getting you bonded. If your finances are solid, you can expect a lower bond premium.
For a full picture of how your Texas mortgage broker bond price is determined, our surety bond cost page is a great resource.
Can I get bonded with bad credit?
It can be challenging to get bonded if your finances are far from perfect. That’s why Lance Surety Bonds operates its Bad Credit Surety Bonds program, to help mortgage brokers with low credit scores, tax liens, bankruptcies, or civil judgements obtain the bond they need.
You can expect your bonding premium to be in the range of between 5% and 10%. While the bond cost is a bit higher, this is still a good chance to get bonded and stay in business. We foster close connections with a number of A-rated, T-listed surety companies, which means we can find the best matching bond option for your circumstances.
How do I get my Texas mortgage broker bond?
You can start your bonding process today by applying online for your free Texas mortgage broker bond quote. To get an exact bond price, just complete the full application and attach all needed paperwork.
If you need more information about the bonding process, our How to Get Bonded page can give you an extensive overview.
Need help? Just call us at (877) 514-5146 and our bonding specialists will answer any questions you might have about bonding or your application.
How are bond claims handled for mortgage brokers?
Mortgage broker bonds don’t protect your business, but rather your customers’ interests. In case you fail to abide by applicable rules, an affected party can bring up a claim on your bond. If the case is proven, the surety needs to repay the claimant up to the penal sum of your bond. However, you need to reimburse the surety afterwards.
Proven claims thus can be a serious hurdle for your brokerage. Besides the immediate financial damage, they can impair your ability to get bonded in the future, and certainly influence your company’s image.