What Is a Washington Mortgage Broker/Mortgage Dealer Bond?
Mortgage brokers and mortgage broker-dealers in Washington state have to get licensed. As a part of the process, you have to obtain a mortgage broker bond to meet the legal requirements.
The goal of this Washington surety bond is to protect the interests of the general public and the state. In a sense, it guarantees you will abide by applicable regulations. A financial compensation can be sought via a claim against your bond in case you transgress from your obligations.
As with all surety bonds, your bond is a contract between three entities. The principal is your mortgage business that needs a bond to get licensed. The Washington State Department of Financial Institutions is the obligee. The third party that backs your company and provides the bond is the surety.
Frequently Asked Questions
When do I have to obtain this bond?
The Department of Financial Institutions requires mortgage brokers and mortgage broker-dealers to get licensed and obtain a surety bond prior to conducting operations in Washington state. You have to undergo the licensing process through the Nationwide Multistate Licensing System & Registry (NMLS). You need to submit the bond online via the website.
Mortgage broker-dealers need to post a $100,000 bond. For mortgage brokers, the bond amount is between $20,000 and $60,000, depending on their annual loan volume. The surety bond for mortgage brokers guarantees they will follow the rules set in the state’s Mortgage Broker Practices Act. As for mortgage broker-dealers, the bond ensures their compliance with the Securities Act.
How much will I pay for my mortgage broker/dealer bond?
The cost of getting bonded depends on the bond amount that you have to post. Your bond price is a percentage of it, referred to as the bond premium.
How is surety bond cost set? Your surety needs to examine your personal and business finances. It has to take a close look at factors such as your personal credit score, business financials, and assets and liquidity you can showcase. This is how it can assess how risky it is to provide you with the bonding. The stronger your finances are, the lower your premium can get.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Mortgage broker- dealer bond||$100,000||$750-$1,500||$1,000-$2,500||$2,500-$5,000||$5,000-$10,000|
|Mortgage broker bond||$20,000 to $60,000||$150-$300 to $450-$900||$200-$500 to $500-$1,250||$500-$1,000 to $1,250-$2,500||$1,000-$2,000 to $2,500-$5,000|
Can I get bonded with problematic credit?
Yes, it is possible to obtain the Washington mortgage broker bond you need even if you are struggling with problematic finances. Lance Surety Bond runs its Bad Credit Surety Bonds program for applicants with issues such as credit score, tax liens, bankruptcies, and civil judgements.
The rates are slightly higher in order to compensate for the increased bonding risk. You can expect to pay between 5%-10% for a bad credit bond. Still, we can offer you a great bonding rate due to our close relations with numerous A-rated, T-listed surety companies.
What is the bonding process like?
If you want to enrich your knowledge about the bonding process, you can always refer to our How to Get Bonded page.
For any questions you may have about bonding or your application, just reach us at (877) 514-5146. Our bonding specialists will help you out.
How are bond claims handled for mortgage brokers and broker-dealers?
Your surety bond functions as an extra layer of protection for your customers and the state. It can be used to claim a compensation for any damages you have caused due to potential illegal activities you’ve engaged in. The maximum reimbursement that a harmed party can seek is the penal sum of your bond.
While your surety provider can cover the costs initially, you are liable to repay them fully. This condition is set in the bond indemnity agreement. Bond claims, in general, are unpleasant for all parties, so it’s best to avoid them as much as possible. They can lead to financial losses for your company, as well as can prevent you from getting bonded in the future.