New York Mortgage Loan Servicer Bonds Explained
If you want to start your operations as a New York mortgage loan servicer, you will need to undergo a licensing process. As part of it, you will have to post a mortgage servicer bond.
By setting the bonding requirement, state authorities ensure your legal compliance and thus the protection of your customers. The bond serves as an additional layer of protection against illegal activities you may engage in.
The mortgage servicer bond represents a contract between your company as the principal, and two more entities. The New York Department of Financial Services is the obligee that requires you to get bonded. The third party is the surety, which gets you bonded.
Questions about Mortgage Servicer Bonds in New York
When is this bond required?
If you want to obtain a New York mortgage loan servicer license, you will need to meet the $250,000 surety bond requirement. It guarantees you will follow applicable laws in the state, including the state Banking Law.
The licensing authority is the Department of Financial Services. However, you have to submit your application and documents via the Nationwide Multistate Licensing System & Registry (NMLS).
How much does the bond cost?
The required bond amount for New York mortgage loan servicers is $250,000. To get bonded, however, you only have to pay a bond premium. It represents a small percentage of the required amount. For applicants with stable finances, the rates are between 0.5% and 5%.
What factors shape your surety bond cost? The most important ones include your personal credit score, business finances, and fixed and liquid assets. Your surety needs to examine these indicators to assess the level of bonding risk. The stronger your overall profile is, the lower your bond cost would be.
|New York Mortgage Loan Servicer Bond Cost Based on Credit Score|
|Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Mortgage loan servicer bond||$250,000||$1,250-$3,125||$1,875-$3,750||$5,000-$12,500||$12,500-$25,000|
Can I obtain bonding with financial problems?
It is more difficult to get bonded with bad credit, but it's possible with Lance Surety Bonds' Bad Credit Surety Bonds program. If you are facing issues such as a low credit score, tax liens, bankruptcies, or civil judgments, you can benefit from this option.
Since the bonding risk is higher, the bad credit premiums are in the range of 5% and 10%. Due to our partnerships with numerous A-rated, T-listed surety companies, however, we are able to offer you a top bonding option.
What is the bonding process like?
You can fill out our online application form (it takes 5min) to get started with your bonding. Then you will have to attach your paperwork, so that we can assess your exact quote. If you're happy with it, you can purchase it straight away online. We will then send you both a digital and a paper version of the bond.
Need more information? Don't hesitate to consult our detailed How to Get Bonded guide.
Our bonding experts are here to help you. You can reach us at (877) 514-5146.
How are bond claims handled?
The purpose of your mortgage loan servicer bond is to protect the state and your customers against illegal activities on your side. If you fail to follow the New York Banking Law or other applicable rules, you can receive a bond claim.
Claimants can seek reimbursement up to the penal sum of your bond, which is $250,000 in this case. On proven cases, the compensation has to be paid to the harmed parties. Your surety may cover the costs at first, but you need to repay it soon after. This is set in the bond indemnity agreement. Thus, it is best to avoid claims, as they can lead to serious financial and reputational harm for your business.