Oregon Mortgage Servicer Bonds Explained
If you want to operate as an Oregon mortgage servicer, you have to obtain a state license. One of the main requirements that you have to meet is to provide a mortgage servicer bond.
The bonding works as a security mechanism that protects the state and your customers. It guarantees you will follow the law in your activities as a mortgage servicer.
The surety bond functions as a three-party contract. The principal is your business that needs the bond. The obligee that sets the requirement is the Oregon Division of Financial Regulation. The surety is the bond provider, which extends the backing to your company.
Questions about Mortgage Servicer Bonds in Oregon
When do I need a mortgage servicer bond?
In order to obtain an Oregon mortgage servicer license, you have to fulfill the surety bond requirement of the Division of Financial Regulation. You need to provide a bond between $50,000 and $200,000.
The Nationwide Multistate Licensing System & Registry (NMLS) handles the actual licensing and bonding documentation. The bond ensures you will comply with Chapter 86A of the Oregon Revised Statutes and Chapter 441 of the Finance and Securities Regulation.
What is the cost of the surety bond?
The surety bond cost that you have to pay to obtain your mortgage servicer bond is based on the bond amount required for the licensing.
The amounts for Oregon servicers are based on their total unpaid principal balance of residential mortgage loans in the state as of the last day of the second quarter of the year. They are the following:
$50,000 - for applicants with unpaid balance below $10 million
$75,000 - between $10 million and $25 million
$100,000 - between $25 million and $50 million
$150,000 - between $50 million and $100 million
$200,000 - above $100 million
You have to pay only a small percentage of the required amount, which is called the bond premium. It is determined on the basis of your personal and business finances. More specifically, your credit score, company financials, and fixed and liquid assets will shape your bond cost. The stronger these factors are, the lower the perceived bonding risk, which results in a lower bond premium. If your finances are in good shape, you can expect rates between 0.5% and 5%.
|Oregon Mortgage Servicer Surety Bond Cost Based on Credit Score|
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|For applicants with unpaid balance below $10 million||$50,000||$250-$625||$375-$750||$1,000-$2,500||$2,500-$3,750|
|Between $10 million and $25 million||$75,000||$375-$938||$562-$1,125||$1,500-$3,750||$3,750-$5,625|
|Between $25 million and $50 million||$100,000||$500-$1,250||$750-$1,500||$2,000-$5,000||$5,000-$7,500|
|Between $50 million and $100 million||$150,000||$750-$1,875||$1,125-$2,250||$3,000-$7,500||$7,500-$11,250|
|Above $100 million||$200,000||$1,000-$2,500||$1,500-$3,000||$4,000-$10,000||$10,000-$15,000|
What happens if I have bad credit?
Obtaining the bond that you need if your finances are not perfect can be a tough ride. That's why Lance Surety Bonds has designed its Bad Credit Surety Bonds program. It is a great bonding option for applicants with low credit scores, tax liens, bankruptcies, and civil judgments.
As the risk involved in getting you bonded is higher, the rates are increased and are between 5% and 10%. Due to our close partnerships with a number of A-rated, T-listed surety companies, we can still find the best bond option for your particular case.
How do I get a bond?
You can launch your bonding process today by completing our online application form (it takes 5min). When you supply us with your full documentation, we will issue an exact quote. Then, you can purchase the bond straight away. We will send you a digital and a paper copy.
Need more information about the way bonding functions? Our How to Get Bonded page is a detailed resource that you can consult.
If you have any further queries, don't hesitate to call us at (877) 514-5146 to speak with our bonding specialists.
What happens in case of a bond claim?
The mortgage servicer bond protects your customers against potential unlawful activities on your side. Thus, if you fail to abide by the Oregon Revised Statutes and other applicable laws, you can end up with a claim against the bond. That's how harmed parties can demand compensation.
Your surety will examine the case and if it is proven, it will pay the costs to the claimant. However, you need to reimburse it, as set in the bond indemnity agreement. The maximum penal sum is the bond amount that you have provided. Claims can lead to serious damage to your business, so it is best to stay away from situations that can cause them.