Vermont Loan Servicer Bonds Explained
Vermont loan servicers need to undergo a licensing process that enables them to operate in the state. It entails providing a mortgage servicer bond.
The bonding requirement functions as an additional layer of protection for the state and the general public. In case you transgress from your legal obligations as a loan servicer, the bond safeguards the interests of your customers.
Your surety bond is a three-party contract, with your company being the principal. The Vermont Department of Financial Regulation is the obligee which requires you to get bonded. The surety is the bond provider, which backs your business.
Questions about Mortgage Servicer Bonds in Vermont
When is this bond necessary?
You have to obtain a $100,000 surety bond if you want to get a Vermont loan servicer license. The state Department of Financial Regulation regulates the industry and sets the requirements for your licensing. However, the Nationwide Multistate Licensing System & Registry (NMLS) handles the actual procedure. Your bond ensures that you will follow applicable Vermont Statutes, such as Title 5, Chapter 85.
What is the surety bond cost?
Your surety bond cost is based on the required bond amount. In this case, it is $100,000. In order to get bonded, you have to pay a small fraction of it, referred to as the bond premium.
When you apply with a surety, it examines your personal and business finances to determine the bonding risk. It also has to take a close look at your personal credit score, company documents, and any fixed and liquid assets that you possess. The stronger these factors are, the lower your bond cost would be. You can expect rates between 0.5% and 5% if your finances are in good shape.
|Vermont Loan Servicer Surety Bond Cost Based on Credit Score|
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Loan servicer bond||$100,000||$500-$1,250||$750-$1,500||$2,000-$5,000||$5,000-$10,000|
Can I obtain a bond if I have financial problems?
It is more complicated to get bonded if you are struggling with financial issues. Lance Surety Bonds has created its Bad Credit Surety Bonds program to offer a bonding option for applicants with low credit scores, tax liens, bankruptcies, and civil judgments.
Due to the increased bonding risk, the premiums in this program are higher - in the range of 5% and 10%. You can still obtain a top bonding rate with us, as we work with numerous A-rated, T-listed surety companies.
How do I get bonded?
You can fill in our online application form (it takes 5min) to get started with the bonding. We will send you an exact quote once we have your complete paperwork. Then you can purchase your bond online, and you will receive both a digital and a paper version from us.
Interested in learning the nitty-gritty details of how bonding works? You can consult our extensive How to Get Bonded page.
Our bonding specialists are here to help you with any queries you may have. You can reach us at (877) 514-5146.
How are bond claims handled?
The purpose of your loan servicer bond is to protect your customers. Thus, if you fail to follow applicable Vermont statutes, you can end up with a claim against your bond. This is how harmed parties can get compensation for damages caused by potential unlawful actions on your side.
Claimants can demand reimbursement up to the bond amount you have posted, which is $100,000 in this case. At first, your surety may pay the costs on proven claims to ensure a fast resolution. However, the bond indemnity agreement sets that you are fully liable. You have to repay the surety, which means claims can seriously harm your business. Thus, the best course of action is to avoid them.