A Little House in Texas: Mortgage Broker Bond Will Open You The Door
It’s a good time to be a mortgage broker in Texas.
Demand in the housing market is so strong that homebuilders are struggling to complete projects and to recruit workers, according to Businessweek.com. In fact, the online publication states that prices of existing homes haven’t been so high since the oil boom of the 1980s.
Current Texas housing market in short
Statistics show that, in the second quarter of 2013, the number of residential sales in the Lone Star State reached a record. In August, the median home price rose 15% in Dallas and 14% in Huston compared to the same time last year, according to the Texas A&M data. During the third quarter, across the state the price for a single-family home was $177,100, which is 10% up from 2012. Since the beginning of the fourth quarter in 2013, sales have registered a 19% year on year hike. In Huston, where the median price for a home was $185, 000, sales were up 20%.
In addition, a recent study by the Federal Reserve Bank of Dallas pointed out that homeowners in Texas were not as badly affected by the U.S. foreclosure crises, caused by lending excesses nationwide. This, however, can be attributed to a state law that does not allow homeowners to take out bigger mortgages for refinancing. Besides, in recent years, builders were able to meet demand because of the state’s abundance of land and relatively easy zoning rules.
How do you become a mortgage broker in Texas?
Texas has two administrative bodies regulating the mortgage industry: the Texas Department of Savings and Mortgage Lending (TDSML) and the Office of the Consumer Credit Commissioner (OCCC). However, all Texas mortgage licenses are handled by the National Mortgage Licensing System.
- First and foremost, you will need to post a mortgage broker surety bond before you obtain a license.
- Candidates must be 18 years of age and have three years’ experience.
- If you lack this amount of experience, then a bachelor’s degree is required in addition to 18 months of relevant experience.
- Or, you could have worked as a lawyer, insurance solicitor, real estate agent or local recording agent: all of these occupations will waive the 3-year experience requirement.
- 20 hours of continuing education, which must contain 3 hours of Federal Law, 3 hours of Ethics, 2 hours of Non-traditional Mortgage Lending and 12 or more hours of electives.
- An additional 8 hours per year of continuing education is a must as required by the Secure and Fair Enforcement of the Mortgage Licensing (SAFE) act.
- Personal Financial Statements should be attached to the application.
- A waiver form allowing the administrative body to obtain your credit report.
- The applicant must provide evidence that he or she is going to work in an in-state office.
The bonding business
If you are aiming at getting a mortgage broker license in Texas, you must post a mortgage broker bond to the amount of $50,000. The bond is usually required to protect customers from unethical and unfair business practices. So it makes sense if a background check and fingerprints submission are also required. The applicant is fit for licensure only if he or she displays good moral character: trustworthiness, honesty and integrity. In addition, the bond is a type of guarantee that the mortgage broker will abide by state and federal regulations.
You have bad credit? No problem.
Still, the applicant should keep in mind that the bonding company doesn’t function as an insurance company, and it assumes a 0% loss ratio. That’s why people with a credit score of at least 650 and higher, no bankruptcies and tax liens, are instantly approved. However, there is an alternative offered by Bryant Surety Bonds, which the agency has called a Bad Credit program. It works for commercial bonds only, including the mortgage broker one.
People with bad credit (650 or below) or no credit history are considered high risk. The bond can still be underwritten, but with a slightly higher premium, usually between 5% and 15% of the total amount of the bond. Later, if the new business is going well and the bonded entity proves to be financially stable, the percentage will gradually decrease.
Mortgage broker bond is denied only in two cases: an open bankruptcy and a late child support payment.
How to apply
Bryant Surety Bonds now offers an online application for both regular and high-risk applicants. We work with a large network of partners in an effort to find the best quotes possible and we strive to notify you of your approval in a timely manner.