Overview of Colorado Mortgage Broker Bond Requirements
The Code of Colorado Regulations (CCR) requires mortgage brokers, also known as mortgage loan originators, in the state to obtain a mortgage broker bond in order to get licensed. Applicants for a license must post the bond to the Colorado Division of Real Estate.
The mortgage loan originator bond is intended to serve as a guarantee that brokers will comply with the provisions of 4 CCR 725-3 (‘Mortgage loan originators and mortgage companies’). The bond agreement also guarantees that if a mortgage broker violates these provisions, parties who suffer damages or losses as a result can file a claim against the bond through the Division. When a claim is filed against a bond, claimants can receive compensation for their losses, for as much as the whole penal sum of the bond, also known as the bond amount.
For more extensive information about surety bonds, read our full ‘What is a surety bond’ guide, or our page on Colorado surety bonds.
Read on for information regarding the cost of your Colorado mortgage broker bond, how to avoid bond claims, and how to get your bond.
Call us at 866.450.3412 if you’d rather speak to one of our agents, or if you need more information regarding your bond. We’ll be happy to hear from you!
Colorado Mortgage Broker Bond Cost
There are three types of Colorado mortgage broker bonds: an individual $25,000 bond, a $100,000 bond for mortgage companies with less than 20 employees, and a $200,000 bond for companies with more than 20 employees.
But don’t worry– getting your bond doesn’t cost that much. The cost of your bond is only a small percentage of the full bond amount. How high or low this percentage is depends mainly on your credit score. For applicants with very high credit scores, the rate on their bond can be as low as 0.5% of the amount of their bond. For a $100,000 bond this would equal a $500 premium.
Apart from your credit score, your bond cost is also influenced by your credit history, your financial statements, your personal liquidity, and your industry experience. All of these factors are taken into account by the surety when it offers a rate on your bond.
Getting Bonded With Bad Credit
If you have a low credit score, but still want to get a Colorado mortgage loan originator bond, you can get one through our Bad Credit Program. The only difference to getting a bond with high credit is the higher rate you will have to pay on your bond. Bond rates under this program are between 2% to 10% of the full bond amount. Your exact bond rate will be determined by the surety when you submit your application.
When you apply for your bond with us, we look for the lowest possible rate we can provide you. This is possible thanks to the many expert surety companies we work with, which provide us with some of the lowest rates in the country. All of the sureties we work with are A-rated and T-listed, which guarantees their professionalism and financial stability.
See the program page for more information about how you can get a bond with low credit.
Claims Against Your Mortgage Broker Bond
A claim can be made against a Colorado mortgage broker’s bond if the broker is found to have violated the provisions of the CCR.
The Colorado mortgage broker loan originator bond form specifies that claims can be filed against the bond in cases of fraud, forgery, or criminal or fraudulent impersonation on the side of a mortgage broker in conducting business. Any other type of violation of the provisions of 4 CCR 725-3 can also result in a claim against the bond.
If an obligee to the bond files a claim against the bond, the bond company is required to investigate the claim and assess its validity. If the claim is found to be valid, the bond company has to compensate claimants for their losses. Such compensation may be as high as the full amount of the bond.
Since bond claims are costly and difficult to handle, they are best avoided. The safest way to avoid a claim is to be clear about the provisions of the CCR and to adhere to the best possible business practices and industry standards. If there’s doubt that there is cause for a claim or a violation, brokers should always contact their surety for advice and assistance.
How to Get Your Colorado Mortgage Broker Bond
Obtaining your Colorado mortgage loan originator bond is simple. Fill in our bond application form and we will contact you with a free quote on your bond. The more information you provide us with, the more precise a quote we will be able to offer you.
Getting your bond typically takes about two working days. As soon as your bond is issued, we’ll send it to you in digital form via email as well as via standard mail.
Do you need more information or assistance? Call us at 866.450.3412 to get help from our surety professionals, plus additional information about the mortgage broker bonding requirements in Colorado. We’ll be happy to help!
