Overview of Hawaii Mortgage Broker Bond Requirements
To get licensed as a mortgage broker (servicer) in Hawaii, applicants must submit a mortgage broker bond to the state Division of Financial Institutions. This bond is a central requirement for the licensing process. The bond must be in an amount of $100,000.
This license is regulated by the DFI but applicants must complete the application process through the Nationwide Mortgage Licensing System (NMLS).
Why do I need a bond?
This bond guarantees mortgage servicers’ compliance with the provisions of the Chapter 454M, HRS.
The chapter delineates the business practices of mortgage servicers, as well as what constitutes a violation of the law. If a borrower or mortgagee is harmed by a servicer’s actions, the former may file a claim against the bond.
The surety that backs the bond must then investigate the case and may need to extend compensation to claimants. Such compensation may even be as high as the full amount of the surety bond.
If you’d like to learn more about why bonds are required, and how they work, see our ‘What is a surety bond’ guide!
See the following sections for more information about the cost of this bond, why bonds claims occur and how to avoid them, and how to apply for your bond.
If you have any additional questions about getting bonded, call us at (866)-450-3412!
What’s the Cost of the Hawaii Mortgage Broker Bond?
The bond premium is the cost you need to pay to get bonded. It is a fraction of the full amount of your bond. The exact rate at which you can get bonded is determined by the surety company once it evaluates your finances.
Factors that determine your bond premium
The most important factor that influences your bond rate is your personal credit score. High credit scores are considered a good indicator of financial stability by sureties. So the higher your score is, the cheaper it will be to get bonded.
For example, if you have a very high credit score, one of at least 700 FICO, you can expect to be offered a rate as low as 0.75%-1.5% of the total bond amount.
Applicants with lower credit score can expect to get bonded but at a slighly higher rates.
In addition to your credit score, the surety company will typically also request to review your:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
For a ballpark estimate of your mortgage broker bond cost see the table below.
|Hawaii Mortgage Broker Bond Cost Based on Credit Score|
|License type||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|Hawaii mortgage servicer license||$100,000||$750-$1,500||$1,000-$3,000||$1,500-$4,000||$3,000-$7,000|
How Can I Avoid a Bond Claim?
A bond claim occurs when the bonded mortgage broker violates the bond agreement’s conditions. A bond is typically conditioned on the faithful execution of the provisions of the law - Chapter 454M HRS. A violation of the bond may involve losses or damages to an individual who makes use of the broker’s services.
In this case, the harmed borrower or mortgagee may seek compensation from the surety that covers the bond. The surety then has the obligation to investigate the claim and determine its legitimacy as well as whether compensation is due.
If compensation is due, the surety will also estimate the exact amount of damages caused and extend compensation up to that sum. In certain cases, compensation may be even as high as the full amount of the bond.
Once the surety has compensated the claimant it will seek to be reimbursed by the bonded mortgage broker. Under the surety bond agreement, liability for claims always rests with the bonded party.
The best way to avoid giving rise to a claim is to completely comply with the provisions of the bond agreement. In this case, the only cost associated with your surety bond will be your surety bond premium.
How to Apply For Your Bond
To get started, click on the banner below and complete the bond form. We will then contact you to provide you with a free quote on your bond.
If you want to know more about getting bonded or about the Hawaii mortgage broker bond, call us at (866)-450-3412!