Louisiana Mortgage Broker Bond Requirements
To become licensed as a mortgage broker, lender, or servicer, or as a mortgage loan originator in the state of Louisiana, you need to obtain a $25,000 mortgage broker bond.
The Louisiana Office of Financial Institutions is the state authority that is responsible for issuing and regulating these licenses. To apply for your license, you must use the Nationwide Mortgage Licensing System (NMLS). After you register in the system, you will be able to submit your bond and application paperwork.
Why Is This Bond Required?
Bonds required of mortgage brokers in Louisiana function as a guarantee that licensed brokers will comply with the provisions of Title 6: Chapter 14. Louisiana S.A.F.E. Residential Mortgage Lending Act.
If a broker violates the provisions of the Act, causing losses or damages to borrowers, a claim can be made against their bond to secure compensation. In the case of a bond claim, the surety company that backs the bond must step in to investigate the issue.
If the claim is legitimate, the surety must consider the amount of compensation to extend to claimants. Compensation extended by the surety may be as much as the full penal sum of the bond.
After a claim is settled, the bonded mortgage broker must reimburse the surety in full for any money it has paid to claimants.
Do you want to know more about surety bonds and why they are required? See our detailed ‘What is a surety bond’ guide for more information!
Learn about the cost of this bond and how to apply to get bonded in the sections below!
For any additional information about surety bonds, call our bond experts at (866)-450-3412 anytime!
What’s The Cost of The Louisiana Mortgage Broker Bond?
The cost of your bond is known as the bond premium. The premium, or what your actual surety bond cost will amount to, is equal to a fraction of the total amount of your bond.
Initially, applicants for a mortgage broker license or a mortgage loan originator license in Minnesota must post a $25,000 bond.
Later, when renewing your license and bond, the amount of your bond will be determined on the basis of the dollar amount of the total loan volume in the previous calendar year. Licensees who have made loans between $0 - $99,999,999 must post a $25,000 bond. Those who have made $100,000,000 or more in loan volume must post a $50,000 bond.
How much your bond costs is determined by the surety company that backs and issues your bond. To set a rate at which you can get bonded, the surety will consider a number of different financial factors.
Factors That Determine Your Bond Premium
The primary factor that influences your bond cost is your personal credit score. Applicants with high credit scores are considered less likely to give rise to a claim. For this reason, sureties will typically offer them a low bond rate.
For example, if you have a credit score of 700 FICO or more, you can expect to be offered a rate on your bond between 0.75% and 1.5% of its total amount.
If you have a slightly lower to average credit score, you are more likely to get bonded at a rate of up to 3%.
Finally, if your credit score is currently low or very low, you can expect to be offered a rate that’s higher than 3%.
In order to get a better picture, the surety may also request to review the following financial information:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
Curious to find out how much your bond might cost? See the table below for an estimate of the cost of your bond, based on your credit score.
|Louisiana Mortgage Broker Bond Cost Based on Credit Score|
|License type||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
How to Get a Mortgage Broker Bond in Louisiana
To get started with your bond application, click on the banner below and complete our brief application form. You’ll then receive a free quote on your bond, along with detailed instructions on how to complete the application process.
Want to know more about the bonding requirements for mortgage brokers in Louisiana? Call us at (866)-450-3412 for more information!