Overview of Alabama Mortgage Broker Bond Requirements
According to the Alabama Mortgage Brokers Licensing Act, applicants for an Alabama mortgage broker license may be required to post a mortgage broker bond to the State Banking Department.
Mortgage broker bonds are agreements between a mortgage broker, a surety bond company, and the state of Alabama. They guarantee that if the mortgage broker violates the provisions of the Licensing Act, any parties harmed by those actions can file a claim against the bond. The bond company guarantees that it will cover any costs and damages that results from the broker’s actions. By signing the agreement, the broker agrees to repay the surety for any compensation it extends if the broker should violate the law.
New to surety bonds? Read our ‘What is a surety bond’ guide or our page on Alabama surety bonds.
According to Section 5-25-5 of the Licensing act, the Board may find that in order to fulfill the requirements of the Alabama Secure and Fair Enforcement for Mortgage Licensing Act, a license applicant needs to post a bond in an amount determined by the Board.
Below, you can find information about how much your mortgage bond might cost, how you can get your bond, and how bond claims occur.
Call us at 866.450.3412 if you want to know more about surety bonds and the bonding requirements for mortgage brokers in Alabama. We’ll be happy to help!
Alabama Mortgage Broker Bond Cost
The bond amount, or penal sum, of the bond is the maximum amount of compensation that is guaranteed by a surety bond to bond claimants (or bond obligees).
The Licensing Board of Alabama typically requires applicants for a mortgage broker license to demonstrate a minimum net worth of $25,000. In certain cases, such as if the applicant is unable to demonstrate such net worth, the Board may instead require applicants to submit a surety bond whose penal sum is determined by the Board on an individual basis.
The cost of obtaining your bond is different from its penal sum, though. The cost, or premium, is only a small percentage of the total amount. It can be as little as 0.5% of the total amount, for applicants who have a very high credit score. For applicants with lower credit scores, the percentage is higher.
The cost of your bond is most strongly influenced by your credit score. Your financial statements and credit report, as well as your assets and liquidity, also play a part in influencing the rate you are offered on your bond. This means that even if your score isn’t very high, you could still get a good rate on your bond.
Getting Bonded With Bad Credit
Even if you have bad credit, you can still get a mortgage broker bond with us! Through our Bad Credit Program you can get bonded just as easily as applicants with high scores– just at a slightly higher rate.
Premiums under this program range between 2% and 10% of the bond amount. The exact rate is determined by the surety for each applicant individually. By getting bonded with us, you will be offered the lowest possible rate on your bond, thanks to the many markets we have access to. All bonds that we secure for our applicants are provided by the best sureties in the country, which is a guarantee for their professionalism and stability.
Get in touch with us through our bad credit page if you want to know more about getting a bond with a low credit score.
Claims Against Your Mortgage Broker Bond
The bond form for the Alabama mortgage broker bond states that individuals who get bonded are required to comply with the provisions of the Alabama Consumer Credit Act, the Alabama Mortgage Broker Licensing Act, and the Alabama Secure And Fair Enforcement for Mortgage Licensing Act. According to the bond, violating any of the provisions of these acts that pertain to mortgage brokers may result in a claim against the bond by the state of Alabama.
Acts which may constitute a cause for a claim against the bond include: not making disclosures required by law, charging customers fees that are not required or allowed by law, engaging in fraud by hiding finances or obtaining property in illegitimate ways, not accounting for transactions, and more.
The safest way to avoid claims against your bond is to carefully study the requirements and provisions for acting as a licensed mortgage broker in Alabama. By doing so, you should have no cause for concern that a claim may arise. If you neglect the provisions of the above acts, you may face a claim against your bond.
Get Your Alabama Mortgage Broker Bond Now!
Ready to apply for your mortgage broker bond? Fill in our online surety bond application form, and we’ll take care of the rest. Once we receive and process your application, we’ll contact you with a free quote on your bond.
If you need any help with finishing your application, our agents are available to respond to your questions and provide you with advice. Once we’ve sorted out the details, and your bond is issued, we will send you a digital copy of the bond by email and your original by mail. You can expect the whole process to take no more than two working days.
If at any point you want to speak to one of our agents, call us at 866.450.3412!
