Overview of Mortgage Lender Bond Requirements

This bond is a commercial bond that is required of mortgage lenders in a large number of states in order to obtain a license. In some states, mortgage lenders must obtain a mortgage broker bond, as brokers and lenders are subject to the same limitations and laws, whereas in other states lenders must obtain a separate bond, specifically intended for them.

This type of bond guarantees that licensed and bonded lenders will comply with state laws that define their obligations and responsibilities when conducting business. Since lenders work with borrowers seeking to obtain a mortgage for their homes, this bond is also put in place to guarantee that they will do so in honest ways.

Common violations of a lender bond agreement include the lender extending a loan which the they know cannot be repaid by the borrower, encourages or assists borrowers in committing fraud, charges excessive fees, etc. In such instances, consumers or the state can file a claim against the bond to recover damages that result from such violations. Under a bond claim, the surety extends compensation to claimants in an amount that can be as high as the full bond amount itself, also known as the penal sum.

States that explicitly require a mortgage lender bond include: California, Delaware, DC, Georgia, Idaho, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New Jersey, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wyoming.

If you are new to surety bonds, our detailed ‘What is a surety bond’ guide can provide you with answers to all your questions!

Start your surety bond application today! Why us?
  • The lowest possible rates
  • A 100% money-back guarantee
  • Access to specialty programs, not available to small agencies

Read on for an overview of the cost of mortgage lender bonds, what bond claims are and how you can get bonded.

Want to speak to one of our agents regarding the lender bonding requirements in your state? Call us at (866)-450-3412 anytime!

The Cost of Your Bond

Surety bond cost is a fraction of the full amount of the bond you are required to obtain. Bond amounts for mortgage lenders vary from state to state. They are commonly around $100,000 but can be as high as $500,000, in some cases, or even more.

The bond amount is the full amount of coverage required by the state and backed by the surety. The cost of your bond is a fraction thereof, and is determined by the surety when you apply for your bond. The most important criteria utilized by the surety in determining your bond rate is your personal credit score. The higher your score, the lower the cost of your bond will be.

Since these bonds typically have high amounts, sureties will usually also review applicants’ financial statements, liquidity, assets, and even their work experience to properly determine their rate.

Applicants with a high credit score, one of 700 FICO or more, can expect to be offered a rate on their bond which is as low as .5%-1.25% of the full amount of their bond.

To get a quick estimate of the cost of your bond, try our bond calculator below. If you want to get a free and exact quote on your bond, see the section on getting bonded for more information!

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Getting Bonded With Bad Credit

Applicants who have a low credit score may at times be turned down by certain sureties. With us, even if you have a low or nonexistent score, you are sure to get bonded, thanks to our Bad Credit Program!

The only difference to applicants with good credit are the slightly higher rates that applicants under this program pay to get bonded. Yet, you can improve your bond rate significantly by improving your credit score over time, and pay increasingly lower costs for your bonds.

See the program page to request a free quote on your bond and to learn more about getting bonded with bad credit.

Claims Against Your Bond

The conditions of your mortgage lender bond will depend on the state you are getting bonded in. Most such bonds have similar conditions though - they include the compliance with state laws that apply to lenders and brokers, and the faithful and honest execution of their obligations.

Common violations that can give rise to a claim against your bond include being dishonest to borrowers, intentionally working with borrowers that are at-risk, pressuring or encouraging them to commit fraud, not maintaining accurate records, charging clients excessively, etc.

When a lender violates the terms of their bond agreement, and thereby causes losses or damages to the state or their clients, a claim can be filed against their bond. Unless the lender covers such damages or losses, their surety may then be required to step in and provide compensation to claimants. But under every surety bond agreements, it is the bonded party that is ultimately liable, and so if a surety extends compensation, a lender must reimburse it in full.

Depending on the violation and the losses caused, compensation extended by your surety may be as high as the full amount of the bond. Given the high amount of such bonds, giving rise to a claim may result in significant financial and reputational difficulties for lenders. Therefore, the best course of action is to always comply with the conditions of one’s bond agreement, and avoid giving rise to a claim!

Apply for Your Bond Here!

To start your bonding process or simply to request a free quote on your bond, complete our bond application form. We will then provide you with an exact quote and with further details about completing the application process.

It will take about two working days for your bond to be issued once you have completed the application process. As soon as it is issued, we will send it to you via mail and also provide you with a digital copy via email.

Start your surety bond application today! Why us?
  • Quick turnaround - just 1-2 business days
  • Tailor-made advice on building a strong application
  • Exclusive bad credit programs

Do you have any questions about this type of bond? Get in touch with us at (866)-450-3412 anytime!