Mortgage Broker Bond Arkansas Overview
To become licensed as a mortgage broker, banker or servicer in Arkansas, you will need to post a mortgage broker bond as part of your application. The bond's amount can be $100,000, $150,000 or $200,000, depending on your loan activity during the preceding year.
The Arkansas mortgage broker license is issued by the state Securities Department, though you must complete the application process through the Nationwide Multistate Licensing System & Registry (NMLS).
Why is this bond required?
This bond serves as a guarantee that you will comply with the provisions of the Fair Mortgage Lending Act and your obligations as a mortgage broker, as they are defined in it.
If you violate the provisions of the Act, anyone harmed by such a violation can file a claim against your bond to request compensation. The surety that backs the bond is then bound to investigate the claim. If it determines the claim to be legitimate, it will extend compensation to claimants for as much as the full amount of your bond.
Want to know more about how bonds work and why you need one? See our detailed ‘What is a surety bond' guide!
See the sections that follow for more information about the cost of this bond, and how to apply for yours! If you'd rather speak to someone, call our bond experts directly at 866.450.3412!
What's The Cost of The Arkansas Mortgage Broker Bond?
The cost of your bond - its premium - is a fraction of its full amount. That fraction is determined by your surety on the basis of several financial factors.
Factors that determine the bond premium
Sureties consider personal credit score the primary determining factor of bond cost. Credit score is seen as a reliable predictor of a person's likelihood of giving rise to a claim on their bond.
Respectively, applicants who have a high score are considered low-risk and are typically offered a rate between .5% and 5% of the full amount of their bond.
Applicants with a lower score are perceived as a slightly higher risk, and are therefore bonded at a rate between 5% and 15%.
Sureties also consider other factors when determining the premium. These are:
- Financial statements
- Fixed and liquid assets
- Industry experience and record
See the table below for an estimate of the cost of your bond, based on your credit score.
|Arkansas Mortgage Broker Bond Cost Based on Credit Score|
|License type||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|Mortgage broker, mortgage banker, mortgage servicer||$100,000||$500-$1,250||$750-$1,500||$2,000-$5,000||$5,000-$7,500|
What Can Give Rise to a Bond Claim?
The surety bond required of Arkansas mortgage brokers, mortgage bankers and mortgage servicers is conditioned upon their compliance with the Fair Mortgage Lending Act. Moreover, the bond form states that when ordered by a court, mortgage brokers are required to pay out compensation to anyone who has been harmed by them while conducting business.
If a broker, banker or servicer violates these conditions, a claim can be filed against their bond to secure compensation. In this case, the surety will investigate the claim and determine the appropriate amount of compensation to pay out to claimants. Such compensation can be as high as the full amount of the bond.
In return, the bonded broker will need to repay the surety. This is a standard condition in any surety bond agreement - the surety does not assume liability for violations of the bond, it only provides a guarantee of compensation.
Ultimately, it is the broker who is liable and who must assume the full cost of a claim. Given the high amount of this bond, it is therefore advised that brokers avoid giving rise to claims on their bond!
Apply Here to Get Bonded!
To get started with your application, complete the bond form below! We will shortly provide you with a free quote and more details about completing the application process.
Call us at 866.450.3412 anytime if you have any further questions about getting bonded as a mortgage broker, banker or servicer in Arkansas!