Indiana Loan Broker Bond Overview
To become licensed as a loan broker in Indiana, you will need to submit a surety bond in an amount of $60,000. This is a type of mortgage broker bond.
This license is regulated and issued by the state Securities Division, even though the licensing process itself is handled by the Nationwide Multistate Licensing System & Registry (NMLS).
Why do I need a bond?
The purpose of this bond is to guarantee loan brokers' compliance with those state laws that govern their business activities.
If a broker violates their obligations as defined under the Loan Broker Act and causes losses or damages to any person they offer their services to, the latter may file a claim against the bond. When a claim is filed, the surety may extend compensation to cover losses for as much as the full amount of the bond.
If you are new to surety bonds and want to know more about them, see our ‘What is a surety bond' guide!
See the following sections for more information about the cost of this bond, what can cause a claim against your bond, and how to get bonded.
If you have any questions about the bonding requirements for loan brokers in Indiana, call our professionals at 866.450.3412!
How Much Does it Cost to Get an Indiana Loan Broker Bond?
When you apply to get bonded you will need to pay a bond premium. The premium is a fraction of the total amount of your bond and is based on the following financial factors.
Factors that determine the bond premium
An applicant's personal credit score is the primary determining factor of the cost of their bond. Sureties consider a credit score as a reliable indicator of financial stability and the higher an applicant's score, the lower their bond rate is.
Applicants with very high to good credit scores are usually offered a rate on their bond between .5% and 5% of its total amount.
Applicants with low to bad credit scores are typically bonded at rates between 5% and 15%. These higher rates are due to the higher risk that sureties perceive in issuing bonds under such circumstances. Yet, rates are not fixed, and the more an individual improves their credit score, the cheaper it becomes for them to get bonded.
In addition to credit score, your surety may also want to review the following information:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience and record
To get a sense of the cost of your bond, based on credit, see the table below!
| Indiana Loan Broker Bond Cost Based on Credit Score | |||||
|---|---|---|---|---|---|
| License Type | Bond Amount | Credit Score | |||
| Above 700 | 650-699 | 600-649 | Below 599 | ||
| Loan Broker | $60,000 | $300-$750 | $450-$900 | $1,200-$3,000 | $3,000-$4,500 |
How Do Bond Claims Occur?
The Indiana Code (IC 23-2.5-4-12) states that the bond required of licensees “covers the activities of each principal manager and mortgage loan originator employed by the loan broker". If any one of these commits a violation of the law, in conducting their activities, which leads to damages or losses to another person, a claim can be filed against the broker's bond.
When a claim is filed, the surety that has issued the bond will investigate the claim and decide on whether or not to extend compensation to claimants, and in what amount. Potentially, the compensation can be as high as the full bond amount.
Even when a claim is resolved, the process is not concluded. If the surety has covered the claim, the bonded loan broker must repay the surety in full. This is a standard condition of all bond agreements, since the surety carries no liability for the violations of any person that it issues a bond to.
Bond claims are complicated and costly to resolve. For this reason, complying with legal requirements is the safest way to avoid giving rise to a claim and incurring unnecessary costs.
Here's How to Get Bonded!
To get started with your bond application, click on the banner below and complete our simple bond form. We'll soon get in touch with you to provide you with a free and accurate quote on your bond, along with more details.
For any additional questions about this bond, call us at 866.450.3412 anytime!
Further Reading
