Maryland Mortgage Broker Bond Overview
In order to operate legally, Maryland mortgage lenders are required to obtain a mortgage broker bond. The amount of this bond is $50,000, $100,000, or $150,000, depending on the volume of mortgage business of the licensee.
Mortgage lenders in MD are regulated by the state Commissioner of Financial Regulation, though in order to get licensed, you will need to apply through the Nationwide Multistate Licensing System & Registry (NMLS).
Why do I require a bond?
This bond is required under Maryland law and it serves as a guarantee that licensed lenders will comply with their legal obligations towards the state and borrowers.
If a licensee violates the law and causes any losses to a borrower, the latter may file a claim against the bond to seek compensation.
If the claim is legitimate, the surety that backs the bond will extend compensation which can be as high as the full amount of the bond.
To better understand how bonds work and why businesses need them, see our ‘What is a surety bond' guide.
In the sections below you will find more information about the amount and cost of your bond, an explanation of how bond claims occur, and details about how you can get bonded!
We are always available at 866.450.3412 if you have any questions regarding the bonding requirements or amount for Maryland mortgage lenders.
What's the Cost of the Maryland Mortgage Broker Bond?
Surety bond cost is a percentage of the full amount of your bond. That percentage is determined by sureties when they review a number of different indicators of your financial stability.
How sureties determine the cost of your bond
Your personal credit score is the most important financial indicator that your surety will consider when you apply.
Typically, applicants who have exceptional or good credit score are bonded by the surety at a rate between .5% and 5% of the total bonding amount.
Applicants with even lower score, on the other hand, are offered a rate between 5% and 15%. This increased rate is due to the increased risk of a claim being triggered that sureties associate with lower scores. The good news is that any improvement in your credit score will also improve your bond rate.
To get a fuller picture, sureties will often also want to review information about the following:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience and record
To get a sense of how much your bond might cost, see the table below.
|Maryland Mortgage Lender Bond Cost Based on Credit Score|
|Volume of mortgage business in the preceding year||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|Below $3 million||$50,000||$250-$625||$375-$750||$1,000-$2,500||$2,500-$3,750|
|Between $3 million and $10 million||$100,000||$500-$1,250||$750-$1,500||$2,000-$5,000||$5,000-$7,500|
|More than $10 million||$150,000||$750-$1,875||$1,125-$2,250||$3,000-$7,500||$7,500-$11,250|
How Do Bond Claims Occur?
Under the Maryland Mortgage Lender Law, applicants for a lender license must obtain a surety bond as a form of guarantee that they will comply with the provisions of the law. Moreover, the bond also serves to protect borrowers and the state from lenders that violate the law, and cause damages to these parties.
In such an instance, a borrower or the Commissioner of Financial Regulation may file a claim to request compensation. The surety that backs the bond is then required to investigate the case and determine its validity as well as the amount of compensation to extend.
When a surety covers a claim, it does not assume liability for the actions that gave rise to the claim. In other words, coverage provided by sureties is only provisional and, ultimately, the licensed lender must repay the surety in full. This is a standard condition of every bond agreement which is why avoiding claims against your bond is the best approach.
Want to Get Bonded? Here's How!
To get started, click on the banner below and complete our brief bond form. We'll then get in touch with you to provide you with a free and precise quote on your bond. You'll also receive further details about how to finalize the application process.
If you want to know more about this bond or need help with your application, call us at 866.450.3412!