Overview of New Mexico Mortgage Broker Bond Requirements
To get a mortgage loan company or mortgage loan originator license in New Mexico, applicants must submit a mortgage broker bond to the state Financial Institutions Division.
Both types of applicants must submit a $50,000 bond with their initial application. After the first year of licensure, the bond amount may be changed, depending on the amount of loans originated during the preceding year.
While the Division regulates these licenses, the license application process is conducted through the Nationwide Mortgage Licensing System (NMLS).
Why is this bond required?
This bond guarantees that licensed mortgage loan companies and loan originators will comply with the provisions of the Mortgage Loan Company and Loan Broker Act (Chapter 58, Article 21 NMSA 1978).
If a loan company or originator violates the Act’s provisions and causes harm to any individual mortgagee or borrower, these may file a claim against the bond.
The bond company must then investigate the situation to determine if the claim is legitimate and compensation is due to claimants. If the claim is legitimate, the surety will extend compensation to cover for losses. Such compensation may be even as high as the full amount of the surety bond.
To learn more about bonds and how they work, see our ‘What is a surety bond’ guide!
See the sections below for more information about the cost of this bond, what may cause a bond claim, and how to apply to get bonded.
If you’d like to know more about getting this type of bond, call us at 866.450.3412!
How Much Does the New Mexico Mortgage Broker Bond Cost?
To get bonded, applicants must pay a bond premium. This premium is equal to a fraction of the total amount of your bond.
The initial amount of this bond, when applying to get licensed for the first time is $50,000.
After the first year, bond amounts are determined based on the total dollar amount of mortgage loans originated annually in the state by the licensee.
- $50,000 bond for loan origination between $0 - $3,000,000
- $100,000 bond for loan origination greater than $3,000,000 but less than $10,000,000
- $150,000 bond for loan origination greater than $10,000,000
Surety companies determine the premium rate by evaluating the strength of applicants’ financials.
Factors that determine your bond premium
The primary factor that influences the rate at which you can get bonded is your personal credit score. The higher your credit score, the more reliable you are considered by the surety.
For this reason, applicants with very high credit scores can expect to be offered a rate in the range of 0.75%-1.5% of the total bond amount.
Along with your credit score, the surety may also want to review the following:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
Want to get an estimate of the cost of your bond? See the table below!
|New Mexico Mortgage Broker Bond Cost Based on Credit Score|
|License type||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|New Mexico mortgage loan company license||$50,000||$375-$750||$500-$1500||$750-$2000||$1500-$3500|
|New Mexico mortgage loan originator license||$50,000||$375-$750||$500-$1500||$750-$2000||$1500-$3500|
How Can I Avoid Bond Claims?
A claim can be filed against a bond, when the bonded mortgage broker violates the conditions of the bond. New Mexico mortgage broker bonds are conditioned on the compliance with the provisions of the Mortgage Loan Company and Loan Broker Act.
If a broker acts in a way that violates the Act and harms a borrower or mortgagee, the latter may file a claim against the bond. The purpose of the claim is to secure compensation for any losses or damages.
The surety company then investigates the claim to determine its validity and the amount of compensation that is due. It will then extend compensation to the claimant in an amount that can be as high as the full amount of the bond but not more.
This closes the case for the claimant. The mortgage broker though must then repay the surety in full for any compensation it has extended. This means that under a bond claim you may have to cover liabilities for thousands of dollars. To avoid a bond claim, you must simply always remain in compliance with the conditions of the bond.
How to Apply For Your Bond
Ready to get started? Click on the banner below and provide us with a few details about your bond. You will then receive your free bond quote along with further details about getting bonded.
If you have any additional questions about this bond, call us at 866.450.3412!