Mortgage Broker Bond New York Overview
To become a mortgage broker in New York you will need to submit a mortgage broker bond when applying to get licensed at the DFS. Bonds for mortgage brokers must be in an amount between $10,000 and $100,000 depending on the number of applications received by the broker.
This license is issued by the DFS but applicants must apply through the Nationwide Multistate Licensing System & Registry (NMLS).
Why do I need to get bonded?
The purpose of this bond is to guarantee that licensed NY mortgage brokers comply with the state Banking Law and its requirements. If a broker violates the law, anyone who is harmed by such violation can file a claim against the bond.
The surety that backs the bond will then investigate the claim and extend compensation to claimants for as much as the full penal sum of the bond.
First time getting bonded? See our ‘What is a surety bond' guide for a full explanation of the purpose and function of bonds!
See the sections below for more information about this bond, how much it costs, and how to apply!
For questions about this bond and how to apply, call us at 866.450.3412!
How Much Does it Cost to Get a New York Mortgage Broker Bond?
Your bond premium, i.e. the cost of your bond, is equal to a small part of its total amount. It is determined by the surety company based on the following criteria.
Factors that determine your bond premium
Sureties consider several factors when offering a bond rate to applicants. The most important one is your personal credit score. The higher an applicant's score, the lower their bond premium, and vice versa.
Applicants with high scores can expect to get bonded at a rate between .5% and 5% of the total bond amount.
Applicants with low scores, and those without scores, are typically offered rates between 5% and 15%. The higher rates for such applicants are due to the greater risk that sureties assume in issuing bonds to them. Yet, you can lower your bond rate significantly by increasing your credit score, and improving your financials overall.
In addition, sureties will frequently also consider the following factors:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience and record
To get a sense of the cost of your bond, based entirely on credit score, see the table below!
|New York Mortgage Broker Bond Cost Based on Credit Score|
|Number of annual applications||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
How Do Bond Claims Occur?
When they get licensed, mortgage brokers in New York must comply with the provisions of the Banking Law. Part 410.15 of the law states that the bond required of brokers is for the protection of the Superintendent and residential mortgage consumers in the state.
The law states that the bond seeks to protect these parties from a broker's bankruptcy, liquidation, and insolvency or the revocation, surrender, or expiration of their license. In any of these events, the bond is to serve as financial security which would cover:
- Improperly charged and collected consumer costs
- Examination costs and assessments of the Banking Department
- Unpaid penalties and other obligations
If a claim is filed against the bond based on any of the above, the surety that backs the bond will investigate the claim and determine its validity. Based on its findings, it may extend compensation to claimants for as much as the full amount of the bond. In return, the bonded broker must repay the surety in full.
Get Your Bond Here!
To get bonded, complete our brief application form. We will contact you to provide you with a free quote, and further details about completing the bonding process.
If you have any further questions about the bonding requirements or require assistance with your application, call us at 866.450.3412!