Texas Mortgage Broker Bonds Overview
Texas mortgage brokers have been under regulation since January 1, 2000. The Texas Department of Savings and Mortgage Lending has the authority to regulate mortgage broker, and loan officer licensees due to the Mortgage Broker License Act.
This act is one of the more restrictive policies one brokers in the United States. One reason is that there is no provision for business entities; instead any individual who performs brokering activities on behalf of the business entity must be licensed as a mortgage broker, or a loan officer.
The Texas Department of Savings and Mortgage Lending requires that mortgage brokers post this type of surety bond for the protection of their clients. The Texas Mortgage Broker License Act defines mortgage broker as “a person who receives an application from a prospective borrower for the purposes of making a mortgage loan from that person's own funds or from the funds of another person.” The bonding requirements do not pertain to mortgage companies looking to get licensed.
If a mortgage broker is using fraud and a third party suffers losses as a result, the bond can serve to compensate the claimants for their loss. It’s important to read the Texas Mortgage Broker License Act and understand your lawful obligations under it. Typical activities which are prohibited include:
- Borrower discrimination
- Deceptive advertising
- Charging fees before you offer services
- Operating without a license
- Not distributing collected fees as per the contract
You can start your online application right away if you want to get bonded today. For more information, feel free to explore the sections below. If you need our assistance, simply call us at 866.450.3412 and we’ll gladly help you.
Texas Mortgage Broker Bond Cost
The total amount of the bond is $50,000, which means that if a successful claim (or claims) is made, the principal and the surety might be liable for sums up to $50,000.
However, this is not the cost of obtaining the bond. Texas mortgage broker bonds are paid in biannual premiums, which generally range between 1% and 3%. This means a two-year premium quoted at 1% will amount to $500. Have a look at the table below for a more detailed breakdown of costs based on credit score.
|Bond Name||Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|TX Mortgage Broker Bond||$50,000||$500-$1,500||$1,000-$2,500||$2,500-$5,000||$5,000-$10,000|
There are different factors that become subject of underwriting consideration for bonding companies. Undoubtedly, your personal credit score plays the most important role. However, the financial strength of your operations or even how many years you have been in business, can also have an impact.
Check out our surety bond cost page for more detailed information on the subject.
Getting Bonded with Bad Credit
While some bonds might be impossible to obtain if you have bad credit, this is not the case with mortgage broker bonds in Texas.
Thanks to our Bad Credit Program, we can still offer low rates to bad credit applicants, and get 99% of applicants approved. Typically, premiums for these bonds will rarely go beyond 10%. You can talk to one of our agents for tips on how to strengthen your application and get the lowest possible premium.
Apply for Your TX Mortgage Broker Bond Today!
All you need to do is submit our online application and we’ll take it from there. It is just a page long - you will only need to provide some general information about your business and its ownership structure. The more information you provide, the more accurate quote we will be able to give you.
When you receive and pay for your quote, we will have the surety bonds company sign your bond form, and we’ll send it to you by mail. You need to attach the original bond form when applying for your mortgage broker license.
How to Get a Texas Mortgage Broker License
To be eligible to get a broker license, you need to have a physical office in the state of Texas, have the appropriate amount of education or experience in the mortgage lending industry, and maintain a net worth of at least $25,000.
These are just some of the requirements you need to satisfy. Check out the websites of the Nationwide Multistate Licensing System & Registry (NMLS) and the Texas Department of Savings and Mortgage Lending for the most up-to-date information on your licensing requirements.
Once issued, mortgage broker licenses are valid for two years. The same goes for your mortgage broker bond. Remember that you will not be able to renew your license without a valid bond first.
Handling Claims on Your Mortgage Broker Bond
In the beginning we outlined some common violations which cause claims against mortgage brokers in Texas. It’s best to avoid claims as they can be quite costly, since the total amount of the bond is $50,000.
If you are notified that there has been a claim against you, you need to pay it promptly. Failure to do so will mean that the surety will have to provide the compensation. However, since indemnity agreements are standard in the industry, you will have to reimburse the surety for that.