Companies or individuals that receive compensation to make, originate, purchase, or service mortgages are considered mortgage lenders. Mortgage brokers are individuals that connect their customers with a mortgage lender that will provide their client with the best loan rate. For mortgage brokers and lenders to practice according to Florida law, they must acquire a surety bond that guarantees they will comply with licensing regulations.
Please note, mortgage brokers and mortgage lenders may have different licensing and bonding requirements. Always check your state’s requirements.
This surety bond is required to protect the public and the state from unethical or illegal acts committed by mortgage brokers and lenders. If a broker or lender commits a fraudulent act, any injured party (usually the broker/lender’s client) can file a claim against their bond to receive compensation. The mortgage broker or lender is financially responsible for reimbursing the surety company for all valid claims that get paid out.
Here are a few examples of unethical/illegal acts that may result in claims on your bond:
This is only a brief list, and more information can be found in Chapter 494 of the Florida Statutes and Florida Administrative Code Rule 69V-40.
Anyone who wishes to operate as a mortgage broker or a mortgage lender in Florida must have this bond. Acquiring a mortgage bond enables brokers and lenders to apply for and obtain their Florida mortgage licenses. The state of Florida will not issue your license without this bond in place.
Furthermore, lenders and brokers that have bonds in place establish themselves as reliable and trustworthy within their field. Mortgages come with serious financial risks, and there’s no doubt that customers are looking for reassurance when choosing their lender.
The obligee, which is the entity that requires you to get the bond, is the Florida Office of Financial Regulation. Their contact info is below:
Physical address:
Florida Office of Financial Regulation
101 E. Gaines Street
Tallahassee, FL 32399
Mailing Address:
Florida Office of Financial Regulation
200 E. Gaines Street
Tallahassee, FL 32399
Phone: (850) 487-9687
The state of Florida mandates that lenders and brokers must post, at a minimum, a $10,000 surety bond before conducting business. The surety company will determine a premium rate based on the applicant’s credit. Your premium will be your premium rate multiplied by the bond amount. Those with excellent credit can expect low rates around 1-3%, which means quotes can be as low as $100.
Due to the nature of this industry, having poor credit may hinder your ability to get licensed by the state. Furthermore, surety companies are hesitant to write mortgage bonds for individuals with poor credit. Fortunately, at EZ Surety Bonds, we have multiple surety companies we can contact to try and find you a quote.
EZ Surety Bonds makes the surety bonding process quick and easy. Simply fill out the short application on our website and you’ll hear from us with your free quote within 24 hours. If you have any questions along the way, give our surety experts a call at 1-866-546-4605 or reach out via email: info@ezsuretybonds.com.
What is the penalty for operating without a bond for mortgage brokers and lenders?
Anyone who makes, originates, underwrites, sells, or services mortgage loans is required to obtain a surety bond. It is typically illegal to perform these acts without a bond, and severe penalties await those that do not comply. These penalties include heavy fines (which typically cost much more than the bond premium itself) and the revocation or suspension of a lender/broker’s license. Operating without a bond may also prevent an individual from obtaining their mortgage lender or broker license in the future.
Can I obtain a bond with bad credit?
Surety companies check credit scores to assess the risk an individual represents before approving them for a bond. Sureties want to write bonds for individuals that can and will pay back claims, and credit is a great indicator of that. Certain bonds may be more difficult to get with poor credit due to the nature of the industry you work in (e.g., mortgage broker and lender bonds). It is possible to get a bond with bad credit; however, your premium will likely be much higher.
How do I get a Florida mortgage broker license?
We cover this topic in more detail here. In short, to earn your mortgage broker license in Florida, you must complete the following:
I’ve purchased my mortgage bond; now what?
Unfortunately, Florida is one of a few states that does not accept bonds filed electronically through the Nationwide Mortgage Licensing System & Registry (NMLS). So, once you purchase your mortgage broker or lender bond, we will mail you the original. You’ll then be responsible for filing that original bond with the Florida Office of Financial Regulation.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.
