What are Colorado finance & mortgage broker bonds?
Finance and mortgage broker bonds are legally binding agreements between three parties: finance professionals such as mortgage brokers, mortgage loan originators, and finance lenders, the Colorado Department of Regulatory Agencies, and a surety company. The bonds provide a guarantee that licensed finance professionals conduct business in compliance with the regulations set forth in the Colorado Code of Regulations Title 4 Chapter 725 Section 3.
If the finance professional fails to comply with the regulations, the surety company will pay out financial losses to damaged parties up to the full bond amount. The finance professional is liable to reimburse the surety for any damages paid under the bond.
How much do Colorado finance & mortgage broker bonds cost?
The Colorado Department of Regulatory Agencies requires all individual mortgage brokers and finance lenders to post a surety bond with a minimum of $25,000 worth of coverage. For companies, the required bond amount varies based on their number of employees:
- Companies with 1 to 19 employees: $100,000
- Companies with 20+ employees: $200,000
The surety company issuing the bond determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Colorado finance and mortgage broker bonds typically cost between 1% and 5% of the total bond amount.
During the application process, the surety company evaluates your personal credit, financial statements, industry experience, and licensing history. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a mortgage broker bond in the State of Colorado. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.
How to get your mortgage broker license in Colorado?
The Colorado Department of Regulatory Agencies (DORA) requires all individuals and companies that originate or modify mortgage loans to obtain a license to operate in the state. Below is an overview of the steps required to get your mortgage broker license in Colorado: