What are Michigan finance & mortgage broker bonds?
Finance and mortgage broker bonds are legally binding agreements between three parties:
- Finance professionals such as mortgage brokers and finance lenders
- A government agency like the Michigan Department of Insurance and Financial Services
- A surety company
The bonds provide a guarantee that finance professionals comply with license regulations like those set forth in the Michigan Mortgage Loan Originator Licensing Act.
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 Michigan finance & mortgage broker bonds cost?
The Michigan Department of Insurance and Financial Services requires 1st mortgage brokers and servicers to post a $125,000 surety bond as part of the licensing process. 2nd mortgage brokers are required to post a $25,000 surety bond.
The surety company issuing the bond determines your premium rate, which is the percentage of the total bond cost you pay as the premium. Premium rates for Michigan finance and mortgage broker bonds typically cost between 1% and 5% of the total bond amount. EZSurety has issued mortgage broker bonds in Michigan for premiums as low as $375.
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 Michigan mortgage broker bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.
How to get your mortgage broker license in Michigan?
The State of Michigan requires different licenses for 1st and 2nd mortgage brokers. For either license, you must meet the following licensing requirements:
- Complete the criminal background check
- Submit your financial statements
- Provide credit reports for all controlling persons
- Provide a Certificate of Authority
- Submit your application through the Nationwide Multistate Licensing System & Registry (NMLS)
- Post the appropriate surety bond
- Pay the licensing fee ($1,550 for 1st mortgage brokers, $1,300 for 2nd mortgage brokers)
For information on obtaining other finance licenses in Michigan, you can visit the NMLS Resource Center.