What are Kentucky finance & mortgage loan broker bonds?
Finance and mortgage loan broker bonds are legally binding agreements between three parties:
- Finance professionals such as mortgage loan brokers and finance lenders
- A government agency like the Kentucky Department of Financial Institutions
- A surety company
The bonds provide a guarantee that licensed finance professionals conduct business in compliance with the regulations like those set forth in the Kentucky Revised Statutes (KRS) statute Chapter 286.
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 Kentucky finance & mortgage loan broker bonds cost?
The Kentucky Department of Financial Institutions requires all mortgage loan brokers to post a $50,000 surety bond.
Mortgage loan originators with an annual loan volume of less than $10 million are required to post a $15,000 surety bond. Loan originators with an annual loan volume of greater than $10 million must post a $20,000 surety bond.
Some of the other finance bonds required in Kentucky include:
- Kentucky Mortgage Loan Company: $250,000
- Kentucky Deferred Deposit Service Surety Bond: $50,000 at minimum
- Kentucky Money Transmission Bond: $500,000 at minimum
- Kentucky Investment Adviser Bond: $25,000 at maximum
- Kentucky Debt Adjuster Bond: $75,000
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 Kentucky finance and mortgage broker bonds typically cost between 1% and 5% of the total bond amount. EZSurety has issued mortgage loan broker bonds in Kentucky for premiums as low as $250.
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 Kentucky finance bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.
How to get your mortgage loan broker license in Kentucky?
To become a licensed mortgage loan broker in Kentucky, you must complete the following steps:
- Complete the criminal background check
- Submit your personal financial statements
- Submit your application through the NMLS
- Complete 30 hours of education courses
- Post the $50,000 surety bond
- Pay the $850 application fee
For information on obtaining other finance licenses in Kentucky, you can visit the NMLS Resource Center.