Massachusetts Finance and 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 Massachusetts Division of Banks
• A surety company

The bonds provide a guarantee that licensed finance professionals conduct business in compliance with the regulations set forth in the Massachusetts General Laws

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.

The Division of Banks requires residential mortgage brokers to post a $75,000 surety bond as part of the licensing process. Mortgage lenders are required to post a bond between $100,000 and $500,000, based on the lender’s prior year loan volume. The bond requirements for other finance bonds in Massachusetts are as follows:

• Massachusetts Investment Adviser or Broker-Dealer Bond: $10,000
• Massachusetts Mortgage Loan Originator Bond: $25,000

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 the Massachusetts finance and mortgage broker bonds typically cost between 1% and 5% of the total bond amount. EZSurety has issued mortgage originator bonds in Massachusetts for premiums as low as $675.

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 Massachusetts mortgage broker bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.

To become a licensed mortgage broker in Massachusetts, you must meet the following licensing requirements:

1. Complete the criminal background check
2. Submit your personal financial statements
3. Provide a copy of your Certificate of Authority
4. Submit your business plan
5. Provide credit reports for all controlling persons
6. Submit your application through the Nationwide Multistate Licensing System & Registry (NMLS)
7. Post the $75,000 surety bond
8. Pay $1,000 in licensing fees and a $36.25 background check fee

For information on obtaining other finance licenses in Massachusetts, you can visit the NMLS Resource Center.