What are Texas 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 Texas Department of Savings and Mortgage Lending
- A surety company
The bonds provide a guarantee that licensed finance professionals conduct business in compliance with the regulations set forth in the Texas Mortgage Broker License 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 Texas finance & mortgage broker bonds cost?
The Texas Department of Savings and Mortgage Lending requires mortgage brokers to post a $50,000 surety bond if they do not meet the $25,000 net assets requirement. The bond requirements for other finance bonds in Texas are as follows:
- Texas Residential Mortgage Loan Servicer Bond: $25,000 or $50,000 depending on loan volume
- Texas Financial Services Company Bond: $1 million
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 Texas 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 Texas 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 Texas?
To become a licensed mortgage broker in Texas, you must meet the following licensing requirements:
- Complete the criminal background check
- Submit your personal financial statements
- Provide credit reports for all control persons
- Submit your application through the Nationwide Multistate Licensing System & Registry (NMLS)
- Post the appropriate surety bond
- Pay all licensing fees
For information on obtaining other finance licenses in Texas, you can visit the NMLS Resource Center.