When you are looking at becoming a mortgage broker you will find that you might need to get a mortgage broker bond. There are three parts to a mortgage broker bone which are the principal, obligee, and surety. The principal is the person that purchases the bond to prove they are a viable business. The obligees are the clients and the state. These are the people that will benefit from you carrying a mortgage broker bond, should you do something wrong. And, the surety is the underwriter of the mortgage broker bond.
In most states, you are required to hold a mortgage broker bond as long as you have a mortgage broker license. This means that you will need to keep this bond throughout your career. The laws are different in every place and you should look within your area to understand the laws. If you are not sure, you can also call a mortgage broker bond company or two and ask what you have to do for your area. Typically they are up on the laws and understand what is needed.
Mortgage broker bonds
Mortgage broker bonds are put into place to protect the state and clients from the mortgage broker’s illegal activity. If you are a victim of a dishonest mortgage broker, this is essentially an insurance program that will allow you to get compensation for your losses. This is important for the protection of the public and state which is why it is often required.
The amount of mortgage broker bonds that you need will depend on the area that you are licensed in, what the legal minimum amount it, the broker’s credit and the volume that they plan to work within their brokerage. The broker’s loan history is also a determining factor.
The typical cost of a mortgage broker bond is typically around 1-3% of the value of the bond. This again will have deciding factors such as the broker’s credit and payment history. But the amount of volume and area in which the broker holds a license is also a deciding factor. For more information on mortgage broker bonds look here.
Clean up your Credit
If you have a bit of a shady credit, you might want to take some time to clean that up before applying for a brokers bond. This is the number one factor that will determine what you will need and how much it will cost. Sometimes just simply pulling up your credit on your own will help you determine things that you can easily repair. Do this before seeking a broker’s bond to give yourself a better chance at getting it at an affordable rate.
Besides this bond, you will have to get licensed as well as pass some basic tests. High school education is the highest form of education needed. A mortgage broker is a middleman that goes between the lender and the banks. They are the party that will look over the information of the borrower to determine which lending institutions might accept them as a client. They don’t necessarily work with any party. But, they are an independent agency.