What is a Surety Bond for Mortgage Brokers?

Nearly every mortgage broker business and mortgage lender is required to purchase a surety bond to obtain their license and conduct business.

At a high level, a surety bond is a type of insurance contractor that serves as a guarantee that you will keep your promises and do what you say you'll do.

In the terms of a mortgage broker, this bond is a guarantee that you will help you clients find the right mortgage product for their situation regardless of:

• Commission structure
• Free structure
• Mortgage companies

What Does a Mortgage Surety Bond Protect Against?

It might help to look at this mortgage surety bond from your clients perspective. It's protection from a broker who may:

• Approve a borrower for a loan they can't afford
• Help a borrower get approved for a loan by providing false information
• Pushing borrowers to high commission loans to make more money
• Creating and charging false fees
• Pushing a specific banks products even though they aren't the ideal solution

If a broker is found guilty of these or similar acts, the client can make a claim against the surety bond for financial compensation. However, the maximum amount of protection extends to the amount of the bond.