Kentucky Mortgage Loan Broker or Originator Bond

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Who is Required To Purchase a Kentucky Mortgage Broker Bond?

The Kentucky Department of Financial Institutions is the licensing agency requiring this mortgage broker surety bond along with Kentucky Public Protection Cabinet.

There are three licensing classifications in Kentucky:

• Mortgage originator - An individual who helps customers find the right mortgage product for their needs
• Mortgage brokers - A company employing originators to help customers find the correct mortgage
• Mortgage loan companies - A company that underwrites the actual mortgage loan

Mortgage loan originators are only required to purchase a mortgage surety bond if they are working independently.

Both mortgage broker companies and loan companies are required to have an active surety bond on file as long as they remain in business.

Every mortgage surety bond has an amount of financial protection available to a customer if they are financially harmed. This amount will vary based on license type and mortgage volume sold or written.

What Are The Mortgage Surety Bond Amounts In Kentucky?

Mortgage Loan Originators

In most cases, a mortgage originator will be a W-2 employee working for a broker or similar financial institution.

In this case there is no surety bond requirement as you're covered by the company's surety bond.

If you're independent, your bond amount is based on the annual loan volume you're producing:

Mortgage Broker and Loan Companies

In the licensing guidelines, Kentucky only mentions the following bond amount minimums:

Having helped thousands of mortgage companies across the United States, in most cases the minimum amount will be your amount for the foreseeable future.

Each year when you renew your license you'll submit a financial review and if the amount of loans you broker or create gets high enough, the Department will tell you if they require a higher bond amount.

Remember, this bond amount is the total financial protection extended to customers in the event they are financially harmed by an act or mortgage fraud.

Why is a Kentucky Mortgage Loan Broker or Originator Bond Required?

Mortgage professionals have lengthy and very detailed licensing requirements. Each requirement put in place to ensure only the most reputable companies obtain a license.

Even with these requirements for obtaining a license, every year there are a small number of licensed mortgage professionals who purposefully and financially harm their customers to make more money.

Kentucky has the Public Protection Cabinet, that is responsible for ensuring the fair operation of licensed businesses in the state.

The mortgage surety bond is the primary tool the Department of Financial Institutions and the Public Protection Cabinet uses to keep mortgage companies accountable year after year.

Here are examples of common mortgage fraud the surety bond protects against:

• Approving a borrower for a loan they can't afford
• Helping a borrower get approved for a loan by providing false information
• Hindering a borrower from getting approved by providing false information
• Pressing a borrower to enter a high commission loan to make more money
• Creating and charge fabricated fees

If a customer is harmed by these or similar actions by an originator or mortgage company, the customer can make a claim against the surety bond for fair financial compensation. However the total amount of any single claim or total claims are capped at the surety bond amount.

How Much Does a Kentucky Mortgage Surety Bond Cost?

Mortgage surety bonds in Kentucky are credit driven bonds. This means each originator and/or business will have a custom price.

This price is determined by a surety. A surety is the insurance company that underwrites the surety bond.

The surety uses the following factors to determine a custom rate:

• Personal credit of the individual or business owner and/or owners
• Mortgage and financial lending experience
• The surety bond history if the owners have been bonded in the past

For whatever internal reason, we've seen different sureties come back with vastly different rates, many times 2 to 3 percentages points different.

And this is your opportunity to save hundreds, even thousands of dollars purchasing your bond.

How To Save Hundreds Even Thousands of Dollars

We are Surety Bonds Direct, a specialized surety agency. Our sole purpose is to help you purchase your surety bond and pay as little as possible.

We work with over a dozen of the highest A rated sureties so we can deliver the lowest rate to you.

Here's how the process works:

Step 1: Request your price quote

It takes about 90 seconds to use our online quote form and tells us about your business.

Step 2: Sit Back And Let Us Price Shop For You

Your bond specialist will begin the process of collecting rates from each surety.

Once we find the lowest rate you'll receive a phone call and email from your bond specialist with the lowest pricing.

Step 3: Purchase Your Bond

Once you receive pricing, you're ready to purchase your bond.

You have no obligation to purchase the bond, especially if you're still in research mode. But at least you have hard pricing for your business.

All price quotes are good for 30 days.

Kentucky Mortgage Bond Price Example

Let's look at the $50,000 bond amount for a pricing example.

The rates in the table below are examples of really good rates to about average. Pay attention to how the price changes because we routinely find our customers one to two percentage point lower rates.

You can easily save $500 to $1,000 when we secure you a lower rate.

Take the money we can help you save and use it to pay the application fees and/or exam fees.

Go request your price quote today. Remember, this is free information for you. There's no obligation to purchase.

There's no reason to request your free quote right now or call a bond specialist at 1-800-608-9950.

How To File Your Kentucky Mortgage Broker Bond?

As you probably know by now, the entire licensing process is managed through the National Multi-State Licensing Service or NMLS.

Once you purchase your bond our issuance team will prepare your bond with the:

• Correct bond form
• Required signatures and seals
• Power of attorney

The issuance process usually takes less than one business day. All bonds we process are done in a queue. So if you're in a rush, get your pricing ASAP so we can start this process now.

Once your bond is complete, we'll provide you detailed instructions to authorize us in the NMLS so we can e-file your bond for you. The process takes only a few minutes.

How Long Does the Kentucky Mortgage Surety Bond Last?

The Kentucky mortgage surety bond has a bond term or 12 months from the effective date.

An effective date is the activation date. You choose this date when you purchase your bond.

12 months from this date, your bond must be renewed.

Renewing a mortgage broker and lender bond is easy. Your bond specialist will contact you 30 to 45 days in advance to ensure you don't miss paying the renewal premium.

You and your bond specialist will review the bond amount to see if it must be updated. They will be able to obtain pricing quickly so you can renew your bond.

Once you pay the renewal premium, your bond remains active. You don't have to re-submit it to the NMLS.

Mortgage Loan Broker or Originator Bonds And Getting Your Kentucky Business License/Registration

There are a lot of steps to get your mortgage license. While each classification is a little different, the majority of the steps are similar.

Here are the steps at a high level of mortgage companies.

Business Formation Documents and Trade Names

You'll have to provide a copy of your business formation documents that are one file with the Secretary of State.

If your business has any registered trade names, you'll need to provide these as well. And finally you'll need to have a copy of your Certificate of Good Standing in Kentucky.

Financial Statements

You'll need to have an official financial statement prepared by a CPA.

The only requirement is the business must have a positive net-worth. There is not minimum requirement.

Direct owners (10% or greater) of the company are required to upload personal financial statements as well.

Personal Credit Reports

All individuals in a position of control are required to upload a credit report to the NMLS. If there are any negative items on the report you'll be able to upload explanations and any proof of possible mistakes.

Organizational Chart and Management Chart

The organizational chart outlines the:

• Direct owners and their ownership interest which must total 100%
• Indirect owners
• Any subsidiaries and affiliates

The management chart outlines the company:

• Directors
• Officers
• Managers

Pre-Licensing Education

Before you submit your application all control persons in the company must have at least 30 hours of NMLS approved education hours. This also includes continuing education on license renewal dates.

Contact Employees

One of the last major steps is identifying your qualifying individual.

The qualifying individual, or Managing Principal, must provide two years of experience working in the mortgage industry. This person actively participates as the primary person for the operations of the business.