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Who Is Required To Purchase a New York Mortgage Surety Bond?
The following company licenses are required to purchase a surety bond:
- Individual mortgage originators
- Mortgage bankers
- Mortgage brokers
- Mortgage servicing companies
- Mortgage lenders who are approved for reverse mortgages
Individual mortgage originators must be covered by a surety bond. However, if they are an employee of a Originator Entity (mortgage company), the company can purchase a surety bond to cover all of their mortgage originators.
Let’s quickly define each of these license classifications:
Mortgage Banker
A mortgage banker is often called a lender and is a company responsible for writing the actual mortgage loan with their own funds.
Mortgage Broker
A broker, also called an originator, is responsible for connecting the borrower with the best mortgage product to fit their financial needs and goals.
Mortgage Originator
This refers to an individual who acts like a mortgage broker, but may or may not be a full time employee of a mortgage company.
Mortgage Servicer
A mortgage servicer manages the day to day accounting for a portfolio of mortgage loans including payments, late payments, additional principal payments and more.
Every license is required to be covered by an active surety bond to get licensed and to continue offering services in the state of New York.
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Let us price shop for you and find the lowest possible price for your New York mortgage bond. This costs you nothing and there's no obligation to buy once you get pricing.
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Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950
Why is a New York Mortgage Bond Required?
The New York Department of Financial Services is responsible for the licensing requirements in New York.
These licensing requirements are the standards and rules New York expects all licensed mortgage professionals to follow over their business lifetime.
And despite these rules and going through the licensing process, there will be a number of mortgage companies that financially harm their customers to make more money.
Examples of fraudulent actions can include:
- 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
The mortgage surety bond is used as the primary tool to penalize companies or individuals who purposefully harm their customers.
If a customer is financially harmed, they can make a claim against the surety bond for financial compensation. Any given claim can only be as large as the required bond amount the company must purchase.
What Are The New York Mortgage Surety Bond Amounts?
As you know already there are a number of different bond requirements based on the specific license you're looking to obtain.
Individual Mortgage Loan Originators
If an originator is not covered by an Originating Entity (mortgage company) they must obtain their own mortgage origination surety bond.
The following bond amounts are based on aggregate dollar amount of loans originated.
| Dollar Amount of Loans Originated | Bond Amount | Get Pricing Today |
|---|---|---|
| Less than $1,000,000 | $10,000 | Click to Get Pricing |
| $1,000,000 to less than $7,500,000 | $15,000 | Click to Get Pricing |
| $7,500,000 to less than $15,000,000 | $25,000 | Click to Get Pricing |
| $15,000,000 to less than $30,000,000 | $50,000 | Click to Get Pricing |
| $30,000,000 to less than $50,000,000 | $75,000 | Click to Get Pricing |
| Over $50,000,000 | $100,000 | Click to Get Pricing |
Originating Entity Surety Bond
If you are an Originating Entity your bond amount will be based on the number of licensed mortgage originators you employ.
Here are the bond amounts:
| Number of Employees | Bond Amount | Get Pricing Today |
|---|---|---|
| Less than 10 employees | $100,000 | Click to Get Pricing |
| 10 to 15 employees | $150,000 | Click to Get Pricing |
| 16 to 24 employees | $250,000 | Click to Get Pricing |
| 25 or more employees | $500,000 | Click to Get Pricing |
Mortgage Banker Company
The bond amount for mortgage banker companies is based on the total dollar volume of loans written.
| Mortgage Volume | Bond Amount | Get Pricing Today |
|---|---|---|
| Less than $1 million | $50,000 | Click to Get Pricing |
| $10 million to less than $30 million | $100,000 | Click to Get Pricing |
| $30 million to less than $100 million | $150,000 | Click to Get Pricing |
| $100 million to less than $200 million | $250,000 | Click to Get Pricing |
| $200 million to less than $300 million | $350,000 | Click to Get Pricing |
| More than $300 million | $500,000 | Click to Get Pricing |
Click here and get a price quote for your bond. If you’d prefer, you can call a bond specialist at 1-800-608-9950.
Mortgage Broker Company
Mortgage broker companies have their bond amounts based on the number of mortgage applications.
| Number of Applications | Bond Amount | Get Pricing Today |
|---|---|---|
| 600+ | $100,000 | Click to Get Pricing |
| 300 to 599 | $75,000 | Click to Get Pricing |
| 100 to 299 | $50,000 | Click to Get Pricing |
| 25 to 99 | $25,000 | Click to Get Pricing |
| 1 to 24 | $10,000 | Click to Get Pricing |
Mortgage Servicer Company
Mortgage servicer companies are required to purchase a flat surety bond amount of $250,000.
| Mortgage License | Bond Amount | Get Pricing Today |
|---|---|---|
| Mortgage Servicer Company | $250,000 | Click to Get Pricing |
The New York Department of Financial Services also issues a number of exempt mortgage licenses. Refer to the NMSL checklist compiler for full details.
However, if you meet the requirements to be an exempt mortgage servicer, you must also purchase a bond in the amount of $250,000.
Mortgage Company Approved For Reverse Mortgage Origination
If you're a mortgage company that gets approved for reverse mortgage origination, you are required to purchase a $100,000 surety bond after your application is approved.
Click here and get a price quote for your bond. If you’d prefer, you can call a bond specialist at 1-800-608-9950.
Remember these bond amounts are the maximum level or financial protection afforded to borrowers in the event they’re a victim of mortgage fraud.
The price to purchase the bond you need will be a small fraction of this bond amount.
How Much Does a New York Mortgage Surety Bond Cost?
All New York mortgage bonds are credit driven bonds. This means the price is going to be custom based on the following factors:
- Personal credit of the business owner or owners
- Mortgage and financial lending experience
- Prior bond claims if the individual or owner has been licensed in the past
These factors will be assessed by a surety. A surety is an insurance company that underwrites mortgage surety bonds.
Every surety that writes these bonds will perform their own analysis of these factors to determine a rate.
The rates from one surety to the next can easily vary by one to two percentage points. And this means you can save hundreds, even thousands, or dollars when you purchase your bond.
How To Pay The Lowest Possible Price For Your Mortgage Bond
Surety Bonds Direct is a specialized surety agency and it's our job to price shop for our customers and find the lowest possible price so you can buy a surety bond with confidence.
Essentially, we are your personal surety bond shopper and it costs you nothing to have a bond specialist find you the lowest rate.
Here are some examples of common rates ranging from really good to about average.
Notice how the one to two points difference creates a huge price difference.
Let's look at the $100,000 bond amount for example pricing.
| Bond Amount | Premium Rate | Total Cost |
|---|---|---|
| $100,000 | 0.05% | $500 |
| $100,000 | 1% | $1,000 |
| $100,000 | 2% | $2,000 |
| $100,000 | 3% | $3,000 |
| $100,000 | 4% | $4,000 |
Go request your price quote today. Remember, this is free information for you. There's no obligation to purchase. Quotes are good for 30 days.
What Happens After You Purchase Your Mortgage Bond?
Once you agree to a price, you can purchase your bond using a simple (and secure) online checkout form.
After your payment is processed, our issuance team will immediately begin the process to issue your bond with the National Multi-State Licensing System.
We provide you with detailed instructions to help us file your bond. The process takes only a few minutes.
The entire process takes less than one business day to complete.
How Long Does a New York Mortgage Surety Bond Last?
As you now know, you must have an active surety bond on file through the NMLS to continue legally operating in the state of New York.
Every mortgage surety bond has a bond term or 12 months from the effective date.
The effective date is a date you choose when you purchase your bond. This is the "activation" date of your bond.
As your expiration date approaches, you will have to first access your current bond amount and make sure its adequate for the following year.
If your business grows in total dollar amount of mortgage written or issued, you will have to increase your bond amount.
Remember as an Originating Entity, if you hire more originators, you will have to increase your bond amount as well.
How Do You Renew a Mortgage Broker and Lender Bond?
This is another great reason why working with Surety Bonds Direct is worth your time.
You get assigned a bond specialist when you purchase your bond. Your bond specialist is responsible for managing your bond and any changes that need to be made.
As your expiration date approaches, your bond specialist will reach out with pricing ready to go in the case your bond amount stays the same or if you need to increase your bond amount.
Once you pay the renewal premium, your bond remains active in the NMLS. You don't have to do anything.
Mortgage Bonds And Getting Your New York Business License/Registration
The NMLS checklist compiler does a good job in Pennsylvania in outlining all of the required licensing steps.
There are a number of mortgage licenses, but here are the common requirements to give you an idea of the steps. Remember the checklist compiler on the NMLS will help make this process easier to get through.
Criminal Background Check
Each control person must have their fingerprints taken for a criminal background check including:
- Directors
- The three most senior executive officers
- The qualifying individual
- An individual mortgage loan originator in the case of an individual license
Outline Business Structure
Outline how your business is structured including all business formation documents.
- Unincorporated association
- Corporation
- Limited Liability Company
- Limited Liability Partnership
- General partnership
- Not for Profit Corporation
- Trust
You're allowed to use "doing business as" names and trade names but they must be approved. This typically means being registered with the New York Secretary of State.
If you’re a company not located in Pennsylvania, you must provide a certificate of authority from the Secretary of State.
Business Primary Contacts
This includes outlining the:
- Control person
- Registered agent
- Qualifying individual
- Primary contact employees
- Non-primary contact employees
The control person is an individual or entity who directly or indirectly owns, controls, or holds 10% or more of controlling or voting stock of the business.
Make sure you check with the NMLS checklist compiler. There are many steps that are unique to each mortgage license classification.
Business Plan
Include a business plan outlining the following information:
- Marketing plan and strategies
- Products offers
- Target markets and geographical areas
- Operating structure
- Aggregate volume of loans originated in states where you're already licensed if any
- Financial projections
- Technology stack for running your business
Staffing and Internal Policies
These policies include:
- Compliance program
- Fair lending plan
- Anti money laundering policies
- Cybersecurity programs
Management and Organizational Structure
Include a chart of the directors, officers, and managers.
Also include a chart outlining the:
- Direct owners
- Indirect owners
- All subsidiaries and affiliates
Personal Financial Statements
Include the personal financial statements and a full explanation of any derogatory issues for:
- Direct owners
- Executive officers
- Indirect owners
- Qualifying individuals
- Trustee and trust protectors
- Manager of investment funds and advisors
- Directors
There are more requirements depending on you specific license. Again, go use the NMLS checklist compiler to help ensure you have everything in order for your application.
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