Pennsylvania Mortgage License Bond

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Who Is Required To Purchase a Pennsylvania Mortgage Surety Bond?

The following company licenses are required to purchase a surety bond:

• Mortgage lenders
• Mortgage brokers
• Mortgage servicers
• Mortgage consumer discount companies

Individual mortgage loan originators are required to be licensed, but they are not required to purchase a surety bond. Individual originators will be covered by their employer's bond.

Let's quickly define each of these license classifications:

Mortgage Lender

A mortgage lender 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 Servicer

A mortgage servicer is a company responsible for managing the day to day and month to month mortgage lifecycle. This includes handling payments, late fees, and any customer communications.

Mortgage Consumer Discount Company

This license is unique to Pennsylvania and is defined as a company that is a consumer lender and directly engages in mortgage lending.

Again, all company licenses are required to purchase a mortgage surety bond as one of many license requirements before a license will be issued.

Why is a Pennsylvania Mortgage License Bond Required?

The Pennsylvania Department of Banking and Securities is responsible for the licensing guidelines for mortgage companies.

These licensing guidelines are a set of standards and rules you're committing yourself and your business to follow so you can legally conduct business in Pennsylvania.

And even with these requirements in place, every year there will be a handful of mortgage professionals and companies who commit mortgage fraud 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 broker surety bond is available as financial protection for customers affected by these and similar actions.

If a customer is financially, and intentionally harmed, they can make a claim against the mortgage bond for financial compensation. However, the claim amount can only be up to the mortgage surety bond amount.

What Are The Pennsylvania Mortgage Surety Bond Amounts?

Pennsylvania actually has a number of different bond requirements. Let's go through each one based on the license classification.

Mortgage Broker Company

There are two bonding requirements for mortgage broker companies.

Surety Bond For Acceptance Of Fees

If you accept fees for your brokerage services in advance of the mortgage closing, you must provide a surety bond in the amount of $100,000.

If you want to collect your fees after the mortgage closes, you do not need to provide this bond. It's optional and depends on how you want to run your business.

Surety Bond Based On Loans Sold

Every broker company is responsible for purchasing this bond based on the dollar amount of loans sold within the previous year.

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 Lender Company

There are two bonding requirements lending companies are required to purchase.

Surety Bond Based on Loans Written

This first bond is the mortgage surety bond based on the dollar amount of loans written. The bond amounts are as follows:

Fidelity Bond Required By Fannie Mae

There are many types of fidelity bonds. In this case you're required to purchase what is called an employee dishonesty bond.

This surety bond is required to ensure your employees don't steal from customer deposits, fees, or funds.

The amount of the bond is based on the total unpaid principal balance of mortgages your company has in house.

The bond amount is based on the greater of:

• The total unpaid balance of single and multi-family originators
• The highest unpaid monthly total balance of loans that the seller/servicer owns including mortgages owned by the seller/servicer but serviced by others

The actual bond amount based on the figure above:

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 Servicer Company

Mortgage servicer companies are required to provide two bonds, the mortgage servicer surety bond and the same fidelity bond as lenders.

The mortgage surety bond amount is a flat $500,000 bond amount.

Mortgage Consumer Discount Company

Consumer discount companies are required to purchase the one mortgage surety bond with the following amounts:

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. And this is where you have the opportunity to save hundreds, even thousands of dollars.

How Much Does a Pennsylvania Mortgage Surety Bond Cost?

The price of a mortgage broker, lender, or servicer bond is determined by a rate, quoted from a surety.

A surety is an insurance company that chooses to underwrite mortgage surety bonds.

Every surety, while looking at similar factors, performs their own, independent, assessment of the applicants. The major factors under consideration include:

• 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

Based on their assessment the surety will quote a rate.

This is where using a specialized surety agency like Surety Bonds Direct is so valuable.

• We price shop for you
• Find the lowest possible price
• And help you purchase your surety bond

We are your personal surety bond shopper and it costs you nothing to have a bond specialist find you the lowest rate. And when you get your pricing, you're under no obligation to purchase. This is free information you can use to help get through the licensing process with greater ease.

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

Mortgage Broker Bond Price Example

Let's look at the $300,000 bond amount for example pricing.

Pay attention to the rates and how one percentage point can make huge difference in the price, saving you hundreds, even thousands of dollars.

You can see the rate you're quoted can make a huge difference.

And while example pricing is great, you can get your exact price with no risk or obligation to purchase within one business day.

Plus all mortgage surety bond quotes are good for 30 days, giving you plenty of time to plan appropriately.

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.

How to File Your Mortgage Surety Bond?

After you agree to a price, purchasing your bond is as easy as completing an online checkout form.

Once 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.

This process applies to both the mortgage surety bond requirements and fidelity bond requirements as well.

How Long Does a Pennsylvania Mortgage Surety Bond Last?

The Pennsylvania Department of Banking and Services requires an active surety bond on file with the NMLS (National Multi-State Licensing System) to legally conduct business in Pennsylvania.

Every mortgage broker, lender, servicer bond and the fidelity bond have 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.

Some sureties may allow you to purchase your bond with a term lasting multiple years. However, must bonds have a term of 12 months from the effective date. This is when your bond will have to be renewed.

How Do You Renew a Mortgage Broker and Lender Bond?

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

Your bond specialist will have renewal pricing already quoted allowing this process to get finished with little headache or effort.

Once you pay the renewal premium, your bond remains active. You don't have to do anything.

Mortgage License Bonds And Getting Your Pennsylvania Business License/Registration

The NMLS checklist compiler does a good job in Pennsylvania in outlining all of the required licensing steps.

Make sure you find “PA” in the sidebar when you go through your application process. Here is a brief rundown of the important steps that are common for each license classification.

Criminal Background Check

All licenses are required to provide fingerprints for a criminal background check, unless you've had one conducted through the NMLS within the previous 12 months. Plus the check cannot be conducted more than 30 days from application processing.

Here's who must submit to the background check:

• All owners (direct and indirect), officers, branch managers, etc...
• The qualifying individual

If a branch manager has not been a legal US resident within the last 5 years, they are required to have a third party background check performed.

These background checks are both Federal and state checks.

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 Pennsylvania Secretary of State.

If you're a company not located in Pennsylvania, you must provide a certificate of authority from the Secretary of State.

Pre-licensing Education and Testing

Testing is required for at least one management level officer. This individual must be listed as a:

• Direct owner
• Executive officer
• Qualifying individual

The education requirements:

• 20 hours of NMLS pre-licensing education courses
• 3 hours or Pennsylvania law

The testing requirements:

• Passing results on both the National and Pennsylvania state components of the SAFE test
• Passing results on both the National and Stand-alone UST components of the SAFE test
• Passing results on the National Test Component with Uniform State Content

Business Structure

This includes outlining the:

• Registered agent
• Qualifying individual
• Primary contact employees
• Non-primary contact employees
• Control person attestation

All individuals in position of control, including the Qualifying Individual must provide a credit report through the NMLS.

You must also provide an organizational chart including:

• Direct owners with percentage of ownership listed
• Indirect owners
• Any subsidiaries and affiliates

There are more requirements including documentation for:

• Tax certification
• Ability to repay analysis
• Line of credit for repayment no less than $100,000

Make sure you check with the NMLS checklist compiler. There are many steps that are unique to each mortgage license classification.

Additional Pennsylvania Mortgage License Bond Resources & Links

Pennsylvania Department of Banking and Securities Mortgage Licensees

MORTGAGE BROKER BOND – ADVANCE FEES

SPONSOR OF MORTGAGE ORIGINATORS BOND FORM

Individual Originator Bond Form