Tennessee Mortgage Broker, Lender and Servicer Bonds

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Who is Required to Purchase a Tennessee Mortgage Bond?

Tennessee licenses the following mortgage activities under the same mortgage license:

• Mortgage lender companies
• Mortgage broker companies
• Mortgage servicer companies

While the license covers all of these activities, there are different bond amounts for each service offered and you must stipulate what services you will be providing.

This means if you plan on offering both leading and servicing activities you must provide the required bond for each.

Third Party Providers

The Department of Finance also requires a surety bond for third-party loan processors and underwriters.

A third-party processor and/or underwriter is a company who handles these responsibilities for a portion or all of the primary company's customers.

Why is a Tennessee Mortgage Bond Required?

This surety bond is required as the primary method to hold mortgage companies accountable to the promises they make to their customers and to Tennessee law.

The Department of Finance has an involved licensing process with the purpose of qualifying mortgage companies who want to do business in the state.

Even with all of the licensing requirements, there are always a handful of companies who will take advantage of their customers to make more money.

Examples of these 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 borrow from getting approved by providing false information
• Pressing a borrow to enter a high commission loan to make higher commissions
• Creating and charging false fees

If a customer is victim to any of these or similar actions by a mortgage company, the customer can make a claim against the company's surety bond for financial compensation.

This is where the bond amount comes in. The bond amount is the maximum amount of money available to approved claims.

What are the Tennessee Mortgage Bond Amounts?

Tennessee is unique among most states because they only have one bond amount per license activity. This amount is a flat amount and does not fluctuate on the total dollar amount of mortgages closed or serviced.

Here are the amounts for each of the license activities:

Remember these bond amounts are the maximum amount of financial protection available to customers.

As you would imagine, the higher the bond amount the greater the cost.

How Much Does a Tennessee Mortgage Surety Bond Cost?

The price you pay for your bond is going to be based on the bond amount and a rate quoted from a surety.

A surety is an insurance company that underwrites mortgage surety bonds. Each surety will primarily use the following three factors to come up with their personalized rate:

• Personal credit of the owners
• Financial lending and business experience
• Prior bond claims if an owner has been licensed in the past

All Tennessee mortgage surety bonds are credit driven.

This means no matter where you go to purchase your bond, the owners will have to have a soft credit pull as part of the price quoting process.

The quoted rate from the surety multiplied by the bond amount will be the price you pay.

This is one payment for the entire term of the bond, which in Tennessee is 12 months.

Here’s How to Save Hundreds of Dollars When Purchasing Your Bond

Surety Bonds Direct is a surety agency. We work with the highest rated sureties to price shop for you.

We collect multiple rates from each surety and find you the lowest possible rate and therefore price.

For bond amounts of this size, this means you can save hundreds of dollars, even thousands.

Tennessee Mortgage Surety Bond Price Examples

Here are some examples of pricing based on common rates from really good to about average. Let’s use the $200,000 bond amount as an example.

Pay attention to how one to two percentage points will drastically change the price. This is the money you can save and put toward other fees in the licensing process.

As you can see, the price differences are big. And we’ve seen sureties quote rates that have been multiple percentage points different.

This is a lot of money you can save.

Find your exact pricing by completing our online quote request form.

You’re under no obligation to or pressure to purchase once you get pricing. We just want a chance to earn your business.

You can also call a bond specialist at 1-800-608-9950 and speak with a real person.

How to File Your Mortgage Bond?

Once you find a low price and you’re ready to purchase your bond, all you have to do is complete an online checkout form.

After your payment is processed our bond issuance team will immediately begin the process to issue your bond with the [National Multi-State Licensing System](https://mortgage.nationwidelicensingsystem.org/sitepages/default.aspx).

We provide you with detailed instructions to help us file your bond. This process only takes a few minutes and we’re here to help if you need it.

How Long Does a Tennessee Mortgage Surety Bond Last?

When you purchase your bond, you will choose an effective or active date of the bond.

In Tennessee the bond term is 12 months from this effective date at which point you’ll have to renew the bond by paying a renewal price.

Renewing Your Tennessee Mortgage Surety Bond

When you initially purchase your bond, you’ll be assigned a bond specialist.

They will manage your bond and 30 to 40 days in advance of your bond’s expiration date contact you with renewal pricing ready to go.

Once you pay this renewal price, your bond remains active for the next 12 months.

If you need to add another bond because you’re expanding the services you offer or you’re offering services to neighboring states, we can help you adjust bond amounts and get the bonds you need.

Mortgage Bonds And Getting Your Tennessee Business License/Registration

Verification of Experience

You must provide a license resume detailing job descriptions and/or duties to show your experience in the industry for the license being applied for.

The requirements are:

• The experience must be proved by the person designated as the Qualifying Individual
• Each applicant must demonstrate at least three years of relevant experience in the mortgage loan industry (within the last 5 years)
• If you’re seeking licensure solely as a servicer, you must demonstrate experience by the single individual identified in the application as having significant managerial control

Criminal Background Check

All officers, partners, and any company individual who is deemed necessary to abide by the Tennessee Residential Lending, Brokerage and Servicing Act are required to have a criminal background check conducted.

If you’ve lived outside the United States for any length of time in the past 10 years, you’ll need to provide an investigative background report prepared by an independent search firm.

Make sure to check the NASM website for a full list of the requirements for this report.

Outline Business Structure And Formation Documents

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.

You will need to include a Certificate of Authority (Good Standing Certificate). This is a state issued certificate proving you’re authorized to do work in Tennessee.

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

Business Plan Including Management And Organizational Chart

You must include a full outline of:

• Marketing strategies
• The suite of products and services
• Target markets
• Fee schedules
• Operating structure
• Policies and procedures
• Access to credit markets
• Records and retention policy

The management chart outlines all of the directors, officers, and managers by name and title.

A separate organizational chart must be included outlining the direct, indirect, subsidiaries, and affiliates of the company.

This also includes company staffing and outlining internal policies.