by Chris on April 12, 2010
It’s that time again.
Florida auto dealers are on the hook for a new surety bond by the month’s end. Florida auto dealer bonds provide consumers in the Sunshine State with a degree of protection against fraud or misrepresentation.
These bonds are also a mandatory part of the licensing process by the Florida Department of Highway Safety and Motor Vehicles, which acts as the obligee. These bonds expire on April 30 of each year.
Auto dealer bonds, which are also called MVD bonds or DMV bonds, are currently set at a $25,000 amount in Florida. Obtaining these bonds can prove costly for applicants with poor credit or minimal assets, with high-risk premiums ranging anywhere from 3 percent to 20 percent.
But applicants with good credit and solid assets can typically find a premium in that 1-3 percent range.
MVD bonds ensure that auto dealers follow applicable laws and regulations. They also provide a built-in protection for consumers , who can file a claim against an auto dealer bond if the dealership is misrepresenting merchandise or engaging in unethical business practices.
Image: David Hilowitz
A sweeping federal mortgage-loan reform bill passed in 2008 is slowly changing laws in every state, bringing new surety-bond requirements for mortgage lenders. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, better known as the SAFE Act, requires states to implement stricter regulation of mortgage loan originators and mortgage brokers within two years. The SAFE Act also mandates ongoing professional education and testing to national standards.
Some states acted quickly to change their laws to comply with SAFE, in some cases passing legislation as an emergency mandate that was implemented immediately. Other states have been slowly formulating their implementation plan. In most cases, new laws designed to comply with the SAFE Act include a surety-bond requirement. In states where bonding was already required, the amount of the bond needed increased in some cases.
For professionals involved in mortgage lending in multiple states, there are a boggling array of changes to their licensing rules, as states set different compliance deadlines. In some cases individual mortgage lenders need bonds, while in others they are covered by the bond obtained by their company or sponsoring broker – the rules vary from state to state.
Here’s a digest of some of the deadlines and bonding changes at the state level:
Massachusetts: Established companies are being grandfathered in and have until Dec. 31, 2010 to meet the new rules. Newer companies must comply on rolling deadlines from July to October. Details of the bonding requirement are still being hammered out.
Montana: The new law here was enacted back in July 2009, but implementation is still rolling out through May 2010, depending on when a mortgage loan originator’s license expires. Mortgage professionals must either have a surety bond or meet a net-worth requirement.
Colorado: State-licensed loan originators needed to comply with all the new rules starting in January 2010, but the surety requirement took effect earlier on an emergency basis, back in April 2009.
Kentucky: New law was effective June 2009. Mortgage originators must have a surety bond or be covered by their employer’s bond.
Arkansas: In an example of how surety requirements are increasing, this state previously required a $100,000 surety bond for mortgage bankers and servicers and a $50,000 bond for brokers. The new law passed in April 2009 requires brokers to have a bond not less than $100,000, to be set by the banking commissioner.
Delaware: Another state that’s increasing the bond minimums. Previously, state law required a $25,000 bond of brokers and a $50,000-$200,000 bond bsaed on loan volume. The new law requires surety-bond coverage for all loan originators that reflects their loan volume, to be set by the state bank commissioner.
States are tinkering with their implementation plans and continuing to finalize new laws to comply with the SAFE Act. If you have questions about your state’s rules, consult your state Department of Financial Institutions or a qualified broker. The experts at SuretyBonds.com can help you make sense of the changes coming to mortgage lender bonds.
Layout from Facebook Layouts
Photo via Flickr user Mike Licht, NotionsCapital.com
by Chris on April 5, 2010
Janitorial and cleaning companies have to place a significant amount of trust in their employees.
Business owners send their workers into all manner of businesses and homes. Janitorial company employees may be scrubbing an office complex in the wee hours or cleaning residential sites during the work day. No matter the locale, business owners have to protect themselves and their customers from potentially illicit or illegal activities conducted by their employees.
That protection typically comes in the form of a Janitorial Services Bond.
These ultra-specific surety bonds insulate business owners from financial harm in the face of employee dishonesty or theft. They also give consumers an avenue of financial recourse if they can prove in court that their property was stolen.
How to Obtain These Bonds
These are among the simplest bonds for businesses to secure. Companies can get coverage amounts varying from $5,000 to $100,000. Sureties can issue the bond for a single year or up to three years. Most standard applications can be processed within a day.
In terms of surety bond cost, janitorial service bonds provide a great deal of coverage at a minimum cost. A $5,000 bond that covers no more than five employees can be obtained for as little as $100 per year in bond premiums. A $100,000 bond for up to 20 employees may cost qualified applicants around $650 annually.
Image: Robert S. Donovan
States are trying to make it tougher for landscape contractors and landscape architects to take homeowners’ money and leave them with half-finished projects by toughening up their surety-bond laws. On Jan. 1 this year, the state of Oregon updated its landscaping contractor law, which now requires bonds ranging from $3,000 for jobs costing $10,000 or less, rising up to a maximum of $15,000 for jobs over $25,000.
North Carolina revamped its landscape contractor law a year ago, and now requires a minimum $10,000 bond.
The State of California goes even further than these states, advising homeowners to ask landscape contractors to take out a bond for the full amount of their job.
With state laws changing, it can be confusing to determine the size bond a landscape contractor is required to obtain for a particular project. The experts at SuretyBonds are ready to help.
Photo via Flickr user David Boyle
by Chris on March 24, 2010
States are still scrambling to reimburse students who lost thousands of dollars in up-front tuition costs after their private computer training school abruptly closed in December, according to a new story in the Baltimore Sun.
Maryland-based ComputerTraining.edu shuttered in December without warning, taking with it millions of tuition dollars from students in 14 states. State officials have turned to surety companies to recoup losses, but the gap between recoverable bond amounts and tuition costs is startling — 150 students Pennsylvania lost anywhere from $1 million to $2 million in Pennsylvania, where the company had to post only a $100,000 surety bond.
According to the Sun, Maryland officials recovered $540,000 through a letter of credit posted by ComputerTraining.edu and plan to use another $500,000 from a state fund specifically designed to aid students harmed by private school closures.
Ohio officials will turn to a similar fund to help students in their state.
“Right now, we’re trying to help the students,” said John Ware, executive director of the Ohio State Board of Career Colleges and Schools, told the newspaper. “Once we get that squared away, we’re going to work with the [Ohio] attorney general to see who we can go after legally.”
Read the story in full here.
Image: Avolore
When retirement-fund fraud happens, investors stand to lose their money, as many learned in the Bernie Madoff scandal. But if a money manager who works directly for the retirement plan mismanages the funds, investors may receive compensation from the manager’s surety bond. The bond provides financial protection to the retirement plan, as the surety company will pay the retirement plan the amount of the bond, and then seek reimbursement from the manager.
The federal Employee Retirement Income Security Act, better known as ERISA, has strict bonding requirements for each employee at a retirement-plan company who handles workers’ accounts. If they steal from the plan or mismanage funds, plan managers can be held personally liable for losses.
Over the years, the bonding requirements have stiffened as the government seeks to make sure workers’ retirement funds are protected from misuse. After the Pension Protection Act of 2006 was passed, the U.S. Department of Labor reviewed the bonding requirements and in 2008 issued new guidance on the bonding rules.
Fiduciaries involved in money management now must be bonded for at least 10 percent of the amount of plan funds they handled in the past year. The bonding amount must be at least $1,000, and in some cases will reach $500,000 or more. The bonding amount must be reviewed and updated annually as plan assets change. If a fiduciary has a prior criminal history, they will not be able to obtain a bond and cannot be hired to oversee retirement-plan funds.
The ERISA provisions covering bonding are complex, detailing who at a retirement plan must obtain surety bonds, how those bonds can be structured, which party is responsible for purchasing the bond, and what bond amount is required. To obtain new ERISA bonds or review your current bond with an expert to make sure it complies with current federal law, contact SuretyBonds.com at 1-800-973-4954.
Photo via Flickr user Katrina.Tuliao
