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How much does a Minnesota mortgage loan originator bond cost?
The cost of a Minnesota residential mortgage loan originator surety bond is usually between 1% and 10% of the total bond amount and is based on the applicant’s qualifications. An underwriter must review the application prior to approving or denying the bond and will determine the cost based on factors including a review of the applicant’s personal credit, whether the applicant has ever been licensed, and relevant experience in the industry. The Minnesota Department of Commerce requires originators to be bonded and the required bond amounts are as follows:
- $100,000 Bond: New licensees and licensees with $5,000,000 or less in loan volume during the previous year
- $125,000 Bond: Licensees with between $5,000,001 and $10,000,000 in loan volume during the previous year
- $150,000 Bond: Licensees with between $10,000,001 and $25,000,000 in loan volume during the previous year
- $200,000 Bond: Licensees with more than $25,000,001 in loan volume during the previous year
Why are mortgage originators bonded?
Mortgage originators need to be bonded as a means of protecting borrowers from loss due to the originator or any of its employees failing to comply with Chapter 58 of the Minnesota Statutes. The bond is also in place to recover all expenses, fines, and fees as determined by the Commissioner. If borrowers suffer loss and it is the originator’s fault, a claim may be made up to the full bond amount. If multiple claims are made against the bond, the total amount of money available will be divided among borrowers. If the surety has to pay to settle the claim, the originator may be responsible for reimbursing the surety.
How long is my bond effective?
Residential mortgage originator bonds are effective for 12 months from the day they are issued and must be renewed each year for as long as the originator wishes to keep their Minnesota license active. Mortgage originator bonds are continuous, meaning there is no new documentation provided when they are renewed.
Can my bond be canceled?
The surety company may cancel the bond at any time during the term by providing the principal and Department of Commerce with 30 days’ written notice. Bonds that are uploaded electronically to NMLS may be canceled by providing electronic notice to the principal and obligee 30 days prior to the cancellation’s effective date.
How to get a Minnesota residential mortgage originator license
To get a Minnesota residential mortgage originator license, applicants must pass the required examination, pay all applicable fees, and submit an application in writing, under oath, and on the commissioner’s form. The application must include the licensee’s name and address, as well as the names and addresses of all partners, members, or directors. Along with a surety bond of at least $100,000, the following materials are to be included with a residential mortgage originator application:
- Affirmation under oath that the applicant is in compliance with all requirements of residential mortgage originators
- Mortgage business experience of applicant and persons controlling the applicant
- Information regarding criminal history, excluding license traffic violations
- Whether the applicant has ever been found to have engaged in gross negligence, fraud, misrepresentation, or deceipt while acting in a manner for which a license is required
- Any orders by a state or federal regulatory agency or the Secretary of HUD barring the licensee from conducting business in the mortgage industry during the 10 years immediately prior to applying as an originator
More information on getting a residential mortgage originator license can be found in Section 58.06 of the 2017 Minnesota Statutes.