Rhode Island Loan Broker or Lender Bond Guide
If you're applying for a lender or loan broker license in Rhode Island, you'll need to purchase a surety bond. Read this guide to learn all about the bonding process.
Bond Overview
- Purpose: To provide financial reimbursement if lendees are harmed in the lending process
- Who Needs It: Any party applying for a lender license or loan broker license in RI
- Regulating Body: The Rhode Island Department of Business Regulation
- Required Coverage: $10,000, $20,000 or $50,000 based on license type
- Premium Rates: Typically 1–5% of the bond amount, credit-based
Why do I need a loan broker or lender bond in Rhode Island?
Loan broker or lender bonds are a required step to becoming a licensed loan broker or small loan lender in Rhode Island. Any company or individual making a loan in the amount of $5,000 or less, not secured by real estate, is required by the state of Rhode Island to have a small loan lender license. Likewise, a Rhode Island loan broker license is required of any company that sells/solicits/processes/negotiates a loan for others in the primary market or offers to do so. The definition of “loan broker” additionally includes anyone who is the nominal mortgagee or creditor in a table funding transaction. A loan is brokered in Rhode Island if:
- the loan is secured by real property in the state
- an application for a loan is received by a representative or the loan broker in the state
- the loan closes within the state
- the loan solicitation is done by someone physically inside the state
- the loan broker has an office in the state
More information on requirements and exemptions for small loan lenders or loan brokers can be found here and here, respectively.
Rhode Island broker or lender bonds assure that if consumers are wronged in the process of a mortgage transaction, they have a safeguard from unprofessional acts of business and can be compensated for financial losses. Unethical acts covered by this bond include, but are not limited to:
- defrauding or misleading borrowers and lenders
- obtaining property by fraud or misrepresentation
- failing to make disclosures required by state law, such as annual interest rate percentages
- advertising a product at a low price when it is not available for sale in order to entice customers to buy a more expensive product, otherwise known as bait-and-switch advertising
- collecting or charging any prohibited or unjustified fees
If the principal violates the terms of his or her bond agreement and a consumer is harmed as a result, the surety will pay for all damages up to the full bond amount; however, the principal is responsible for reimbursing the surety for any money it pays out to consumers.
How much will my loan broker or lender bond cost in Rhode Island?
SuretyBonds.com offers Rhode Island loan broker or lender bonds for different costs, depending on each applicant’s credit report. Even though this bond is subject to underwriting, our experts will work hard to get you the best price possible for your unique credit situation. Brokers are required to post a bond in the amount of $20,000; lenders must post a bond in the amount of $10,000. There is also an additional fee of $5,000 for each location where the principal (loan broker or lender) plans to conduct business.
How to become a licensed loan broker in Rhode Island
It is against the law to conduct business as a loan broker or lender without first obtaining the proper license. Lender and broker applications are two separate processes and require two different applications. Both applications must go through the Nationwide Mortgage Licensing System (NMLS).
Before applying for a small loan lender license, applicants must:
- List the headquarters as the main office on NMLS and list other offices as branch offices (if headquarters differs from the proposed main office).
- Obtain and maintain a $10,000 surety bond.
- Have all control persons complete a federal background check and authorize a credit report through NMLS. Control persons include officers, directors, individual direct owners who have an equity interest of 10% or more, and the qualifying individual. The qualifying individual must have a minimum of five years of experience in small loan lending and be on site 51% of the hours of operation.
- Maintain a minimum net worth of $25,000.
An NMLS information sheet on Rhode Island small loan lender license applications can be found here.
Before applying for a loan broker license, applicants must:
- Complete a federal background check.
- Obtain and maintain a $20,000 surety bond.
- Maintain a minimum net worth of $10,000.
- Have a minimum of five years of experience in making loans (if designated as manager of the licensed office).
An NMLS information sheet on Rhode Island loan broker license applications can be found here.
Our experts understand these licensing requirements and are prepared to answer any questions you might have. Call 1 (800) 308-4358 to speak with a surety specialist.
Additional considerations for Rhode Island loan brokers or lenders
This bond runs continuously in full force and in effect unless otherwise canceled by the surety or the principal. If either party wishes to terminate the bond before its set date of expiration, a 30-day notice prior to cancellation is required to be submitted and filed with the Department of Business Regulation.
Mortgage Industry Surety Bonds Available Nationwide
Many states have their own surety bond requirements for mortgage professionals. This means mortgage professionals who work in several states often have multiple surety bonds. Use the map below to learn more about mortgage bonds in other states
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Additional Resources
State of Rhode Island Department of Business Regulation Loan Broker Bond Form - Sample
State of Rhode Island Department of Business Regulation Small Loan Lender Bond - Sample
State of Rhode Island Department of Business Regulation Licensees/Mortgage Companies Forms
NMLS Lender and/or Loan Broker Information
