Tennessee Mortgage Bond Guide
If you are working as a mortgage broker, lender or servicer in Tennessee, you need to purchase a surety bond. Read on to learn all about the bonding process.
Bond Overview
- Purpose: To protect any person injured by a mortgage professional's wrongdoing
- Who Needs It: All Tennessee mortgage brokers, lenders and servicers
- Regulating Body: The Tennessee Department of Financial Institutions
- Required Amount: $45,000–$300,000, based on license type
- Premium Rates: Start at 1% of the bond amount, credit-based
How much does a mortgage broker, lender, or servicer bond cost in Tennessee?
The Tennessee Department of Financial Institutions requires mortgage brokers, lenders, and servicers to post surety bonds as a licensing requirement. Brokers must post $90,000 bonds, while lenders and servicers must post $200,000 bonds. Licensees who choose to broker and lend and/or service loans are required to carry the higher bond amount of $200,000.
Some surety underwriting companies require current business financials and a personal financial statement to underwrite these bonds, so having these documents handy will expedite the bonding process and could help you qualify for a lower premium.
Why do I need this bond?
Tennessee mortgage broker, lender, or servicer surety bonds are put in place for the benefit of any person injured by the principal’s (mortgage broker's, lender's, or servicer's) wrongful acts, defaults, fraud, or misrepresentation while on the job. By posting this bond, the principal pledges to conduct business ethically and in accordance with all laws of the state and industry.
If the principal fails to comply with the provisions of the surety bond contract, the surety will initially cover any damages up to the full penal sum of the bond. The principal must reimburse the surety for any sums paid out.
What’s the fine print?
Mortgage broker bonds in Tennessee remain in full force and effect until canceled and for as long as the principal remains in compliance with the terms of the surety bond contract. These bonds become effective on the date listed on the bond form and remain in force for a period of one year.
This bond must be maintained by the principal for at least two years following the expiration, revocation, suspension, or surrender of his or her license.
How to become a mortgage broker in Tennessee
Tennessee mortgage broker, lender, or servicer applicants must apply for licensure through NMLS.
Prerequisites for a license application include:
- a net worth of $25,000 for headquarters, plus an additional $25,000 per branch location in Tennessee
- surety bond in the proper amount
- criminal fingerprinting-based background checks for certain individuals
- experience of at least one year in the mortgage industry
- sufficient financial responsibility
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.
