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Alabama Mortgage Broker Bond
Mortgage brokers conducting business in Alabama are required by the Alabama State Banking Department to post a Mortgage Broker Bond benefitting the State in order to obtain their license. The Alabama Mortgage Broker Bond is offered by Jet Insurance Company as a financial guarantee to protect the public from licensed mortgage brokers who break the law or commit fraud and cause financial injury.
At Jet, we make the bond application simple, cutting out the middlemen who slow you down and cost you more for your bond with commissions and fees. We operate as the direct carrier for your bond, which means our team is with you through your application, renewals, and even claims if they arise.
How Is the Price Determined for the Alabama Mortgage Broker Bond?
Jet’s price for Alabama Mortgage Broker Bond will be based on the bond limit, which will be set by the Alabama Banking Department based on the applicant’s residential loan volume in the previous calendar year.
Jet’s price for the bond will always be a small percentage of the bond amount. See the table below for preferred credit pricing based on various bond amounts, rates may vary as we do factor in the personal credit of the applicant:
| Previous Yearly Loan Amount | Bond Term | Monthly | Annual |
|---|---|---|---|
| $25 mil or less | $25,000 | $13 | $125 |
| $25 mil to $100 mil | $50,000 | $25 | $250 |
| More than $100 mil | $75,000 | $38 | $375 |
Jet’s unique monthly payment option allows you to keep your bond active the easiest way possible, with a low, automatic monthly payment. No more renewal paperwork and annual deadlines; just a no-hassle bond at a competitive rate. Jet also offers the bond in an annual payment option, which you can renew each year along with your Mortgage Broker License.
What Is the Purpose of the Alabama Mortgage Broker Bond?
Mortgage brokers hold an extremely important fiduciary responsibility for the economy, connecting the public to a key piece of the American Dream: home ownership. The Alabama Mortgage Broker Licensing Act requires mortgage brokers to obtain a license and surety bond to ensure that brokers act in good faith with the public interest, and to hold them accountable to that responsibility. The Mortgage Broker Bond stands as a financial guarantee that if a broker commits fraud and causes financial damages to a client, that the client will be reimbursed.
The Alabama Banking Department regulates banking and lending institutions in Alabama and is also charged with managing licensing for various professions protecting the public from unlawful practices that could cause financial harm.
How to Apply for the Alabama Mortgage Broker Bond With Jet
Applying with Jet is easy! The Mortgage Broker Bond application and purchase can be done online in minutes. You will need to submit some basic information: name of your business, required bond amount as determined by the Alabama Banking Department, and social security number. We will run a soft credit check to help determine the best available rate for your bond (don’t worry; this will not affect your credit score).
Once your purchase is complete, we will immediately send you a receipt and digital copy of the bond for your records.
How Does the Alabama Mortgage Broker Bond Get Filed?
Buy your bond with Jet and let us file the bond for you! Once your purchase is complete, Jet will immediately ship the original sealed bond to the Alabama Banking Department.
Once we take care of the bond, don’t forget that you will need to apply for the Mortgage Broker License through the Nationwide Multistate Licensing System (NMLS) (the surety bond is a prerequisite).
If your preference is to file the bond with the Alabama Banking Department yourself, that option will be available for you at checkout. Please ensure all bond paperwork is delivered to the following address:
State of Alabama
State Banking Department
ATTN: Consumer Lending
P.O. Box 4600
Montgomery, AL 36103-4600
Can I Cancel My Alabama Mortgage Broker Bond and Get a Refund?
You can cancel your bond with Jet anytime. Just send the Jet team written notice (an email to [email protected] is fine), and we will notify the Alabama Banking Department. The bond is technically active for 60 days following this notice. Once cancelled, please note that you are responsible for your conduct during licensure for two years following the termination of your Mortgage Broker License, per the fraud statute of limitations in Code of Alabama Section 6-2-3.
If you have selected Jet’s monthly payment option, cancelling your bond is easy. Your payments will cease once the 60-day notice period has elapsed. If you are paying for your bond annually, the Jet team will send you any available premium refund.
How to Renew the Alabama Mortgage Broker Bond
Licensed mortgage brokers in Alabama will need to renew their license (through NMLS) and by December 31st of each year. Your bond may or may not be renewing at that time. If you are paying for your bond monthly at Jet there is no need to worry. Your bond will remain active as long as your payments from your preferred account continue.
If you are paying on an annual payment option, Jet will remind you well in advance that your bond is approaching your renewal deadline. If your residential loan volume has changed in the past year, the Jet team will work with you to make sure you have the appropriate bond coverage to meet the State Banking Department’s requirements for your license.
How Does a Principal Avoid Alabama Mortgage Broker Bond Claims?
To avoid bond claims, licensed mortgage brokers in Alabama must uphold the fiduciary responsibilities of their license and act in good faith with their clients. Specifically, the Code of Alabama Section 5-25-12 lists prohibited activities that would constitute breaking the law. Some examples include:
- Intentionally misrepresenting or concealing a material fact of a transaction pertinent to an application for a mortgage loan
- Failing to use due diligence and make reasonable efforts to procure a mortgage loan on behalf of the borrower
- Delaying closing of a mortgage loan for the purpose of increasing interest rate, costs, fees, or other charges payable by the borrower
- Collecting any mortgage broker fees before a conditional commitment is obtained from the lender by the mortgage broker
If a mortgage broker violates these laws resulting in damages to a client, that client may file a complaint through the Alabama Banking Department. Alternatively, the Department may independently pursue an investigation into the mortgage broker’s activities. Per Code of Alabama Section 5-25-16, in either case, if the Department finds the complaint valid, they may proceed to suspend or revoke a license, or levy civil penalties up to $3,000 for violations of a similar nature, or up to $15,000 for knowing violations.
Again, mortgage brokers remain responsible for their conduct under the license after the termination of their license, and may be subject to investigation and penalties including bond claim, for up to two years from when the actions occurred.
What Happens if I Get a Alabama Mortgage Broker Bond Claim?
If you are notified that the Alabama Banking Department or a client are proceeding with a complaint against your business, immediately notify the Jet team. We will work with you to defend you to the maximum extent possible. We will need your earnest cooperation to mount this defense, providing clear communication and all pertinent information regarding the case.
You will have 20 days from the date of official notice of an order from the Department to request a hearing.
If the claim is deemed valid, Jet Insurance Company is obligated to pay up to the full amount of the bond. If this occurs, Jet is acting as a financial guarantor, paying on your behalf. You remain responsible for the actions that resulted in the claim, and will be required to reimburse Jet for the amount paid. Failure to do so would render your bond inactive, suspending your license, and preventing you from conducting business. It could also jeopardize your ability to obtain a surety bond in the future.
