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North Carolina Mortgage Lender and Broker Bonds
The Mortgage Lender Bond and Mortgage Broker Bond are required by the Commissioner of Banks to ensure that mortgage lenders and brokers follow licensing regulations while managing residential mortgage loans in the State of North Carolina. These bonds are enforced to financially protect consumers from a mortgage lender or broker acting unlawfully.
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The North Carolina Commissioner of Banks oversees regulation of mortgage lenders and brokers but utilizes the Nationwide Multistate Licensing System (NMLS) for all paperwork including licensing and bonding. Jet works with both regulatory agencies to get your bond on file efficiently.
How Much Does a Mortgage Lender or Mortgage Broker Bond Cost?
The cost for a Mortgage Broker Bond has a minimum bond limit of $75,000 and starts at $28 monthly or $281 annually. The $125,000 limit starts at $469 annually and the $250,000 limit at $938 annually. The chart below shows the starting rate, based on preferred credit, for each bond limit.
| Bond Limit | Monthly | Annual |
|---|---|---|
| $75,000 | $28 | $281 |
| $125,000 | $47 | $469 |
| $250,000 | $94 | $938 |
The Mortgage Lender Bond’s minimum bond limit is $125,000 and the cost starts at $47 monthly or $469 annually. Both bonds have a variable limit which depends on the amount of mortgage loans originated within a calendar year. Approved rates are contingent on the bond limit and several underwriting factors. Mortgage lender submission must be reviewed by an underwriter and additional financial reports may be required. The chart below shows the starting rate, based on preferred credit, for each bond limit.
| Bond Limit | Monthly | Annual |
|---|---|---|
| $150,000 | $56 | $563 |
| $250,000 | $94 | $938 |
| $500,000 | $188 | $1,875 |
With Jet’s exclusive monthly payment plan, you can break up the cost of the bond to make it affordable no matter what your required bond limit is. For payment up front, Jet offers one year or multi-year options.
How to Determine the Bond Limit for Mortgage Business Bonds
Mortgage Bonds vary with the type of services provided. Lenders and brokers are both obligated to carry a bond that will cover the amount of mortgage loans originated within a calendar year. To find what bond limit you are required to carry, check the chart below for your bond type and the appropriate range of mortgage loans. If you are applying for a first time license, the Mortgage Broker Bond limit will be $75,000 and the Mortgage Lender Bond amount will be $150,000.
| Amount in Originated Mortgage Loans | Mortgage Broker Bond Limit | Mortgage Lender Bond Limit |
|---|---|---|
| Up to $10,000,000 | $75,000 | $150,000 |
| $10,000,001 – $49,999,999 | $125,000 | $250,000 |
| $50,000,000 or more | $250,000 | $500,000 |
Mortgage loan originators that are employed by a mortgage lender or mortgage broker can be covered by the Mortgage Lender Bond or the Mortgage Broker Bond. The amount of mortgage loans made by an originator should be included with the mortgage broker’s or mortgage lender’s total originated residential loans amount to have appropriate coverage.
Types of Mortgage Businesses in North Carolina
The Commissioner of Banks regulates licensing and bonding for multiple mortgage businesses, including mortgage brokers and lenders. Mortgage loan originators can be employed by a broker or lender.
Broker:
- Accepts or offers to accept an application for a mortgage loan
- Solicits or offers to solicit a mortgage loan
- Negotiates terms or conditions of a mortgage loan
- Issues mortgage loan commitments or interest rate guarantee agreements to borrowers or potential borrowers on residential real property for payment
Lender:
- Closes a mortgage loan
- Advances funds, offers to advance funds
- Makes a commitment to advance funds to a borrower on residential real property for payment
- A lender can also perform services of a mortgage broker and a mortgage servicer
Mortgage Loan Originator:
- Accepts or offers to accept mortgage loan applications
- Solicits or offers to solicit a mortgage loan
- Offers or negotiates the terms or conditions of a mortgage loan
- Issues mortgage loan commitments or interest rate guarantee agreements to prospective borrowers
How Does the Mortgage Bond Get Filed?
After you purchase your Mortgage Lender Bond or Mortgage Broker Bond, the filing process can begin with the Nationwide Multistate Licensing System (NMLS). You must grant authority to Jet within the NMLS to be able to create and upload the bond. Once the bond is completed by you and Jet in the NMLS system, it is submitted to be filed. If changes need to be made at any time, Jet can issue riders to correct the bond as needed through the NMLS.
Can I Cancel My Mortgage Lender Bond or Mortgage Broker Bond and Get a Refund?
Yes! The Commissioner keeps the bond in effect for an additional 90 days after cancellation has been requested. Jet must charge you for those 90 days while the bond is still active. Jet will notify the Commissioner of the cancellation the same day that you request it.
Monthly payments would not be eligible for a refund, but would stop abruptly after the 90-day period. If you prepaid for an annual or multi-year term, yes, you can get a refund! Other companies hold on to commission rates and add on cancellation fees when you request cancellation. Jet only considers the time used on the bond (including the additional 90 days) versus the time that was unused and refunds the direct cost of the time left on the bond.
How Does a Mortgage Lender or Broker Avoid Bond Claims?
The Mortgage Lender Bond and the Mortgage Broker Bond are required by the Commissioner to ensure that mortgage lenders and brokers comply with their licensing requirements as listed in the North Carolina Secure and Fair Enforcement (S.A.F.E.) Mortgage Licensing Act (General Statutes Chapter 53, Article 19B). Claims on the bond can be filed by a consumer directly and by the Commissioner on behalf of a claimant. The best way to avoid claims on the bond is to conduct business lawfully, taking care to avoid prohibited acts, including but not limited to:
- Withholding any funds or documents that a mortgage lender is not entitled to keep in connection with a mortgage loan
- Brokering, making, or servicing a mortgage loan with any fraud or any dealings that are not in good faith
- Failing to pay due fees to an appraiser for services that were requested
What Happens If I Get a Bond Claim?
If a claim gets filed against your Mortgage Lender Bond or Mortgage Broker Bond, Jet will start an investigation to find whether the claim is valid or not, giving both sides an opportunity to present their case. If the investigation rules in favor of the claimant, Jet will pay the amount of the claim up to the full limit of the bond and notify the Commissioner of the payout within 10 days. Because you are ultimately responsible for your actions, you must pay Jet back in the amount of the claim within 30 days to restore the full coverage of the bond.
Claims can also be paid out automatically for any failure to make payment that becomes due for a violation of licensing rules and regulations. The Commissioner may instruct you to make payment to a consumer or you can agree to make payment through a consent agreement. Jet is obligated to pay the claim within 30 days of the due date as instructed by the Commissioner. Likewise, you are still obligated to pay Jet back for any claims paid out from the bond.
Claims may be filed in one action or in successive claims by any consumers or the Commissioner. If a consumer and the Commissioner have both filed claims, the consumer has priority for receiving payment.
Why Are the Mortgage Lender Bond and Mortgage Broker Bond Required?
The Mortgage Lender Bond is a licensing requirement for a mortgage lender license and the Mortgage Broker Bond is a requirement for the mortgage broker license. These bonds help protect consumers from financial losses and enforce mortgage lenders and brokers to comply with the rules and regulations of the NC S.A.F.E. Act. The NC Commissioner of Banks is responsible for regulating mortgage lenders, brokers, and other mortgage businesses, as well as trust companies and state banks. The Commissioner monitors mortgage business licensing activity but partners with the Nationwide Multistate Licensing System for the filing of mortgage licenses and bonds.
How Does the Application Process Work With Jet?
Applying for a Mortgage Lender Bond or a Mortgage Broker Bond is easy with Jet! Our online application will take you through each step to add in any necessary information, such as your name and social security number. Both bonds require full underwriting, which will include an evaluation by a Jet team member and may require additional information.
When the review is complete, an approved rate will be sent to you to purchase online instantly. Once you have purchased your Mortgage Lender or Broker Bond, Jet can begin the filing process with the NMLS.
How to Renew Mortgage Bonds in North Carolina
When it is time to renew your Mortgage Lender or Mortgage Broker Bond, Jet will send you notice through mail and email for your convenience. Renewing online only takes a minute to keep your bond in effect for another term. Filling out a mailed renewal notice is also quick, but takes a few days to be mailed to Jet.
If you are making monthly payments, you don’t need to worry about renewing your bond. Each payment that you make will keep your bond in effect for another month.
Do Mortgage Lender and Broker Bonds Expire?
No, the Mortgage Lender Bond does not have an expiration date and can be renewed as needed. Coverage from the bond will cease 90 days after cancellation is requested with the Commissioner of Banks.
Can a Mortgage Business Avoid the Bond Requirement?
Yes, under certain circumstances. The bond requirement may be waived by the Commissioner for any mortgage business who has demonstrated financial security and competent claims handling. As long as the mortgage lender or broker fulfills these requirements, business can be conducted without a Mortgage Lender Bond or Mortgage Broker Bond. However, the Commissioner has the authority to reinstate the bond requirement at any time if there is reason to believe that the standards listed below are no longer being met.
To waive the bond requirement, a mortgage lender or broker must satisfy all of the following:
- Be licensed for at least three years
- Hold a net worth of at least four times the required bond amount, proved by audited financial statements
- Have a history of resolving consumer complaints and responding to findings or examinations by the Commissioner
- Have the faith of the Commissioner that all complaints, responses to examinations or investigative findings, and all financial obligations will be fulfilled
Do North Carolina Mortgage Lenders and Brokers Need Any Other Bonds?
Yes, mortgage businesses may apply for authorization with the Commissioner to make reverse mortgage loans, per North Carolina G.S. Chapter 53, Article 21. Once authorized, a $100,000 Reverse Mortgage Lender Bond must be held to protect the borrowers of a reverse mortgage loan. Unlike the NMLS licensing and bonding for mortgage lenders, the Reverse Mortgage Lender Bond must be filed manually to the Commissioner as an original, paper bond.
If you are in need of further details on the mortgage industry, licensure processes in multiple states, and applicable surety bond regulations, take a look at Jet’s comprehensive Mortgage License Bonds Guide.
