Oregon Mortgage Lender Bond
As a prerequisite to obtaining a mortgage lender license under Oregon Revised Statutes (ORS) 86A.095 to 86A.198, mortgage brokers, mortgage bankers, and lending companies are required to secure a Mortgage Lender Bond. The surety bond is to guarantee financial protection for those dealing with mortgage lenders.
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The Oregon Department of Consumer and Business Services (DCBS), Division of Financial Regulation, is responsible for regulation of the more than 800 mortgage lenders, but licensing is done through the Nationwide Multistate Licensing System (NMLS).
How Much Does the Mortgage Lender Bond Cost in Oregon?
With Jet the bond costs as low as $188 annually or $19 monthly. Your approved rate will be determined by a soft credit check of the qualifier. The qualifier must be an owner or full-time employee of the company with three years of mortgage lending experience in the past five years. Prices shown below are based on an applicant with good credit standing.
| Mortgage Loan Amounts | Bond Limit | Monthly | Annual |
|---|---|---|---|
| New Business or less than $10mil | $50,000 | $19 | $188 |
| $10 - 25 mil | $75,000 | $28 | $281 |
| $25 - 50 mil | $100,000 | $38 | $375 |
| $50 - 100 mil | $150,000 | $56 | $563 |
| More than $100 mil | $200,000 | $75 | $750 |
Jet is the only surety bond carrier offering monthly payment plans to mortgage lenders. You can get your bond started with an installment payment and will have little to worry about afterwards with Jets automatic payment system. By cutting out middlemen surety brokers, their carriers and finance companies, Jet Insurance Company is able to get your bond on file quickly and efficiently, without charging additional fees.
How Is the Mortgage Lender Bond Amount Determined?
The bond amount for mortgage lenders in Oregon ranges from $50,000 to $200,000, which is based on the past four quarterly residential mortgage activity reports of condition submitted under Oregon Administrative Rules 441-865-0025. The Oregon DCBS will determine the bond amount based on submitted paperwork. Mortgage lender branches are covered under the company license bond. If you are applying for a new license, the bond amount always starts at $50,000.
Mortgage loan servicers need a different bond altogether, the Mortgage Servicer Bond, and license. Businesses originating and servicing the loan need both mortgage servicer and mortgage lender licenses and surety bonds.
Types of Mortgage Lenders
There are three main types of mortgage lenders, all who fall under the Mortgage Lender Bond requirement.
Mortgage brokers shop the market, typically working through a realtor or borrower to find the best mortgage loan for the borrower.
Mortgage bankers are those working in the loan department of a financial institution, such as a bank. They will advise the borrower of loan options available which may or may not be within their organization.
Mortgage loan originators are the front line of the mortgage process and deal directly with the borrower. The originator can be with a lender, brokerage or bank. Any business employing a mortgage loan originator must obtain a surety bond that covers the originator.
How Is the Mortgage Lender Bond Filed?
Since April 2018 the NMLS only accepts bonds filed electronically, no hard copies. Jet has broken down the process so you understand your role in getting your bond on file. You must grant authority to Jet within the NMLS, then we take care of the rest for you.
Jet takes care of the renewal, cancellation, bond riders, reinstatements, and all other management of the bond through the NMLS for you. If a change needs to be made just let us know.
The bond must be renewed or replaced annually through the NMLS. The effective date of the filed bond is December 31st upon renewal, but must be submitted to the NMLS prior to December 1st. If not on file by that time, the DCBS can suspend your license.
Is It Possible To Cancel the Bond and Receive a Refund?
With Jet you can! Other insurance carriers and brokers retain the unearned premium and charge fees for early cancellation. Ever heard of a minimum earned amount? We have from our competitors rate filings and consider it a hidden tactic to account for inefficiencies. Jet returns all premium not earned to our customers.
Jet will request cancellation through the NMLS and the bond does remain active for 30 days following cancellation notice. We do have to factor in any time the bond is active into our return calculations.
How To Avoid Bond Claims as a Mortgage Lender
Mortgage lending businesses can avoid bond claims by simply following the laws and statutes put in place. Claims can come from the public or the DCBS for reasons such as falsifying documents, omitting necessary information, failing to meet education requirements, adding on fees for mortgage services not provided, or other ORS 86A.183 provisions.
Mortgage loan originators, mortgage bankers, and mortgage brokers who violate provisions of ORS 86A.095 to 86A.198 are subject to be investigated by the DCBS, pursuant to ORS 86A.127. All complaints and violations will be evaluated by the Department prior to leading to a bond claim. The DCBS will throw out frivolous accusations, the same as Jet during our investigations, however, should the determination be against you, the lender, it is best to abide by the corrective action to avoid further penalties and possible revocation of you license.
Lenders knowingly violating ORS 86A are committing a Class C felony. The fine for a Class C felony can be up to $5,000 per violation. Any civil penalties fall under ORS 183.745.
What Is Jet’s Bond Claim Process?
You will not have to worry about a claim on your bond if you abide by the rules, regulations, and run an honest practice. However, if a claim is made against your surety bond, Jet takes the following steps to ensure a smooth process for all parties involved:
- Jet is notified of the claim and informs the DCBS
- All evidence regarding the violation is reviewed
- Jet will investigate claim further, as needed
- Jet will determine validity of claim
- If valid, Jet will pay the damaged party
Unlike an insurance policy, the surety bond is a guarantee of payment and is more like a letter of credit. Jet will seek reimbursement from you if claim payment is made. The lender is ultimately responsible for their actions and therefore still needs to reimburse Jet.
The Mortgage Lender Bond must remain in effect and on file for five years minimum after the mortgage banker or broker discontinues their license. So, don’t be surprised if you hear from an old surety company regarding business you did years ago; even after retirement, your work can still come under scrutiny.
Why Is the Mortgage Lender Bond Required in Oregon?
The purpose of the Mortgage Lender Bond is to provide a means of financial protection to the public when losses or damages occur due to the actions of the mortgage lender. Mortgage lenders are responsible for providing future homeowners with a process to find the right loan to purchase their desired home. The lender should make a confusing loan process manageable for the public, but where there is confusion, there is opportunity for swindling, hustling and down right deception. The Oregon DCBS requires the bond as a guarantee to the public for financial damages that can be caused by the lender.
How To Get the Mortgage Lender Bond With Jet
Jet’s online process allows you to obtain this bond in minutes. General business information is verified through our online database to make sure the bond gets filed correctly.
You will receive a copy for your records immediately and be ready for the NMLS notice to confirm bond filing information.
What Is the Mortgage Lender Bond Renewal Process with Jet?
For lenders on Jet’s monthly payment option there is no renewal process. The bond remains active as the payments will continue to come out of your preferred account. If you have a bond limit change from the prior year, just let Jet know and we will have to adjust the rate to coincide with the increase or decrease.
Lenders on annual terms can expect a simple renewal process with Jet. Simply pay the renewal amount and poof - done. We go out of our way to notify you, so the requirement is not missed and thus put your license in jeopardy.
Are Other Bonds Needed for Mortgage Businesses in Oregon?
With the passing of Oregon Senate Bill 98, a Mortgage Servicer Bond is required for businesses servicing residential mortgage loans in Oregon. Companies originating and servicing loans must be licensed as mortgage lenders and mortgage servicers, and file surety bonds for both licenses.
