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Who is Required To Purchase a Arizona Mortgage Broker and Banker Bond?
All mortgage companies are required to purchase a surety bond:
- Residential mortgage broker companies
- Residential mortgage banker companies
- Commercial mortgage broker companies
- Commercial mortgage banker companies
A mortgage broker is a company responsible for helping consumers find the best mortgage lender or banker to meet their financial needs.
A mortgage banker is a company responsible for originating the loan. They may or may not service the loan in-house.
All of these licenses are independent, requiring their own licensing process and mortgage broker bond requirements.
Why is an Arizona Mortgage Broker or Banker Bond Required?
Arizona Department of Insurance and Financial Institutions is responsible for the licensing requirements for mortgage brokers and bankers. The licensing process is managed by the National Multi-State Licensed System (NMLS).
The licensing process is a set of standards and rules you're committing yourself and your business to follow to legally operate in Arizona.
Despite the licensing process, every year there will be a handful of mortgage professionals who purposefully:
- Approve a borrower for a loan they can't afford
- Help a borrower get approved for a loan by providing false information
- Hinder a borrower from getting approved by providing false information
- Press a borrower to enter a high commission loan to make more money
- Create and charge fabricated fees
If a mortgage broker or banker is found guilty of these acts or similar acts, the customer can make a claim against the mortgage bond for financial compensation. The total compensation available only extends to the amount of the bond.
What Are The Arizona Mortgage Broker and Banker Bond Amounts?
Before listing the bond amounts, a couple quick definitions:
Institutional Investors
If your mortgage broker or banker company is financially backed by institutional investors, your bond amounts will be lower.
An institutional investor can be a:
- State or national bank
- State or Federal savings and loan association
- State or Federal credit union
- Federal government agency
- Licensed real estate broker or salesperson
- Profit sharing or pension trust
- Insurance company
Residential Mortgage Broker Company
As a company, if your backed by institutional investors, you must purchase a $10,000 mortgage broker bond.
If you're backed by other forms of financials, you must provide a $15,000 mortgage broker bond.
| Company Financing | Bond Amount | Click to Get Quote |
|---|---|---|
| With institutional investors | $10,000 | Click for Quote |
| With institutional investors | $15,000 | Click for Quote |
Mortgage Loan Originator Surety Bond (Optional)
All residential loan originators are required to be licensed through their own licensing process.
One requirement of a loan originator license is paying $100 per year into Arizona's mortgage guarantee fund.
This fund is money set aside as financial protection for consumers harmed by fraudulent brokers who financially harm their clients.
However, the broker company can purchase a $200,000 surety bond, covering all of their mortgage originators relieving them of having to pay $100 into the guarantee fund.
| Company Mortgage Bond | Bond Amount | Click to Get Quote |
|---|---|---|
| Mortgage Loan Originator Bond: Company | $200,000 | Click for Quote |
Residential Mortgage Banker Company
If your mortgage origination banking company is financially supported through institutional investors, you're required to purchase a $25,000 mortgage banker bond.
| Company Financing | Bond Amount | Click to Get Quote |
|---|---|---|
| With institutional investors | $25,000 | Click for Quote |
If you're not supported through institutional financing, you need to purchase a mortgage banker bond based on:
- The total assets of your company
- Plus the unpaid balance of loans which you're contracted to service for others as of the end of the fiscal year
Based on these numbers, the bond amounts are as follows:
| Mortgage Loan Range | Range Breakdown | Bond Amount | Click to Get Quote |
|---|---|---|---|
| $0 to $1,000,000 | For first $500,000 | $25,000 | Click for Quote |
| $500,001 to $1,000,000 | $5,000 added for each $100,000 | ||
| $1,000,001 to $10,000,000 | Bond Minimum | $50,000 | Click for Quote |
| $1,000,001 to $10,000,000 | $5,000 added for each $1,800,000 | ||
| $10,000,001 to $100,000,000 | Bond Minimum | $75,000 | Click for Quote |
| $10,000,001 to $100,000,000 | $5,000 added for each $18,000,000 | ||
| $100,000,000 and over | No sub-tiers | $100,000 flat | Click for Quote |
Mortgage Loan Originator Surety Bond (Optional)
Mortgage banker licenses are subject to the same surety bond option of $200,000 to cover all of their mortgage loan originators as discussed above.
Commercial Mortgage Broker Company
If your company is funded through institutional money, your bond amount is $10,000.
If you're company is not funded through institutional money, your bond amount is $15,000.
| With institutional investors | $10,000 | Click for Quote |
| Without institutional investors | $15,000 | Click for Quote |
Commercial Mortgage Banker Company
If your company is funded through institutional money, your bond amount is $25,000.
If you're company is not funded through institutional money, your bond amount is $100,000.
| With institutional investors | $25,000 | Click for Quote |
| Without institutional investors | $100,000 | Click for Quote |
How Much Does an Arizona Mortgage Broker and/or Banker Bond Cost?
The price of both residential and commercial mortgage broker bonds and mortgage banker bonds are determined by a rate, quoted from a surety.
A surety is an insurance company who chooses to underwrite mortgage broker bonds. Every surety conducts their own independent analysis or the applicant based factors including:
- Personal credit of the individual or business owner
- Mortgage and lending experience
- Prior bond claims if the individual or owner has been licensed in the past
CALLOUT - This rate multiplied by your bond amount is the price you pay.
Because this rate is the critical factor determining your price, getting a lower rate can easily save you hundreds if not thousands of dollars.
At Surety Bonds Direct, we price shop for you, find you the lowest possible price, and help you purchase your surety bond.
It costs you nothing to have us price shop for you and once you get your pricing, you're under no obligation to purchase. Obtaining pricing is free information.
There's no reason not to request your free quote right now or call a bond specialist at 1-800-608-9950.
Mortgage Broker and Banker Bond Pricing Example
Let's look at the $200,000 residential mortgage broker company bond for mortgage loan originators as an example.
Pay attention to the rates and how one percentage point can make huge difference in the price. ()
| Bond Amount | Premium Rate | Total Cost |
|---|---|---|
| $200,000 | 0.05% | $1,000 |
| $200,000 | 1% | $2,000 |
| $200,000 | 1.5% | $3,000 |
| $200,000 | 2% | $4,000 |
| $200,000 | 3% | $5,000 |
Example pricing is great, but you can get your exact price with no risk or obligation to purchase within one business day.
Go request your price quote today. Remember, this is free information for you. There's no obligation to purchase. Quotes are good for 30 days.
Request a FREE Price Quote Today
Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.
Need Help? Call Us Today
Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950
How To File Your Mortgage Broker or Lender Bond?
After you agree to a price, purchasing your bond is as easy as completing an online checkout form.
Once your payment is processed, our issuance team will immediately begin the process to issue your bond with the National Multi-State Licensing System.
We provide you with detailed instructions to help us file your bond. The process takes only a few minutes.
How Long Does an Arizona Mortgage Broker Bond Last?
The Arizona Department of Insurance and Financial Institutions require an active surety bond on file with the NMLS (National Multi-State Licensing System) to have a licensed issued.
Every mortgage broker and banker bond has a bond term or 12 months from the effective date.
The effective date is a date you choose when you purchase your bond. This is the "activation" date of your bond.
12 months from this date, your bond will have to be renewed.
How Do You Renew a Mortgage Broker and Lender Bond?
Renewing a mortgage broker and lender bond is easy. As your bond expiration date approaches, your bond specialist will contact you 30 to 45 days in advance to ensure you don't miss paying the renewal premium.
Your bond specialist will have renewal pricing already quoted allowing this process to get finished with little headache or effort.
Once you pay the renewal premium, your bond remains active. You don't have to do anything.
Mortgage Broker or Banker Bonds And Getting Your Arizona Business License/Registration
This is just an overview of the licensing process for:
- Residential mortgage broker companies
- Residential mortgage banker companies
- Commercial mortgage broker companies
- Commercial mortgage banker companies
Each license shares a similar process, which is outlined below. Make sure you also consult the NMLS for special cases.
Criminal Background Check
All licenses are required to provide fingerprints for a criminal background check, unless you've had one conducted through the NMLS within the previous 12 months.
Here's who must submit to the background check:
- All owners (direct and indirect) with more than 20% ownership
- The top 3 individuals who provide oversight for the company
- The qualifying individual
Branch Locations
Arizona is called a brick and mortar state. This means each company must have at least one physical location that's a commercial property or a personal residence.
Additional branch locations require their own application process.
List All DBAs and Trade Names
You're allowed to use "doing business as" names and trade names but they must be approved. This typically means being registered with the Arizona Secretary of State.
There are additional rules so make sure you read through them as you're submitting your application.
Qualifying Individual or Responsible Individual
The Qualifying Individual, also called a Responsible Individual is one person who must:
- Be a resident of Arizona
- Be a W2 employee of the company
- Have not less than 3 years experience as a mortgage broker or equivalent experience in a related business within 5 years from the application date
- Complete a 24 hour mortgage broker study course
- Pass a mortgage broker examination (this can be waived)
- Continue to meet a 12 hour continuing education requirement every license year
Residential Mortgage Banker Companies
Residential banker companies have a few extra requirements:
- 3 years of relevant experience in making mortgage loans or equivalent lending experience
- Plus they must submit a full employment history
Commercial Mortgage Broker Company
Commercial broker companies require a Qualifying Individual to have 3 years of commercial broker experience and list all applicable employment history as well.
Make sure you read through the details in experience requirements.
Purchase the Relevant Surety Bond or Surety Bonds
See the pricing cards above.
Business Plan, Management & Organizational Charts
Business Plan
You must upload a business plan including:
- Marketing strategies
- Products being sold
- Target markets you will serve
- Operating structure being used
Management Chart
Upload a company chart including:
- Company divisions
- Officers
- Managers
- Compliance reporting process and individuals
- Internal audit structure and individuals
Organizational Chart
Upload an organization chart including:
- Percentage of ownership for both direct and indirect owners
- Any subsidiaries and affiliates
Financial Statements
Residential mortgage broker companies must be financially solvent as defined under ARS Section 47. And they must provide an un-audited financial statement.
Residential Mortgage Banker Company
- Must have a $100,000 net-worth at all times
- Provide a CPA audited financial statement
- The financial statement can't be older than 6 months
There are a few other scenarios that depend on where your funding comes from. Make sure you look at all requirements.
Request a FREE Price Quote Today
Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.
Need Help? Call Us Today
Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950