Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Indiana mortgage broker bond needs. Learn how to become a mortgage broker in Indiana, below.
What Mortgage Broker Licenses Are Issued in Indiana?
Indiana issues several different types of mortgage broker licenses, the most common of which are:
- The mortgage lending license is issued by the Indiana Department of Financial Institutions (DFI), which allows licensees to originate or broker consumer mortgage loans.
- The loan broker license is issued by the Indiana Secretary of State (SOS), which permits the brokering of residential mortgage loans from third parties.
Applications for both of these licenses are processed through the Nationwide Mortgage Licensing System, or NMLS. However, some supporting documentation must be sent directly to DFI or SOS.
What Are the Steps in the Licensing Process?
Neither a mortgage lending license nor loan broker license requires applicants to meet any pre-licensing educational or examination requirements. The major steps in the licensing process are:
- Apply for an NMLS account and ID number.
- Submit the appropriate license application (as an individual or for a company).
- Submit a surety bond in the required amount—$100,000 for a mortgage lending license; $50,000, $60,000, or $75,000 for a loan broker license, depending on the previous year’s loan volume.
- Submit a criminal background check, if required.
- Pay the required application, background check, and NMLS processing fees.
Why is a Mortgage Broker Bond Required?
An Indiana mortgage broker bond is your pledge to comply with all state laws and regulations in your work as a mortgage broker. The bond indemnifies the state of Indiana and the bonding company against any liability for claims filed against the bond for damages caused by the unlawful or unethical actions of an Indiana-licensed mortgage broker. It also guarantees payment to the injured party for valid claims for such damages.
How Are Mortgage Broker Bond Claims Paid?
A surety bond agreement is a legally binding contract between three parties: an “obligee,” a “principal,” and a “surety.” In the case of an Indiana mortgage broker bond, these are:
- The Indiana DFI or SOS (the obligee requiring the bond)
- The mortgage broker seeking licensure (the principal required to purchase the bond)
- The bonding company (the surety underwriting and authorizing the bond)
While the surety bond agreement legally obligates the principal to pay all valid claims, in actuality, the surety pays the claimant directly, drawing on a line of credit established for the principal at the time the surety bond is purchased. The principal must then repay that debt to the surety, but may be able to do so in manageable installments rather than all at once.
How Much Does an Indiana Mortgage Broker Bond Cost?
The annual premium for an Indiana mortgage broker bond is a small percentage of the required bond amount. That percentage (the premium rate) is established by the surety on a case-by-case basis. The surety’s primary concern is being repaid for claims paid on behalf of the principal, so the premium rate is based largely on the principal’s personal credit score.
With good credit, the principal should qualify for a premium rate in the range of 1% to 3%. Those with lesser credit should still be able to purchase a mortgage broker bond but may be assigned a higher premium rate.
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