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 Texas mortgage broker bond needs. Learn how to become a mortgage broker in Texas, below.
What Mortgage Broker Licenses Are Issued in Texas?
The Texas Department of Savings and Mortgage Lending issues licenses for most mortgage-related professions, including mortgage brokers. Under Texas law, a mortgage broker is defined as “a person who receives an application from a prospective borrower for the purposes of making a mortgage loan from that person’s own funds or from the funds of another person.”
Mortgage broker license applications are submitted and processed through the Nationwide Mortgage Licensing System, or NMLS.
What Are the Steps in the Licensing Process?
There are several eligibility and pre-licensing educational requirements for obtaining a mortgage broker license in Texas. These must all be met before applying for licensure as a mortgage broker. You may also have to gather certain documents that will need to be submitted in support of your license application.
The licensing process involves the following steps:
- Applying for an NMLS account and ID number.
- Completing the appropriate license application and uploading required documentation.
- Submitting a $50,000 Texas broker surety bond.
- Authorizing any required criminal background check(s).
- Paying all required fees, including application and NMLS processing fees.
Why is a Mortgage Broker Bond Required?
A Texas mortgage broker bond guarantees that the mortgage broker (the bond’s “principal”) abides by all applicable state laws in doing business. The bond also relieves the Department of Savings and Mortgage Lending (the “obligee” requiring the bond) of any liability for financial losses incurred by mortgage applicants or others as a result of the principal’s unlawful or unethical business conduct. The surety company (the “surety” for short) is similarly indemnified.
Most important, a Texas mortgage broker bond ensures that funds will be available for paying claims for financial damages for which the principal is responsible.
How Are Mortgage Broker Bond Claims Paid?
The surety bond agreement for a Texas mortgage broker bond is a legally binding contract that makes the principal solely responsible for paying valid claims against the bond. However, the usual practice is for the surety to pay claims on behalf of the principal.
A Texas mortgage broker bond represents a line of credit established for the principal by the surety when the bond is issued. The surety’s payment of a valid claim creates a debt that the principal is legally obligated to repay.
How Much Does a Texas Mortgage Broker Bond Cost?
The annual premium you’ll pay for a Texas mortgage broker bond depends on the premium rate the surety’s underwriters assign to you. This is based on your creditworthiness and financial strength. The surety’s main concern, of course, is the risk of not being reimbursed for claims paid on your behalf.
If your credit is good enough to qualify for the standard market rate, your premium rate should be no more than 3% and could be as low as 1%.
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