Arizona Commercial Mortgage Banker Bond: A Comprehensive Guide

March 9, 2021

Arizona Commercial Mortgage Banker Bond

This guide provides information for insurance agents to help mortgage bankers obtain Arizona Commercial Mortgage Banker Bonds

For information on how to obtain the Arizona Mortgage (Non-Commercial) Banker Bond, click here

At a Glance:

  • Average Cost: Between 0.5% to 5% of the bond amount per year based on the commercial mortgage banker’s credit
  • Bond Amount:
    • $25,000 if the banker’s investors are solely institutional investors
    • $100,000 if the banker’s investors are not solely institutional investors
  • Who Needs It: All individuals and business entities seeking to obtain a commercial mortgage banker license in the State of Arizona
  • Purpose: To ensure the public will receive compensation for any damages should the mortgage banker fail to comply with licensing law
  • Who Regulates Commercial Mortgage Bankers in Arizona: The Arizona Department of Insurance and Financial Institutions

Background

Arizona Statute 6-973 requires commercial mortgage bankers operating in the state to obtain a license with the Department of Insurance and Financial Institutions. The Arizona legislature enacted the licensing laws and regulations to ensure that mortgage bankers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, bankers must purchase and maintain either a $25,000 or $100,000 commercial mortgage banker surety bond to be eligible for licensure.

What is the Purpose of the Arizona Commercial Mortgage Banker Bond?

Arizona requires bankers to purchase the Commercial Mortgage Banker Bond as part of the application process to obtain a commercial mortgage banker license. The bond ensures that the public will receive compensation for financial harm if the banker fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the banker breaks licensing laws.

Arizona Commercial Mortgage Banker Bond Form

Arizona Commercial Mortgage Banker Bond Form

How Can an Insurance Agent Obtain an Arizona Commercial Mortgage Banker Surety Bond? 

BondExchange makes obtaining an Arizona Commercial Mortgage Banker Bond easy. Simply login to your account and use our keyword search to find the “mortgage” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Arizona Commercial Mortgage Banker Bond?

Surety companies will run a credit check on the mortgage banker to determine eligibility and pricing for the Arizona Commercial Mortgage Banker bond. Bankers with excellent credit and work experience can expect to receive the best rates. Bankers with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the banker’s credit.

How Much Does the Arizona Commercial Mortgage Banker Bond Cost?

The Arizona Commercial Mortgage Banker surety bond can cost anywhere between 0.5% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $100,000 bond requirement.

$100,000 Commercial Mortgage Banker Bond Cost

Credit Score Bond Cost (1 year)
700+ $500
650 – 699 $1,000
625 – 649 $1,250
600 – 624 $1,880
550 – 599 $4,000
500 – 549 $5,000

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Arizona Define “Commercial Mortgage Banker”?

Arizona Statute 6-971 defines a commercial mortgage banker as any individual or business entity who engages in any of the following activities:

  • Originates commercial mortgage loans
  • Services commercial mortgage loans
  • Either directly or indirectly makes, negotiates or offers to make or negotiate commercial mortgage loans

How Do Commercial Mortgage Bankers Apply for a License in Arizona?

Bankers in Arizona must navigate several steps to secure their commercial mortgage banker license. Below are the general guidelines, but bankers should refer to the NMLS’s application guidelines for details on the process.

License Period – The Arizona Commercial Mortgage Banker License expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Arizona Commercial Mortgage Banker License must first amass a company net worth (assets – liabilities) of at least $100,000. Bankers must submit a current (6 months or less) CPA audited financial statement verifying their net worth when submitting their license application.

Step 2 – Meet the Experience Requirements

Commercial mortgage bankers must employ a “qualified individual” who has the necessary experience and is capable of handling the day to day operations of the banker’s business. Qualified individuals must have at least three years of work experience in the commercial mortgage business or a related field and must submit proof of experience.

Step 3 – Purchase a Surety Bond

Mortgage bankers must purchase and maintain a commercial mortgage banker surety bond with the following limit:

    • $25,000 if the banker’s investors are solely institutional investors
    • $100,000 if the banker’s investors are not solely institutional investors

Step 4 – Request a NMLS Account

The Arizona Commercial Mortgage Banker License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 5 – Complete the Application

All Arizona Commercial Mortgage Banker License applications can be completed online through the NMLS. Completed applications will include the following items:

    • Audited financial statements indicating a company net worth of at least $100,000
    • Personal Financial Statement (sole proprietors only)
    • Documents verifying the qualified individual’s work experience
    • FBI background check authorization
    • Company formation documents
    • A company business plan containing the following information:
      • Marketing strategies
      • Products
      • Target markets
      • The operating structure that the applicant intends to employ
    • A management chart detailing the leadership hierarchy of the company
    • An ownership chart detailing the amount ownership structure of the company

Step 6 – Pay Fees

Applicants for the Arizona Commercial Mortgage Banker License must pay the following fees when submitting their license application:

    • $1,000 application fee
    • $100 NMLS processing fee
    • $36.25 background check fee
    • A licensing fee dependent on the month the license is issued:

Month the License is Issued Licensing Fee
Jan, Feb, Mar $1,250
Apr, May, Jun $937.50
Jul, Aug, Sep $625
Oct $312.50
Nov, Dec $1,562.50

How Do Arizona Commercial Mortgage Bankers Renew Their License?

Commercial Mortgage Bankers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Arizona Commercial Mortgage Banker License expires on December 31 of each year and must be renewed before the expiration date

What Are the Insurance Requirements for the Arizona Commercial Mortgage Banker License?

The State of Arizona does not require mortgage bankers to obtain any form of liability insurance as a prerequisite to obtaining a Commercial Mortgage Banker License. Bankers must purchase and maintain a commercial mortgage banker surety bond with the following limits:

  • $25,000 if the banker’s investors are solely institutional investors
  • $100,000 if the banker’s investors are not solely institutional investors

How Do Arizona Commercial Mortgage Bankers File Their Bond?

Commercial mortgage bankers should submit the completed bond form, including the power of attorney, electronically through the NMLS. The commercial mortgage banker surety bond requires signatures from both the surety company that issues the bond and the mortgage banker. The surety company should include the following information on the bond form:

  • Legal name of entity/individual(s) buying the bond
  • Surety company’s name
  • Bond amount
  • License Type (commercial mortgage banker)
  • Date the bond goes into effect

What Can Businesses Do to Avoid Claims Against the Arizona Commercial Mortgage Banker Bond?

To avoid claims on the Commercial Mortgage Banker Bond, businesses must follow all license regulations in the state, and ensure that they do not engage in, or allow any representatives of their business to engage in, any acts of fraud.

What Other Insurance Products Can Agents Offer Commercial Mortgage Bankers in Arizona?

Arizona does not require commercial mortgage bankers to obtain any form of liability insurance. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Arizona Commercial Mortgage Banker Customers?

Arizona conveniently provides a public database to search for active commercial mortgage bankers in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2021-12-28T15:21:58-05:00