Georgia Mortgage Lender Bond: A Comprehensive Guide
This guide provides information for insurance agents to help mortgage lenders obtain Georgia Mortgage Lender Bonds
At a Glance:
- Lowest Cost: $1,875 per year or $188 per month, based on the applicant’s credit
- Bond Amount: Minimum of $250,000 (more on this later)
- Who Needs it: All mortgage lenders seeking to obtain a license in Georgia
- Purpose: To ensure the public will receive compensation for any damages should the mortgage lender fail to comply with licensing law
- Who Regulates Mortgage Lenders in Georgia: The Georgia Department of Banking and Finance
Georgia Statute 7-1-1001 requires all mortgage lenders operating in the state to obtain a license with the Department of Banking and Finance. The Georgia legislature enacted the licensing laws and regulations to ensure that mortgage lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law mortgage lenders must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Georgia Mortgage Lender Bond?
Georgia requires mortgage lenders to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the business fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the mortgage lender breaks licensing laws.
How Can an Insurance Agent Obtain a Georgia Mortgage Lender Surety Bond?
BondExchange makes obtaining a Georgia Mortgage Lender 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? Gain access 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.
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How is the Bond Amount Determined?
Georgia Statute 7-1-1001 mandates the limit on the mortgage lender bond be determined on a case by case basis by the Department of Banking and Finance. The bond amount will reflect the total dollar amount of loans originated by the lender. The bond amount must be a minimum of $250,000.
Is a Credit Check Required for the Georgia Mortgage Lender Bond?
Surety companies will run a credit check on the owners of the mortgage lending company to determine eligibility and pricing for the Georgia Mortgage Lender bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners 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 owner’s credit.
How Much Does the Georgia Mortgage Lender Bond Cost?
The Georgia Mortgage Lender surety bond can cost anywhere between 0.75% 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 a $250,000 bond requirement.
$250,000 Mortgage Lender Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|650 – 699||$2,500||$250|
|625 – 649||$3,125||$313|
|600 – 624||$3,750||$375|
|550 – 599||$10,000||$1,000|
|500 – 549||$12,500||$1,250|
*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 Georgia Define “Mortgage Lender?”
Georgia Statute 7-1-1000 defines a mortgage lender as any individual or business entity who makes, purchases, originates, underwrites, or services mortgage loans.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Mortgage Lenders Apply for a License in Georgia?
Mortgage lenders in Georgia must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – All Georgia Mortgage Lender Licenses expire on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage lenders must purchase and maintain a surety bond with a minimum limit of $250,000
Step 2 – Request NMLS Account
The Georgia Mortgage Lender 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 3 – Complete the Application
- A primary company and consumer complaint contact
- Company formation documents
- Company business plan containing the following information:
- State the business activities that will be conducted in Georgia
- Mortgage activities (e.g., brokering, processing, lending, servicing, underwriting, etc.)
- Products offered (Conventional loans, Government loans, etc.)
- Target markets (consumers, businesses, etc.)
- Marketing strategies
- Operating structure
- Management chart indicating the company’s hierarchy
- Organizational chart detailing the company’s ownership structure
- Flow of funds diagram
- Verification of Lawful Presence Affidavit
- State background check authorization
Mortgage Lenders must pay the following fees when submitting their license application:
- $900 license fee
- $250 application fee
- $100 NMLS processing fee
- $36.25 background check fee (per person)
- $15 credit report fee (per person)
How Do Georgia Mortgage Lenders Renew Their License?
Mortgage lenders can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. All Georgia Mortgage lender Licenses expire on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Georgia Mortgage Lender License?
The State of Georgia does not require mortgage lenders to obtain any form of liability insurance as a prerequisite to obtaining a business license. Mortgage lenders must purchase and maintain a surety bond with a minimum limit of $250,000.
How Do Georgia Mortgage Lenders File Their Bond?
Mortgage lenders should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the mortgage lending company. The surety company should include the following information on the bond form:
- Legal name and business address of entity/individual(s) buying the bond
- Surety company’s name, state, city and county
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Georgia Mortgage Lenders Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, mortgage Lenders in Georgia must ensure not to engage in any acts of fraud or misrepresentation when servicing customers.
What Other Insurance Products Can Agents Offer Mortgage Lenders in Georgia?
Georgia does not require mortgage lenders to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable lenders 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 Georgia Mortgage Lender Customers?
The NMLS conveniently provides a public database to search for active mortgage lenders in Georgia. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.