Hawaii Mortgage Servicer Bond: A Comprehensive Guide
This guide provides information for insurance agents to help mortgage servicers obtain Hawaii Mortgage Servicer Bonds
At a Glance:
- Lowest Cost: $750 per year or $75 per month based on the applicant’s credit
- Bond Amount: $100,000
- Who Needs it: All mortgage servicers seeking to obtain a license in Hawaii
- Purpose: To ensure the public will receive compensation for any damages should the mortgage servicer fail to comply with licensing law
- Who Regulates Mortgage Servicers in Hawaii: The Hawaii Division of Financial Institutions
Hawaii Statute 454M-2 requires all mortgage servicers operating in the state to obtain a license with the Division of Financial Institutions. The Hawaii legislature enacted the licensing laws and regulations to ensure that mortgage servicers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law mortgage servicers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Hawaii Mortgage Servicer Bond?
Hawaii requires mortgage servicers 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 mortgage servicer fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the mortgage servicer breaks licensing laws.
How Can an Insurance Agent Obtain a Hawaii Mortgage Servicer Surety Bond?
BondExchange makes obtaining a Hawaii Mortgage Servicer 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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Is a Credit Check Required for the Hawaii Mortgage Servicer Bond?
Surety companies will run a credit check on the owners of the mortgage servicing company to determine eligibility and pricing for the Hawaii Mortgage Servicer 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 Hawaii Mortgage Servicer Bond Cost?
The Hawaii Mortgage Servicer surety bond can cost anywhere between $750 to $5,000 per year or $75 to $500 per month. 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 Mortgage Servicer Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|650 – 699||$1,000||$100|
|625 – 649||$1,250||$125|
|600 – 624||$1,500||$150|
|550 – 599||$4,000||$400|
|500 – 549||$5,000||$500|
*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 Hawaii Define “Mortgage Servicer?”
Hawaii Statute 454-M1 defines a mortgage servicer as the business entity who receives payments on a residential mortgage loan and makes payments to the owner of the loan or any other third party.
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 Servicers Apply for a License in Hawaii?
Mortgage Servicers in Hawaii 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 – The Hawaii Mortgage Servicer License expires on June 30 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage servicer license applicants must purchase and maintain a $100,000 surety bond
Step 2 – Request NMLS Account
The Hawaii Mortgage Servicer 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
All Hawaii Mortgage Servicer License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
- Primary company and consumer complaint contacts
- Disclosure questions
- Certificate of Good Standing obtained from the Hawaii Business Registration Division
- Management chart showing the company’s hierarchy
- Organizational chart showing the company’s ownership structure
- List of services provided to other companies
- Company’s proposed method for doing business and a list of all customer remittance methods that will be offered
- Sub-Servicer and Master Servicer Form (if applicable)
- List of the company’s physical locations
- Cost and Fees Schedule
Mortgage Servicers must pay the following fees when submitting their license application:
- $675 application fee
- $100 processing fee
How Do Hawaii Mortgage Servicers Renew Their License?
Mortgage servicers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Hawaii Mortgage Servicer License expires on June 30 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Hawaii Mortgage Servicer License?
The State of Hawaii does not require mortgage servicers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Mortgage servicer license applicants must purchase and maintain a $100,000 surety bond.
How Do Hawaii Mortgage Servicers File Their Bond?
Mortgage servicers 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 servicing 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
- Bond amount
- Date the bond is signed
- Notary signatures for both the principal and surety company
What Can Hawaii Mortgage Servicers Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, mortgage servicers in Hawaii must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Properly account for all funds received from borrowers
What Other Insurance Products Can Agents Offer Mortgage Servicers in Hawaii?
Hawaii does not require mortgage servicers to purchase any form of liability insurance as a prerequisite to obtaining a license. 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 Hawaii Mortgage Servicer Customers?
The NMLS conveniently provides a public database to search for active mortgage servicer in Hawaii. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.