Illinois Exempt Company Registration Bond: A Comprehensive Guide

May 7, 2021

Illinois Exempt Company Registration Bond

This guide provides information for insurance agents to help mortgage exempt companies obtain Illinois Exempt Company Registration Bonds

At a Glance:

  • Average Cost: Between 0.75% to 5% of the bond amount per year based on the applicant’s credit
  • Bond Amount: Based upon Illinois residential mortgage loans brokered, funded, originated, serviced or purchased

Table 1.1

Loans Bond Amount
$0 – $5 million $25,000
Over $5 million to $20 million $50,000
Over $20 million to $50 million $75,000
Over $50 million to $100 million $100,000
Over $100 million $150,000

  • Who Needs it: All companies exempt from mortgage licensing in Illinois who employ licensed mortgage loan originators
  • Purpose: To ensure the public will receive compensation for any damages should the mortgage company fail to comply with registration law
  • Who Regulates Mortgage Companies in Illinois: The Illinois Department of Financial and Professional Regulation

Background

The Illinois Residential Mortgage License Act requires all residential mortgage companies who are exempt from licensing requirements but employ mortgage loan originators to register with the Department of Financial and Professional Regulation. The Illinois legislature enacted the registration laws and regulations to ensure that mortgage companies engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, exempt mortgage companies must purchase and maintain a surety bond to be eligible for registration.

What is the Purpose of the Illinois Exempt Company Registration Bond?

Illinois requires exempt mortgage companies to purchase a surety bond as part of the application process to register with the Department of Financial and Professional Regulation. The bond ensures that the public will receive compensation for financial harm if the mortgage company fails to comply with the registration regulations. In short, the bond is a type of insurance that protects the public if the mortgage company breaks registration laws.

Illinois Exempt Company Registration Bond Form

Illinois Exempt Company Registration Bond Form

How Can an Insurance Agent Obtain an Illinois Exempt Company Registration Surety Bond?

BondExchange makes obtaining an Illinois Exempt Company Registration Bond easy. Simply login to your account and use our keyword search to find the “exempt” 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 Illinois Exempt Company Registration Bond?

Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Illinois Exempt Company Registration 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 Illinois Exempt Company Registration Bond Cost?

The Illinois Exempt Mortgage Company Registration 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 $25,000 bond requirement.

$25,000 Exempt Company Registration Bond Cost

Table 1.2

Credit Score Bond Cost (1 year)
700+ $188
650 – 699 $250
625 – 649 $313
600 – 624 $470
550 – 599 $1,000
450 – 499 $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 Illinois Define “Mortgage Company?”

The Illinois Residential Mortgage License Act considers all individuals and business entities who perform one or more of the following services as a mortgage company:

  • Brokers residential mortgage loans
  • Funds residential mortgage loans
  • Originates residential mortgage loans
  • Services residential mortgage loans
  • Purchases residential mortgage loans

Who is Exempt From the Licensing Requirements?

Illinois mandates that businesses who perform any of the above services obtain a residential mortgage license. However, the following companies are exempt from the licensing requirements and instead must register with the Illinois Department of Financial and Professional Registration if they employ mortgage loan originators:

  • Licensed banking organizations
  • Any national bank, federally chartered savings and loan association, federal savings bank, federal credit union
  • Any insurance company authorized to transact business in Illinois
  • Any business engaged solely in commercial mortgage lending
  • Service corporations for a federally chartered savings loan association or savings bank
  • First tier subsidiaries of banks
  • Any individual or business makes, acquires or resells three or fewer residential mortgage loans in a single year using their own funds for their own investment
  • Nonprofit organizations
  • Individuals and businesses who originate, brokers or services residential mortgage loans without compensation
  • Any individual or business that solely provides loan processing services through the sponsorship of individuals

How do Exempt Mortgage Companies Apply for Registration in Illinois?

Exempt mortgage companies in Illinois must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

Registration Period – The Illinois Exempt Company Registration expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Exempt mortgage companies apply for registration must purchase and maintain a surety bond (limits outlined in Table 1.1)

Step 2 – Request a NMLS Account

The Illinois Exempt Company Registration 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 Illinois Exempt Company Registration applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

    • Primary company contact and consumer complaint contact information
    • Certificate of Good Standing issued by the Illinois Secretary of State
    • Company formation documents
    • Reason the applicant is exempt from licensing requirements

Exempt companies must pay a $100 processing fee when submitting their application.

How Do Illinois Exempt Mortgage Companies Renew Their Registration?

Exempt mortgage companies can renew their registration online through the NMLS. Registration holders need to simply login to their account to access their renewal application. Companies must pay a $100 fee when renewing their registration. The Illinois Exempt Company Registration expires on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Illinois Exempt Mortgage Company Registration?

The State of Illinois does not require exempt mortgage companies to obtain any form of liability insurance as a prerequisite to obtaining a registration. Exempt mortgage companies apply for registration must purchase and maintain a surety bond (limits outlined in Table 1.1).

How Do Illinois Exempt Mortgage Companies File Their Bond?

Exempt mortgage companies 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 company. 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
  • Date the bond is signed

What Can Illinois Exempt Mortgage Companies Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, exempt mortgage companies in Illinois must follow all registration 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
  • Do not omit any information when assisting consumers

What Other Insurance Products Can Agents Offer Mortgage Companies in Illinois?

Illinois does not require mortgage companies to obtain any form of liability insurance as a prerequisite to obtaining a registration. However, many 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 Illinois Exempt Mortgage Company Customers?

The NMLS conveniently provides a public database to search for active registered mortgage companies in Illinois. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2021-12-28T15:20:44-05:00