Illinois Exempt Entity Processor Bond: A Comprehensive Guide

May 11, 2021

Illinois Exempt Entity Processor Bond

This guide provides information for insurance agents to their customers obtain Illinois Exempt Entity Processor Bonds

At a Glance:

  • Average Cost: Between $375 to $2,500 per year based on the applicant’s credit
  • Bond Amount: $50,000
  • Who Needs it: All businesses that provide loan processing services through the sponsorship of individuals in Illinois
  • Purpose: To ensure the public will receive compensation for any damages should the business fail to comply with registration law
  • Who Regulates Exempt Entity Processors in Illinois: The Illinois Department of Financial and Professional Regulation

Background

The Illinois Residential Mortgage Licensing Act requires that all independent loan processing entities register with the Department of Financial and Professional Regulation. The Illinois legislature enacted the registration laws and regulations to ensure that loan processors engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, independent loan processing entities must purchase and maintain a $50,000 surety bond to be eligible for licensure.

What is the Purpose of the Illinois Exempt Entity Processor Bond?

Illinois requires independent loan processing entities to purchase a surety bond as part of the application process to register with the IDFPR. The bond ensures that the public will receive compensation for financial harm if the loan processor fails to comply with the registration regulations set forth in the Residential Mortgage Licensing Act. Specifically, the bond protects consumers in the event the loan processor were to commit fraud or omit any relevant information when servicing a consumer. In short, the bond is a type of insurance that protects the public if the loan processor breaks registration laws.

Illinois Exempt Entity Processor Bond Form

Illinois Exempt Entity Processor Bond Form

How Can an Insurance Agent Obtain an Illinois Exempt Entity Processor Surety Bond?

BondExchange makes obtaining an Illinois Exempt Entity Processor 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 Entity Processor Bond?

Surety companies will run a credit check on the owners of the loan processing company to determine eligibility and pricing for the Illinois Exempt Entity Processor 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 Entity Processor Bond Cost?

The Illinois Payday Loan surety bond can cost anywhere between $375 to $2,500 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 $50,000 bond requirement.

$50,000 Exempt Entity Processor Bond Cost

Credit Score Bond Cost (1 year)
700+ $375
650 – 699 $500
625 – 649 $625
600 – 624 $940
550 – 599 $2,000
450 – 549 $2,500

*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.

Who Is Required to Purchase a Bond?

Illinois requires all independent loan processing entities who are exempt from licensing under the Residential Mortgage Licensing Act, and who engage in the business of loan processing solely through the sponsorship of individuals, to purchase a $50,000 surety bond and register with the IDFPR.

How do Exempt Entity Processors Apply for Registration in Illinois?

Exempt entity processors 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.

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

Step 1 – Purchase a Surety Bond

Applicants for the Illinois Exempt Entity Processor Registration must purchase and maintain a $50,000 surety bond

Step 2 – Request a NMLS Account

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

    • Primary company and consumer complaint contact information
    • Certificate of Good Standing issued by the Illinois Secretary of State
    • Company formation documents

Loan processors must pay the following fees when submitting their license application:

    • $100 registration fee
    • $100 NMLS processing fee

How Do Illinois Loan Processors Renew Their Registration?

Loan processors can renew their registration online through the NMLS. Registration holders need to simply login to their account to access their renewal application. The Illinois Exempt Entity Processor 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 Entity Processor Registration?

The State of Illinois does not require loan processors to obtain any form of liability insurance as a prerequisite to registering their business. Applicants for the Illinois Exempt Entity Processor Registration must purchase and maintain a $50,000 surety bond.

How Do Illinois Exempt Entity Processors File Their Bond?

Exempt Entity Processors 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 loan processing company. The surety company should include the following information on the bond form:

  • Legal name and NMLS number of entity/individual(s) buying the bond
  • Surety company’s name
  • Bond amount
  • Date the bond is signed

What Can Illinois Exempt Entity Processors Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, exempt entity processors 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 servicing consumers

What Other Insurance Products Can Agents Offer Loan Processors in Illinois?

Illinois does not require loan processors to purchase any form of liability insurance as a prerequisite to obtaining a registration. 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 Illinois Exempt Entity Processor Customers?

The NMLS conveniently provides a public database to search for active exempt entity processors 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.

2021-12-28T15:20:42-05:00