Louisiana Mortgage Lender Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Louisiana Mortgage Lender Bonds
At a Glance:
- Lowest Cost: $125 per year or $13 per month based on the applicant’s credit
- Bond Amount: Based on the volume of loans originated in the previous calendar year:
| Loan Volume | Bond Amount |
|---|---|
| Less than $100 million | $25,000 |
| $100 million or more | $50,000 |
- Who Needs it: All mortgage lenders operating in Louisiana
- 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 Louisiana: The Louisiana Office of Financial Institutions
Background
Louisiana statute 1086 requires all mortgage lenders operating in the state to obtain a license with the Office of Financial Institutions. The Louisiana 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 Louisiana Mortgage Lender Bond?
Louisiana 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 mortgage lender fails to comply with the licensing regulations set forth in the Louisiana Secure and Fair Enforcement of Mortgage Licensing Act of 2009. Specifically, the bond protects the public in the event the mortgage lender engages in any acts of fraud or fails to honor any agreements made. 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 Louisiana Mortgage Lender Surety Bond?
BondExchange makes obtaining a Louisiana 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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Is a Credit Check Required for the Louisiana Mortgage Lender Bond?
Surety companies will run a credit check on the owner’s of the mortgage lending company to determine eligibility and pricing for the Louisiana Mortgage Lender bond. Owners 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 Louisiana Mortgage Lender Bond Cost?
The Louisiana Mortgage Lender 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 a $25,000 bond requirement.
$25,000 Mortgage Lender Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 700+ | $125 | $13 |
| 650 – 699 | $250 | $25 |
| 625 – 649 | $313 | $32 |
| 600 – 624 | $470 | $47 |
| 550 – 599 | $1,000 | $100 |
| 500 – 549 | $1,250 | $125 |
*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 Louisiana Define “Mortgage Lender?”
Louisiana statute 1083 defines a mortgage lender as any individual or business entity who originates or makes, or offers to originate or make, a residential mortgage loan.
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 Louisiana?
Mortgage Lenders in Louisiana 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 Louisiana Mortgage Lender License expires 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 limit based on the volume of loans originated in the previous calendar year:
| Loan Volume | Bond Amount |
|---|---|
| Less than $100 million | $25,000 |
| $100 million or more | $50,000 |
Step 2 – Request a NMLS Account
The Louisiana 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
All Louisiana Mortgage Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Company formation documents
- Mortgage Loan Originator Agreement
- Organizational chart detailing the company’s hierarchy
- Copies of all company promissory notes
- Verification of the company’s warehouse line of credit
- Certificate of Corporate Resolution
- Employer Coverage Affidavit
- Wholesale Lender Form (wholesale lenders only)
Mortgage lenders must pay the following fees when submitting their license application:
-
- $600 application fee
- $36.25 background check fee (per person)
How Do Louisiana 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. The Louisiana Mortgage Lender License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Louisiana Mortgage Lender License?
The State of Louisiana 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 limit based on the volume of loans originated in the previous calendar year:
| Loan Volume | Bond Amount |
|---|---|
| Less than $100 million | $25,000 |
| $100 million or more | $50,000 |
How Do Louisiana 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 NMLS number of entity/individual(s) buying the bond
- Surety company’s name and NAIC number
- Bond amount
- Date the bond is signed
What Can Louisiana Mortgage Lenders Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage lenders in Louisiana 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
- Honor all agreements made with consumers
What Other Insurance Products Can Agents Offer Mortgage Lenders in Louisiana?
Louisiana does not require mortgage lenders 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 Louisiana Mortgage Lender Customers?
The NMLS conveniently provides a public database to search for active mortgage lenders in Louisiana. The database can be accessed here. Contact BondExchange to learn more about the Louisiana Mortgage Lender Bond, we specialize in helping insurance agents obtain surety bonds for their customers.