Minnesota Accelerated Mortgage Payment Provider Bond: A Comprehensive Guide

June 30, 2021

Minnesota Accelerated Mortgage Payment Provider Bond

This guide provides information for insurance agents to help their customers obtain Minnesota Accelerated Mortgage Payment Provider Bonds

At a Glance:

  • Average Cost: Between $750 to $5,000 per year based on the applicant’s credit
  • Bond Amount: $100,000
  • Who Needs it: All accelerated mortgage payment providers operating in Minnesota
  • Purpose: To ensure the public will receive compensation for any damages should the accelerated mortgage payment provider fail to comply with licensing law
  • Who Regulates Accelerated Mortgage Payment Providers in Minnesota: The Minnesota Department of Commerce

Background

The Minnesota Department of Commerce requires all accelerated mortgage payment providers operating in the state to obtain a business license through the Nationwide Multistate Licensing System (NMLS). The Minnesota legislature enacted the licensing laws and regulations to ensure that accelerated mortgage payment providers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, accelerated mortgage payment providers must purchase and maintain a $100,000 surety bond to be eligible for licensure.

What is the Purpose of the Minnesota Accelerated Mortgage Payment Provider Bond?

Minnesota requires accelerated mortgage payment providers 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 payment provider fails to comply with the regulations set forth in Minnesota statutes 332.30-303. Specifically, the bond protects the public in the event the payment provider engages in any acts of fraud or fails to honor consumer agreements. In short, the bond is a type of insurance that protects the public if the accelerated mortgage payment provider breaks licensing laws.

Minnesota Accelerated Mortgage Payment Provider Bond Form

Minnesota Accelerated Mortgage Payment Provider Bond Form

How Can an Insurance Agent Obtain a Minnesota Accelerated Mortgage Payment Provider Surety Bond?

BondExchange makes obtaining a Minnesota Accelerated Mortgage Payment Provider 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? 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 Minnesota Accelerated Mortgage Payment Provider Bond?

Surety companies will run a credit check on the payment company to determine eligibility and pricing for the Minnesota Accelerated Mortgage Payment Provider 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 Minnesota Accelerated Mortgage Payment Provider Bond Cost?

The Minnesota Accelerated Mortgage Payment Provider bond can cost anywhere between $750 to $5,000 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 $100,000 bond requirement.

$100,000 Accelerated Mortgage Payment Provider Bond Cost

Credit Score Bond Cost (1 year)
700+ $750
650 – 699 $1,000
625 – 649 $1,250
600 – 624 $1,880
550 – 599 $4,000
450 – 549 $5,000

How Does Minnesota Define Accelerated Mortgage Payment Provider?

To paraphrase Minnesota statute 332A.02, an accelerated mortgage payment provider is any business entity who makes mortgage payments on behalf of a debtor in order to exceed the debtor’s regularly scheduled mortgage payments. Simply put, accelerated mortgage payment providers help homeowners pay off their mortgage more quickly.

How do Accelerated Mortgage Payment Providers Apply for a License in Minnesota?

Accelerated mortgage payment providers in Minnesota 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 Minnesota Accelerated Mortgage Payment Provider License is perpetual and does not expire unless revoked or surrendered

Step 1 – Purchase a Surety Bond

Accelerated mortgage payment providers must purchase and maintain a $100,000 surety bond

Step 2 – Request a NMLS Account

The Minnesota Accelerated Mortgage Payment Provider 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 Minnesota Accelerated Mortgage Payment Provider 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 contact information
    • Information for the company bank account used solely for client funds
    • Company business plan containing the following information:
      • Marketing strategies
      • Products
      • Target markets
      • Fee schedule
      • Operating structure the applicant intends to employ
    • Certificate of Good Standing
    • Company staffing and internal policies
    • Sample copy used with homeowners
    • Company formation documents
    • Management chart showing the company’s hierarchy
    • Organizational chart showing the company’s ownership structure
    • Authorization for all trust accounts
    • BCA Form

Accelerated mortgage payment providers must pay a $250 licensing fee when submitting their application.

What are the Insurance Requirements for the Minnesota Accelerated Mortgage Payment Provider License?

Minnesota does not require accelerated mortgage payment providers to purchase any form of liability insurance as a prerequisite to obtaining a business license. The Minnesota Accelerated Mortgage Payment Provider License is perpetual and does not expire unless revoked or surrendered.

How Do Minnesota Accelerated Mortgage Payment Providers File Their Bond?

Accelerated mortgage payment providers 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 payment company 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 goes into effect
  • Date the bond is signed

What Can Minnesota Accelerated Mortgage Payment Providers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, accelerated mortgage payment providers in Minnesota 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
  • Faithfully adhere to all consumer agreements

What Other Insurance Products Can Agents Offer Accelerated Mortgage Payment Providers in Minnesota?

Minnesota does not require accelerated mortgage payment providers 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 Minnesota Accelerated Mortgage Payment Provider Customers?

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

2021-12-28T15:19:41-05:00