Missouri Residential Mortgage Loan Broker Bond: A Comprehensive Guide
July 6, 2021
This guide provides information for insurance agents to help their customers obtain Missouri Residential Mortgage Loan Broker 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 on the amount of mortgage loans brokered, funded, or serviced:
|Amount of Loans Brokered, Funded, and Serviced||Bond Amount for Loans Brokered||Bond Amount for Loans Funded||Bond Amount for Loans Serviced|
|$7.5 million or less||$50,000||$50,000||$50,000|
|Over $7.5 million to $15 million||$50,000||$100,000||$100,000|
|Over $15 million to $22.5 million||$75,000||$150,000||$150,000|
|Over $22.5 million to $30 million||$100,000||$200,000||$200,000|
|Over $30 million to $45 million||$150,000||$300,000||$300,000|
|Over $45 million to $60 million||$200,000||$400,000||$400,000|
|Over $60 million||$250,000||$500,000||$500,000|
- Who Needs it: All residential mortgage loan brokers operating in Missouri
- Purpose: To ensure the public will receive compensation for any damages should the mortgage broker fail to comply with licensing law
- Who Regulates Residential Mortgage Loan Brokers in Missouri: The Missouri Division of Finance
Missouri statute 443.805 requires all residential mortgage loan brokers operating in the state to obtain a license with the Division of Finance. The Missouri legislature enacted the licensing laws and regulations to ensure that mortgage brokers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage brokers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Missouri Residential Mortgage Loan Broker Bond?
Missouri requires mortgage loan brokers 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 broker fails to comply with the regulations set forth in Missouri statute 443.849 (the statute outlines a $20,000 bond limit, but the Division of Finance increased the limit to $50,000). Specifically, the bond protects the public in the event the broker engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the mortgage broker breaks licensing laws.
How Can an Insurance Agent Obtain a Missouri Residential Mortgage Loan Broker Surety Bond?
BondExchange makes obtaining a Missouri Residential Mortgage Loan Broker 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 Missouri Residential Mortgage Loan Broker Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Missouri Residential Mortgage Loan Broker 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 Missouri Residential Mortgage Loan Broker Bond Cost?
The Missouri Residential Mortgage Loan Broker 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 the $50,000 bond requirement.
$50,000 Residential Mortgage Loan Broker Bond Cost
|Credit Score||Bond Cost (1 year)|
|650 – 699||$500|
|625 – 649||$750|
|600 – 624||$1,250|
|550 – 599||$2,000|
|500 – 549||$2,500|
Who is Required to Obtain a License?
Missouri statute 443.801 requires all business entities who provide one or more of the following services to obtain a license:
- Helps a borrower obtain a residential mortgage loan
- Advances funds or makes a commitment to an applicant for a residential mortgage loan
- Collects mortgage payments from a borrower
- Purchases residential mortgage loans
How do Residential Mortgage Brokers Apply for a License in Missouri?
Mortgage Brokers in Missouri 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 Missouri Mortgage Company License expires one year from the date of issuance and every two years thereafter
Step 1 – Establish a Place of Business
Mortgage brokers must establish a place of business that is in-state, full-service, staffed and open to the general public. Mortgage companies headquartered outside of Missouri must have at least one Missouri based office location managed by a licensed mortgage loan originator.
Step 2 – Purchase a Surety Bond
Applicants for the Mortgage Company License must purchase and maintain a surety bond (limits outlined in Table 1.1)
Step 3 – Request a NMLS Account
The Missouri Mortgage Company 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 4 – Complete the Application
- Application Averment and Release Form
- Company formation documents
- Organizational chart if the applicant is owned by a separate individual/entity or has any subsidiaries
Mortgage companies must pay the following fees when submitting their license application:
- $600 first year license fee
- $300 investigation fee
- $100 NMLS processing fee
- $36.25 background check fee (per person)
- $15 credit report fee (per person)
How Do Missouri Mortgage Brokers Renew Their License?
Mortgage brokers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Missouri Mortgage Company License expires one year from the date of issuance and every two years thereafter.
What are the Insurance Requirements for the Missouri Mortgage Company License?
Missouri does not require mortgage companies to purchase any form of liability insurance as a prerequisite to obtaining a business license. Applicants for the Mortgage Company License must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do Missouri Mortgage Companies File Their Bond?
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:
- Name and NMLS number of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What Can Missouri Mortgage Brokers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage brokers in Missouri 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
- Pay all required taxes and fees
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Mortgage Brokers in Missouri?
Missouri does not require mortgage brokers to purchase any form of liability insurance as a prerequisite to obtaining a business 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 Missouri Mortgage Broker Customers?
The NMLS conveniently provides a public database to search for active mortgage brokers in Missouri. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.