New Mexico Escrow Company Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a New Mexico Escrow Company bond.
At a Glance:
- Lowest Cost: $375 per year or 38 a month
- Bond Amount: $100,000
- Who Needs It: Within the first three years of licensure, escrow companies operating in New Mexico must purchase and maintain a surety bond
- Purpose: To protect the public from financial harm if the escrow company commits fraud or engages in unfair business practices
- Who Regulates Escrow Companies in New Mexico: The New Mexico Regulation and Licensing Department
Background
New Mexico Statute 58-22-8 requires all escrow companies operating in the state to obtain a license from the Regulation and Licensing Department. The New Mexico Legislature enacted the licensing requirement to ensure that escrow companies do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, escrow companies must purchase and maintain a $100,000 surety bond to be eligible for licensure.
What Is the Purpose of the New Mexico Escrow Company Bond?
Within the first three years of licensure, escrow companies operating in New Mexico must purchase and maintain an Escrow Company bond. The bond ensures that restitution is available to any damaged party should the escrow company fail to abide by the regulations outlined in the New Mexico Statutes, Chapter 58. Specifically, the bond protects claimants if the escrow company commits fraud or engages in unfair business practices. In short, the bond is a type of insurance that protects the public if the escrow company violates the terms of its license.
How Can an Insurance Agent Obtain a New Mexico Escrow Company Bond?
BondExchange makes obtaining a New Mexico Escrow Company bond easy. Simply log in to your account and use our keyword search to find the “escrow company” 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.
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Is a Credit Check Required for the New Mexico Escrow Company Bond?
Surety companies will run a credit check on the escrow company to determine eligibility and pricing for the New Mexico Escrow Company bond. Escrow companies with excellent credit and work experience can expect to receive the best rates. Escrow companies with poor credit may be declined by some surety companies or have to pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the New Mexico Escrow Company Bond Cost?
The New Mexico Escrow Company bond can cost between $375 to $6,000 per year or $38 to $600 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below briefly references the approximate bond cost on the $100,000 bond requirement.
$100,000 New Mexico Escrow Company Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $375 | $38 |
| 680 – 719 | $450 | $45 |
| 660 – 679 | $700 | $70 |
| 649 – 659 | $1,000 | $100 |
| 629 – 648 | $1,500 | $150 |
| 600 – 628 | $2,500 | $250 |
| 580 – 599 | $3,500 | $350 |
| 550 – 579 | $4,000 | $400 |
| 525 – 549 | $5,000 | $500 |
| 500 – 524 | $6,000 | $600 |
*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 New Mexico Define “Escrow Company”?
To paraphrase New Mexico Statute 58-22-3, an escrow company is a business that holds property in a trust for a third party until certain conditions have been met. For example, when an individual is purchasing a house, an escrow company will hold onto the title to the property and the initial down payment until both the buyer and seller meet all of their contractual obligations.
Exemptions to this definition include the following:
- Banks, trust companies, building/loan or savings/loan associations, credit unions, or insurance companies
- Licensed attorneys performing their regular duties
- Licensed abstractors performing title searches for the issuance of a title insurance policy
- Licensed real estate brokers
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 Escrow Companies Become Licensed in New Mexico?
Escrow companies in New Mexico must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department’s Escrow Company Forms webpage for details on the process.
License Period – New Mexico escrow company licenses must be renewed on or before June 1st of each year.
Step 1 – Purchase a Surety Bond
Within the first three years of licensure, escrow companies operating in New Mexico must purchase and maintain a surety bond. The surety bond requirement no longer applies after three years of consecutive licensure.
Step 2 – Complete License Application
Complete and submit the Escrow Company License Application to the New Mexico Regulation and Licensing Department. In addition, include all required attachments and a $400 fee.
How Do Escrow Companies in New Mexico Renew Their Licenses?
New Mexico escrow company licenses must be renewed with the Department of Regulation and Licensing Department on or before June 1st of each year. The renewal application can be found here.
What Are the Insurance Requirements for Escrow Companies in New Mexico?
New Mexico does not require escrow companies to purchase any form of liability insurance as a prerequisite to obtaining a license. Within the first three years of licensure, escrow companies must purchase and maintain a $100,000 surety bond.
How Do Escrow Companies File Their Bonds in New Mexico?
Escrow companies should submit their completed bond forms, including the power of attorney when submitting their license applications to the New Mexico Department of Regulation and Licensing (see the mailing address listed below).
New Mexico Department of Regulation and Licensing
PO Box 25101
Santa Fe, NM 87504
The surety bond requires signatures from the surety company, as well as a representative from the escrow company. The surety company should include the following information on the bond form:
- The legal name of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can New Mexico Escrow Companies Do to Avoid a Claim Against Their Surety Bond?
To avoid claims against their bonds, escrow companies in New Mexico must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Negligence
- Unethical business practices
- Fraud
What Other Insurance Products Can Agents Offer Escrow Companies in New Mexico?
Most reputable escrow companies will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of 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 Escrow Company Customers in New Mexico?
New Mexico conveniently provides a public database to search for active escrow companies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.