New Mexico Mortgage Loan Originator Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain New Mexico Mortgage Loan Originator Bonds
At a Glance:
- Lowest Cost: $250 per year or $25 per month based on the applicant’s credit
- Bond Amount: Based on the total annual amount of mortgage loans originated
|Mortgage Loans Originated||Bond Amount|
|$0 – $3 million||$50,000|
|Over $3 million but less than $10 million||$100,000|
|Greater than $10 million||$150,000|
- Who Needs it: All New Mexico mortgage loan originators who are not sponsored by their employer’s surety bond
- Purpose: To ensure the public will receive compensation for any damages should the mortgage loan originator violate licensing law
- Who Regulates Mortgage Loan Originators in New Mexico: The New Mexico Financial Institutions Division
New Mexico statute 58-21B-4 requires all mortgage loan originators (MLOs) operating in the state to obtain a license with the Financial Institutions Division. The New Mexico legislature enacted the licensing laws and regulations to ensure that MLOs engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, MLOs who are not covered under their employer’s surety bond must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the New Mexico Mortgage Loan Originator Bond?
New Mexico requires mortgage loan originators who are not covered under their employer’s surety bond 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 MLO fails to comply with the regulations set forth in the New Mexico statutes 58-21B. Specifically, the bond protects the public in the event the MLO 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 MLO breaks licensing laws.
How Can an Insurance Agent Obtain a New Mexico Mortgage Loan Originator Bond?
BondExchange makes obtaining a New Mexico Mortgage Loan Originator 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.
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Do all New Mexico Mortgage Loan Originators Need to Purchase a Bond?
No, mortgage loan originators who are employed by a licensed mortgage loan company, and are therefore covered under their employer’s surety bond, are not required to purchase a bond.
Is a Credit Check Required for the New Mexico Mortgage Loan Originator Bond?
Surety companies will run a credit check on the MLO to determine eligibility and pricing for the New Mexico Mortgage Loan Originator bond. MLOs with excellent credit and work experience can expect to receive the best rates. MLOs 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 MLO’s credit.
How Much Does the New Mexico Mortgage Loan Originator Bond Cost?
The New Mexico Mortgage Loan Originator 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 $50,000 bond requirement.
$50,000 Mortgage Loan Originator Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|650 – 699||$500||$50|
|625 – 649||$625||$63|
|600 – 624||$940||$94|
|550 – 599||$2,000||$200|
|500 – 549||$2,500||$250|
How Does New Mexico Define “Mortgage Loan Originator?”
New Mexico statute 58-21B-3 defines a mortgage loan originator as any business entity who takes a residential mortgage loan application or offers or negotiates the terms of 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 Loan Originators Apply For a License in New Mexico?
Mortgage loan originators in New Mexico 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 New Mexico Mortgage Loan Originator License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Obtain Surety Bond Coverage
MLOs must either be covered under their employer’s surety bond or purchase an individual surety bond (limits outlined in Table 1.1)
Step 2 – Complete the Pre-Licensing Education
All MLOs are required to complete 20 hours of pre-licensure education conducted by an approved course provider
Step 3 – Pass the Exam
After completing their pre-licensure education, MLOs must satisfy one of the following exam requirements:
- Passing results on both the National and New Mexico State components of the SAFE Test
- Passing results on both the National and Stand-alone UST components of the SAFE Test
- Passing results on the National Test Component with Uniform State Content
Step 4 – Request a NMLS Account
The New Mexico Mortgage Loan Originator 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 5 – Complete the Application
- Disclosure questions
- Full list of the MLO’s employment history and a resume verifying the experience
Mortgage loan originators must pay the following fees when submitting their license application:
- $200 license fee
- $200 application fee
- $36.25 background check fee
- $30 NMLS processing fee
- $15 credit report fee
How Do New Mexico Mortgage Loan Originators Renew Their License?
Mortgage loan originators can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The New Mexico Mortgage Loan Originator License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the New Mexico Mortgage Loan Originator License?
New Mexico does not require mortgage loan originators to purchase any form of liability insurance as a prerequisite to obtaining a license. MLOs must either be covered under their employer’s surety bond or purchase an individual surety bond (limits outlined in Table 1.1).
How Do New Mexico Mortgage Loan Originators File Their Bond?
New Mexico mortgage loan originators 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 the MLO. The surety company should include the following information on the bond form:
- Name and phone number of entity/individual(s) buying the bond
- Surety company’s name, phone number, and state of incorporation
- Bond amount
- Date the bond is signed
What Can New Mexico Mortgage Loan Originators Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage loan originators in New Mexico must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Mortgage Loan Originatorsin New Mexico?
New Mexico does not require mortgage loan originators 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 New Mexico Mortgage Loan Originator Customers?
The NMLS conveniently provides a public database to search for active mortgage loan originators in New Mexico. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.