Ohio Mortgage Loan Originator Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Ohio Mortgage Loan Originator Bonds
At a Glance:
- Average Cost: Between 0.5% to 5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Between $50,000 to $150,000 (more on this later)
- Who Needs it: All Ohio mortgage loan originators (MLOs) who work for exempt entities and are not covered under their employer’s surety bond (more on this later)
- 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 Ohio: The Ohio Division of Financial Institutions
Background
Ohio statute 1322.07 requires all mortgage loan originators operating in the state to obtain a license with the Department of Financial Services. The Ohio legislature enacted the licensing laws and regulations to ensure that mortgage loan originators engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage loan originators who work for exempt entities and who are not covered under their employer’s bond must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Ohio Mortgage Loan Originator Bond?
Ohio requires mortgage loan originators who work for exempt entities and who are not covered under their employer’s 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 mortgage loan originator fails to comply with the regulations set forth in Ohio statute 1322.32. Specifically, the bond protects the public in the event the mortgage loan originator 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 loan originator breaks licensing laws.
How Can an Insurance Agent Obtain an Ohio Mortgage Loan Originator Surety Bond?
BondExchange makes obtaining an Ohio 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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How is the Bond Amount Determined?
The limit on the Mortgage Loan Originator bond must be equal to 0.5% of the aggregate loan amount of residential mortgage loans originated in the immediately preceding calendar year. The bond amount may not exceed $150,000 ($100,000 for MLOs who file their own bond). Additionally, the bond may not be less than $50,000 plus an additional $10,000 per branch office location.
Is a Credit Check Required for the Ohio Mortgage Loan Originator Bond?
Surety companies will run a credit check on the MLO (or their employer) to determine eligibility and pricing for the Ohio 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 Ohio Mortgage Loan Originator Bond Cost?
The Ohio 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) |
|---|---|---|
| 700+ | $250 | $25 |
| 650 – 699 | $500 | $50 |
| 625 – 649 | $625 | $63 |
| 600 – 624 | $940 | $94 |
| 550 – 599 | $2,000 | $200 |
| 500 – 549 | $2,500 | $250 |
How Does Ohio Define “Mortgage Loan Originator?”
Ohio statute 1322.01 defines a mortgage loan originator as any individual who provides one or more of the following services:
- Takes a residential mortgage loan application
- Offers or negotiates the terms of a residential mortgage loan
- Issues a commitment to a residential mortgage loan to a buyer
Who is Required to Purchase a Bond?
Mortgage loan originators who work for, or contract their services to, entities that are exempt from licensing under the Ohio Residential Mortgage Lending Act must obtain surety bond coverage. The MLO can either purchase an individual surety bond, or be covered by the exempt entity’s bond. The following are entities are exempt from obtaining a mortgage license/registration in Ohio:
- Credit union service organizations
- Depository institutions
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 Ohio?
Mortgage loan originators in Ohio 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 Ohio 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 who work for exempt organizations must either purchase an individual surety bond or be covered under their employer’s bond (limits outlined above)
Step 2 – Complete the Pre-Licensure Education
All MLO license applicants must 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 Ohio 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 – Obtain Company Sponsorship
All mortgage loan originators must have their license application sponsored by the exempt entity with whom they are employed with or contract their services to
Step 5 – Request a NMLS Account
The Ohio 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 6 – Complete the Application
All Ohio Mortgage Loan Originator License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Disclosure questions
- Ohio attestation
- Detailed resume (operations manager only)
Mortgage loan originators must pay the following fees when submitting their license application:
-
- $150 application fee
- $36.25 background check fee
- $30 NMLS processing fee
- $15 credit report fee
How Do Ohio 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 Ohio 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 Ohio Mortgage Loan Originator License?
Ohio does not require mortgage loan originators to purchase any form of liability insurance as a prerequisite to obtaining a business license. MLOs who work for exempt organizations must either purchase an individual surety bond or be covered under their employer’s bond (limits outlined above).
How Do Ohio Mortgage Loan Originators File Their Bond?
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 address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Bond term
- Date the bond is signed
What Can Ohio Mortgage Loan Originators Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage loan originators in Ohio must ensure that they 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
- Do not breach any contracts made with consumers
- Do not charge exorbitant fees
What Other Insurance Products Can Agents Offer Mortgage Loan Originators in Ohio?
Ohio does not require mortgage loan originators to purchase any form of liability 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 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 Ohio Mortgage Loan Originator Customers?
The NMLS conveniently provides a public database to search for active mortgage loan originators in Ohio. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.