Oregon Mortgage Lender Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Oregon Mortgage Lender Bonds
At a Glance:
- Lowest Cost: 0.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Based on the total amount of mortgage loans originated in the previous 4 fiscal quarters
Table 1.1
| Mortgage Loans Originated | Bond Amount |
|---|---|
| Less than $10 million | $50,000 |
| $10 million to less than $25 million | $75,000 |
| $25 million to less than $50 million | $100,000 |
| $50 million to less than $100 million | $150,000 |
| $100 million or more | $200,000 |
First time license applicants must purchase a $50,000 bond
- Who Needs it: All mortgage lenders operating in Oregon
- Purpose: To ensure the public will receive compensation for any damages should the mortgage lender violate licensing law
- Who Regulates Mortgage Lenders In Oregon: The Oregon Division of Financial Regulation
Background
Oregon statute 86A.103 requires all mortgage lenders operating in the state to obtain a license with the Division of Financial Regulation. The Oregon legislature enacted the licensing laws and regulations to ensure that mortgage lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage lenders must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Oregon Mortgage Lender Bond?
Oregon requires mortgage lenders 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 lender fails to comply with the regulations set forth in Oregon statute 86A.106. Specifically, the bond protects the public in the event the mortgage lender 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 lender breaks licensing laws.
How Can an Insurance Agent Obtain an Oregon Mortgage Lender Surety Bond?
BondExchange makes obtaining an Oregon Mortgage Lender 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.
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 Oregon Mortgage Lender Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Oregon Mortgage Lender 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 Oregon Mortgage Lender Bond Cost?
The Oregon Mortgage Lender 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 Lender Bond Cost
Table 1.2
| 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 Oregon Define “Mortgage Lender?”
To paraphrase Oregon statute 86A.100, a mortgage lender is any business entity who provides one or more of the following services:
- Assists consumers in obtaining residential mortgage loans
- Make residential mortgage loans
- Sell residential real estate paper
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 Lenders Apply for a License in Oregon
Mortgage lenders in Oregon 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 Oregon Mortgage Lender License expires on December 31 of every year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
First time license applicants must purchase and maintain a $50,000 surety bond
Step 2 – Hire a Qualifying Individual
Oregon requires all mortgage lender license applicants to employ a qualifying individual who has at least three years of experience in mortgage lending within the past 5 years
Step 3 – Request a NMLS Account
The Oregon Mortgage Lender 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
All Oregon Mortgage Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Unaudited company financial statements prepared within the last 6 months
- Disclosure questions
- Company business plan containing the following information:
- Marketing strategy
- Products
- Target markets
- Operating structure
- Certificate of Good Standing
- Company formation documents
- Company management and organizational charts
- This form if the company never plans to accept money for the payment of third party service providers
- This form if the company does plan to accept money for the payment of third party service providers
Mortgage lenders must pay a $1,060 fee when submitting their license application.
How Do Oregon Mortgage Lenders Renew Their License?
Mortgage lenders can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Oregon Mortgage Lender License expires on December 31 of every year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Oregon Mortgage Lender License?
Oregon does not require mortgage lenders to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage lenders must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do Oregon Mortgage Lenders File Their Bond?
Mortgage lenders 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 of entity/individual(s) buying the bond
- Surety company’s name and
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Oregon Mortgage Lenders Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage lenders in Oregon 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
What Other Insurance Products Can Agents Offer Mortgage Lenders in Oregon?
Oregon does not require mortgage lenders 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 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 Oregon Mortgage Lender Customers?
The NMLS conveniently provides a public database to search for active mortgage lenders in Oregon. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.