Oregon Mortgage Servicer Bond: A Comprehensive Guide

August 11, 2021

Oregon Mortgage Servicer Bond

This guide provides information for insurance agents to help their customers obtain Oregon Mortgage Servicer Bonds

At a Glance:

  • Average Cost: Between $250 to $2,500 per year based on the applicant’s credit
  • Bond Amount: $50,000
  • Who Needs it: All mortgage servicers operating in Oregon
  • Purpose: To ensure the public will receive compensation for any damages should the mortgage servicer violate licensing law
  • Who Regulates Mortgage Servicers In Oregon: The Oregon Division of Financial Regulation

Background

Oregon statute 86A.306 requires all mortgage servicers 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 servicers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage servicers must purchase and maintain a $50,000 surety bond to be eligible for licensure.

What is the Purpose of the Oregon Mortgage Servicer Bond?

Oregon requires mortgage servicers 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 servicer fails to comply with the regulations set forth in Oregon statute 86A.324. Specifically, the bond protects the public in the event the mortgage servicer 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 servicer breaks licensing laws.

Oregon Mortgage Servicer Bond Form

Oregon Mortgage Servicer Bond Form

How Can an Insurance Agent Obtain an Oregon Mortgage Servicer Surety Bond?

BondExchange makes obtaining an Oregon Mortgage Servicer 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 Oregon Mortgage Servicer Bond?

Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Oregon Mortgage Servicer 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 Servicer Bond Cost?

The Oregon Mortgage Servicer Bond can cost anywhere between $250 to $2,500 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 Mortgage Servicer Bond Cost

Credit Score Bond Cost (1 year)
700+ $250
650 – 699 $500
625 – 649 $625
600 – 624 $940
550 – 599 $2,000
500 – 549 $2,500

How Does Oregon Define “Mortgage Servicer?”

Oregon statute 86A.303 defines a mortgage servicer as any business entity who receives periodic mortgage payments from a borrower and then pays these funds to a lender on the borrower’s behalf.

How Do Mortgage Servicers Apply for a License in Oregon

Mortgage servicers 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 Servicer License expires on December 31 of every year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Mortgage servicers must purchase and maintain a $50,000 surety bond

Step 2 – Request a NMLS Account

The Oregon Mortgage Servicer 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 Servicer License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

    • Company financial statements (audited or unaudited)
    • Primary company and consumer complaint contacts
    • Company’s FinCEN confirmation number and filing date
    • Disclosure questions 
    • Company business plan containing the following information:
      • Marketing strategies
      • Products
      • Target markets
      • Fee schedule
      • Operating structure the applicant intends to employ
      • A statement with a detailed breakdown of the portfolio of mortgage loan servicing rights on a nationwide basis, as well as separately for Oregon
    • Certificate of Good Standing
    • Company formation documents
    • Company management and organizational charts

Mortgage servicers must pay the following fees when submitting their license application

    • $960 license fee
    • $100 NMLS processing fee
    • $36.25 background check fee (per person)
    • $15 credit report fee (per person)

How Do Oregon Mortgage Servicers Renew Their License?

Mortgage servicers 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 Servicer 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 Servicer License?

Oregon does not require mortgage servicers to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage servicers must purchase and maintain a $50,000 surety bond.

How Do Oregon Mortgage Servicers File Their Bond?

Mortgage servicers 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 # of entity/individual(s) buying the bond
  • Surety company’s name and NAIC #
  • Bond amount
  • Date the bond goes into effect

What Can Oregon Mortgage Servicers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, mortgage servicers 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 Servicers in Oregon?

Oregon does not require mortgage servicers 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 Servicer Customers?

The NMLS conveniently provides a public database to search for active mortgage servicers 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.

2021-12-29T10:11:45-05:00