Utah Mortgage Loan Originator Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Utah Mortgage Loan Originator Bonds
At a Glance:
- Lowest Cost: 0.75% of the bond amount per year based on the applicant’s credit
- Bond Amount: Based on the annual dollar amount of mortgage loans originated
Table 1.1
| Loans Originated | Bond Amount |
|---|---|
| $5 million or less | $12,500 |
| $5 million to $15 million | $25,000 |
| Over $15 million | $50,000 |
- Who Needs it: All mortgage loan originators (MLOs) operating in Utah
- Purpose: To ensure the public will receive compensation for any damages should the mortgage loan originator fail to comply with licensing law
- Who Regulates Mortgage Loan Originators In Utah: The Utah Department of Financial Institutions
Background
Utah statute 70D-3-201 requires all mortgage loan originators operating in the state to obtain a license with the Division of Real Estate. The Utah 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 must obtain surety bond coverage to be eligible for licensure.
What is the Purpose of the Utah Mortgage Loan Originator Bond?
Utah requires mortgage loan originators to obtain surety bond coverage 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 Utah statutes Title 70d Chapter 3. Specifically, the bond protects the public in the event the MLO fails to pay all required taxes and fees 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 a Utah Mortgage Loan Originator Surety Bond?
BondExchange makes obtaining a Utah 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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Can Utah Mortgage Loan Originators Obtain Bond Coverage From Their Employer?
Utah allows mortgage loan originators to obtain surety bond coverage through their employer. MLOs who are covered under their employer’s bond do not need to purchase an individual surety bond. Mortgage companies who wish to provide bond coverage for their MLO employees must purchase a surety bond with a limit based on the annual dollar amount of loans originated by their organization, as referenced below:
Table 1.2
| Loans Originated | Bond Amount |
|---|---|
| $10 million or less | $25,000 |
| $10 million to $30 million | $50,000 |
| Over $30 million | $100,000 |
Is a Credit Check Required for the Utah Mortgage Loan Originator Bond?
Surety companies will run a credit check on the MLO, or the owners of the company employing them, to determine eligibility and pricing for the Utah 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 Utah Mortgage Loan Originator Bond Cost?
The Utah Mortgage Loan Originator Bond can cost anywhere between 0.75% 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 $25,000 bond requirement.
$25,000 Mortgage Loan Originator Bond Cost
Table 1.3
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 700+ | $188 | $19 |
| 650 – 699 | $250 | $25 |
| 625 – 649 | $313 | $32 |
| 600 – 624 | $470 | $47 |
| 550 – 599 | $1,000 | $100 |
| 450 – 549 | $1,250 | $125 |
How Does Utah Define “Mortgage Loan Originator”?
To paraphrase Utah statute 70D-3-102, a mortgage loan originator is any individual who takes a residential mortgage loan application or who 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 Utah?
Mortgage loan originators in Utah 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 Utah Mortgage Loan Originator expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Complete the Pre-licensure Education
MLO license applicants must complete 20 hours of pre-licensure education conducted by an approved course provider
Step 2 – Pass the Exam
After completing their pre-licensure education, MLOs must satisfy one of the following examination requirements:
-
- Passing results on both the National and Utah 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 3 – Purchase a Surety Bond
Mortgage loan originators must either purchase (Table1.1) or obtain (Table 1.2) surety bond coverage
Step 4 – Request a NMLS Account
The Utah 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
All Utah Mortgage Loan Originator License applications can be completed online through the NMLS. Applicants must complete the entire application, and pay the following fees:
-
- $200 license fee
- $36.25 background check fee
- $30 NMLS processing fee
- $15 credit report fee
How Do Utah 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 Utah Mortgage Loan Originator expires on December 31 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for the Utah Mortgage Loan Originator License?
Utah does not require mortgage loan originators to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage loan originators must either purchase (Table1.1) or obtain (Table 1.2) surety bond coverage
How Do Utah 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 from the MLO. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Utah Mortgage Loan Originators Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage loan originators in Utah must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Pay all required taxes and fees
- Do not engage in any acts of fraud
- Honor all contractual obligations
What Other Insurance Products Can Agents Offer Mortgage Loan Originators in Utah?
Utah does not require mortgage loan originators to purchase any form of liability insurance as a prerequisite to obtaining a license. 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 Utah Mortgage Loan Originator Customers?
The NMLS conveniently provides a public database to search for active mortgage loan originators in Utah. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.