West Virginia Mortgage Lender Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a West Virginia Mortgage Lender bond
At a Glance:
- Lowest Cost: 0.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Based on the annual amount of mortgage loans originated
- Who Needs it: All mortgage lenders operating in West Virginia
- Purpose: To ensure the public will receive compensation for any damages should the mortgage lender fail to comply with licensing law
- Who Regulates Mortgage Lenders In West Virginia: The West Virginia Division of Financial Institutions
Background
West Virginia statute 31-17-4. requires all mortgage lenders operating in the state to obtain a license with the Division of Financial Institutions. The West Virginia legislature enacted the licensing laws and regulations to ensure that mortgage lenders engage in ethical business practices. 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 West Virginia Mortgage Lender Bond?
West Virginia 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 lender fails to comply with the licensing regulations set forth in West Virginia code Chapter 31 Article 17. Specifically, the bond protects the public in the event the 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 a West Virginia Mortgage Lender Bond?
BondExchange makes obtaining a West Virginia 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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How is the Bond Amount Determined?
The required bond amount for mortgage lenders is based on the annual amount of mortgage loans originated, as listed below
Table 1.1
| Loans Originated | Bond Amount |
|---|---|
| $0 to $3 million | $100,000 |
| Greater than $3 million to $10 million | $150,000 |
| Greater than $10 million | $250,000 |
Is a Credit Check Required for the West Virginia Mortgage Lender Bond?
Surety companies will run a credit check on the owners of the lending company to determine eligibility and pricing for the West Virginia Mortgage Lender Bond. Owner’s 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 West Virginia Mortgage Lender Bond Cost?
The West Virginia Mortgage Lender surety 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 $100,000 bond requirement.
$100,000 Mortgage Lender Bond Cost
Table 1.2
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 700+ | $500 | $50 |
| 650 – 699 | $1,000 | $100 |
| 625 – 649 | $1,250 | $125 |
| 600 – 624 | $1,880 | $188 |
| 550 – 599 | $4,000 | $400 |
| 500 – 549 | $5,000 | $500 |
How Does West Virginia Define “Mortgage Lender?”
West Virginia statute 31-17-1 defines a mortgage lender as any business entity who makes, accepts, purchases, or services mortgage loans in West Virginia.
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 West Virginia?
Mortgage lenders in West Virginia must navigate several steps to secure their license. Below are the general guidelines, but license applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The West Virginia Mortgage Lender License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage lenders must purchase and maintain a surety bond (limits outlined in Table 1.1)
Step 2 – Meet the Net Worth Requirements
Applicants for the West Virginia Mortgage Lender License must maintain a company net worth (assets – liabilities) of at least $250,000. Lenders must submit documents verifying their net worth when submitting their license application.
Step 3 – Register With the State Tax Department
All West Virginia businesses must register with the State Tax Department. To register, mortgage lenders simply need to follow the steps contained within the registration portal and pay a $30 fee.
Step 4 – Purchase Insurance
West Virginia requires all businesses with employees to purchase workers’ compensation insurance
Step 5 – Request a NMLS Account
The West Virginia 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 6 – Complete the Application
All West Virginia Mortgage Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Company formation documents
- Certificate of Good Standing
- Criminal background check
- Release form (if applicable)
- All (if any) mortgage loan originator license applications
- Certificate of compliance signed by an executive officer
Mortgage lenders must pay a $1,350 fee when submitting their license application.
How Do West Virginia 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 West Virginia Mortgage Lender License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the West Virginia Mortgage Lender License?
West Virginia requires all businesses with employees to purchase workers’ compensation insurance. Mortgage lenders must purchase and maintain a surety bond (limits outlined in Table 1.1)
How Do West Virginia 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 lending company. 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 is signed
What Can West Virginia Mortgage Lenders Do to Avoid Claims Against Their Bond?
To avoid claims made against their bond, mortgage lenders in West Virginia must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Do not breach any contracts made with consumers
- Do not engage in any acts of fraud
What Other Insurance Products Can Agents Offer Mortgage Lenders in West Virginia?
West Virginia requires all businesses with employees to purchase workers’ compensation insurance. 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 West Virginia Mortgage Lender Customers?
The NMLS conveniently provides a public database to search for active mortgage lenders in West Virginia. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.