Wisconsin Mortgage Broker Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Wisconsin Mortgage Broker Bond
At a Glance:
- Lowest Cost: $900 per year or $90 per month based on the applicant’s credit
- Bond Amount: $120,000
- Who Needs it: All mortgage brokers operating in Wisconsin
- Purpose: To ensure the public will receive compensation for any damages should the mortgage broker fail to comply with licensing law
- Who Regulates Mortgage Brokers In Wisconsin: The Wisconsin Department of Financial Institutions
Background
Wisconsin statute 224.72 requires all mortgage brokers operating in the state to obtain a license with the Department of Financial Institutions. The Wisconsin legislature enacted the licensing laws and regulations to ensure that mortgage brokers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, mortgage brokers must purchase and maintain a $120,000 surety bond to be eligible for licensure.
What is the Purpose of the Wisconsin Mortgage Broker Bond?
Wisconsin requires mortgage brokers 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 broker fails to comply with the licensing regulations set forth in Wisconsin statute 224.72. Specifically, the bond protects the public in the event the broker company 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 broker breaks licensing laws.
How Can an Insurance Agent Obtain a Wisconsin Mortgage Broker Bond?
BondExchange makes obtaining a Wisconsin Mortgage Broker 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 Wisconsin Mortgage Broker Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Wisconsin Mortgage Broker 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 Wisconsin Mortgage Broker Bond Cost?
The Wisconsin Mortgage Broker Bond can cost anywhere between $900 to $6,000 per year or $90 to $600 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $120,000 bond requirement.
$120,000 Mortgage Broker Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 700+ | $900 | $90 |
| 650 – 699 | $1,200 | $120 |
| 625 – 649 | $1,500 | $150 |
| 600 – 624 | $2,256 | $226 |
| 550 – 599 | $4,800 | $480 |
| 450 – 549 | $6,000 | $600 |
How Does Wisconsin Define “Mortgage Broker?”
To paraphrase Wisconsin statute 224.72, a mortgage broker is any business entity who finds or negotiates a residential mortgage loan for a consumer or engages in table funding.
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 Brokers Apply for a License in Wisconsin?
Mortgage brokers in Wisconsin 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 Wisconsin Mortgage Broker License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage brokers must purchase and maintain a $120,000 surety bond
Step 2 – Request an NMLS Account
The Wisconsin Mortgage Broker 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 3 – Complete the Application
All Wisconsin Mortgage Broker License applications can be completed online through the NMLS. Completed applications will include the following items:
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- Company financial statements prepared by a CPA
- Certificate of Good Standing
- Company formation documents
Mortgage brokers must pay an $850 fee when submitting their license application.
How Do Wisconsin Mortgage Brokers Renew Their License?
Mortgage brokers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Wisconsin Mortgage Broker License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Wisconsin Mortgage Broker License?
Wisconsin does not require mortgage brokers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Mortgage brokers must purchase and maintain a $120,000 surety bond.
How Do Wisconsin Mortgage Brokers File Their Bond?
Mortgage brokers 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:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name
- Date the bond goes into effect
- Date the bond is signed
What Can Wisconsin Mortgage Brokers Do to Avoid Claims Against Their Bond?
To avoid claims made against their bond, mortgage brokers in Wisconsin must 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 Brokers in Wisconsin?
Wisconsin does not require mortgage brokers 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 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 Wisconsin Mortgage Broker Customers?
The NMLS conveniently provides a public database to search for active mortgage brokers in the state. 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.