Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Virginia mortgage broker bond needs. Learn how to become a mortgage broker in Virginia, below.
What Mortgage Broker Licenses Are Issued in Virginia?
The Commonwealth of Virginia requires companies and sole proprietors to obtain a mortgage broker license before they can directly or indirectly negotiate, place, or find mortgage loans for others or offer to do so.
Mortgage brokers who originate or make mortgage loans must also obtain a lender license. Individuals working for such companies who take residential mortgage applications or offer or negotiate the terms of residential mortgage loans must be licensed as mortgage loan originators. Our focus here is solely on mortgage broker licenses.
What Are the Steps in the Licensing Process?
While the Virginia Bureau of Financial Institutions (BFI) issues mortgage broker licenses, applications for licensure are submitted through and processed by the Nationwide Mortgage Licensing System (NMLS). The NMLS website lists the requirements and procedures for getting licensed as a Virginia mortgage broker.
Before you start working on your mortgage broker application, make sure you meet the eligibility requirements. Although there is no required pre-licensure education or examination, there is an experience requirement, and your company must be properly registered with the Virginia State Corporation Commission.
The process for obtaining a mortgage broker license involves the following steps:
- Applying for an NMLS account and ID number.
- Completing the applicable sections of the mortgage broker application and uploading certain supporting documents to NMLS. (Some required documents must be to BFI).
- Purchasing and submitting a Virginia mortgage broker surety bond in the amount of $25,000.
- Paying the application and NMLS processing fees (currently totaling $600), as well as other applicable fees.
Why is a Mortgage Broker Bond Required?
A Virginia mortgage broker bond is a legally binding contract between three parties:
- BFI is the “obligee” requiring the bond.
- The mortgage broker is the “principal” required to purchase the bond.
- The bonding company underwriting and authorizing the bond is the “surety.”
The bond indemnifies BFI and the Commonwealth against liability for any financial harm to consumers resulting from the unlawful or unethical actions of the principal. In purchasing the bond, the principal agrees to do business in full compliance with applicable state laws and to pay any valid claim filed against the bond.
How Are Mortgage Broker Bond Claims Paid?
The principal is legally obligated to pay claims against the Virginia mortgage broker bond, but the actual payment to the claimant is made by the surety. This draws against a line of credit established for the principal when the bond is issued. That payment creates a debt that the principal must subsequently pay back to the surety. This process ensures prompt payment of the claim and allows the principal to repay the surety in manageable installments rather than having to come up with a large sum of money all at once.
How Much Does a Virginia Mortgage Broker Bond Cost?
While the obligee established the $25,000 required bond amount (also known as the bond’s “penal sum”), the premium rate that will determine how much the principal pays for the bond is set by the surety on a case-by-case basis.
The surety’s main concern is the risk involved in extending credit to the principal. So, the premium rate reflects the underwriters’ assessment of the principal’s creditworthiness and financial strength. Someone with a high personal credit score will pay a lower premium rate (typically in the 1% to 3% range) than someone with lesser credit.
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