Massachusetts Mortgage Loan Originator Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Massachusetts Mortgage Loan Originator Bonds
At a Glance:
- Lowest Cost: $188 per year or $19 per month based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All Massachusetts mortgage loan originators (MLO) who are not listed under their employer’s surety bond coverage
- 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 Massachusetts: The Massachusetts Division of Banks
Background
Massachusetts general law 255F s. 2 requires all mortgage loan originators operating in the state to obtain a license with the Division of Banks. The Massachusetts 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, who are not covered under their employers surety bond, must purchase and maintain a $25,000 surety bond to be eligible for licensure.
What is the Purpose of the Massachusetts Mortgage Loan Originator Bond?
Massachusetts requires mortgage loan originators, who are not covered under their employer’s bond, 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 loan originator fails to comply with the licensing regulations set forth in Massachusetts general law 255F. Specifically, the bond protects the public in the event the mortgage loan originator engages in any acts of fraud or fails to honor agreements 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 Massachusetts Mortgage Loan Originator Surety Bond?
BondExchange makes obtaining a Massachusetts 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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Do all Mortgage Loan Originators Need to Purchase a Surety Bond?
No, Massachusetts general law 255f s. 12 allows MLOs to be covered under their employer’s surety bond. MLOs who are not covered under their employer’s bond must purchase and maintain a $25,000 surety bond
Is a Credit Check Required for the Massachusetts Mortgage Loan Originator Bond?
Surety companies will run a credit check on the mortgage loan originator to determine eligibility and pricing for the Massachusetts Mortgage 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 Massachusetts Mortgage Loan Originator Bond Cost?
The Massachusetts Mortgage Loan Originator surety bond can cost anywhere between $188 to $1,250 per year or $19 to $125 per month. 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 $25,000 bond requirement.
$25,000 Mortgage Loan Originator Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 700+ | $188 | $19 |
| 650 – 699 | $250 | $25 |
| 625 – 649 | $313 | $32 |
| 600 – 624 | $375 | $38 |
| 550 – 599 | $750 | $75 |
| 500 – 549 | $1,250 | $125 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Massachusetts Define “Mortgage Loan Originator?”
Massachusetts general law 255F s. 1 defines a mortgage loan originator as any individual who takes a residential mortgage loan application or offers or 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 Massachusetts?
Mortgage loan originators in Massachusetts 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 Massachusetts Mortgage Loan Originator License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Complete the Pre-Licensure Education
MLOs must complete 20 hours of pre-licensure education prior to submitting their license application
Step 2 – Pass the Exam
Once the pre-licensure education has been completed, MLOs must pass the required licensure examinations, which will be administered through the Nationwide Multistate Licensing System (NMLS)
Step 3 – Obtain a Company Sponsorship
Applicants for the Mortgage Loan Originator License must obtain a company sponsorship for their license application. The company sponsor should be the MLO’s employer, and the employer must submit the sponsorship letter themselves.
Step 4 – Purchase a Surety Bond
MLOs who are not covered under their employer’s bond must purchase and maintain a $25,000 surety bond
Step 5 – Request a NMLS Account
The Massachusetts Mortgage Loan Originator License application is submitted electronically through the NMLS. To submit a license application, applicants must first request to obtain an NMLS account.
Step 6 – Complete the Application
All Massachusetts Mortgage Loan Originator License applications can be completed online through the NMLS. Applicants must complete the entire application, and pay the following fees:
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- $500 license fee
- $115 investigation fee
- $36.25 background check fee
- $30 NMLS processing fee
- $15 credit report fee
How Do Massachusetts 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 Massachusetts Mortgage Loan Originator License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Massachusetts Mortgage Loan Originator License?
The State of Massachusetts does not require mortgage loan originators to obtain any form of liability insurance as a prerequisite to obtaining a business license. MLOs who are not covered under their employer’s bond must purchase and maintain a $25,000 surety bond.
How Do Massachusetts 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 the mortgage loan originator. The surety company should include the following information on the bond form:
- Legal name and address of individual buying the bond
- Surety company’s name and state of incorporation
- Date the bond is signed
What Can Massachusetts Mortgage Loan Originators Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage loan originators in Massachusetts 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
- Honor all agreements made with consumers
What Other Insurance Products Can Agents Offer Mortgage Loan Originators in Massachusetts?
Massachusetts does not require mortgage Loan Originators to purchase any form of liability insurance as a prerequisite to obtaining a 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 Massachusetts Mortgage Loan Originator Customers?
The NMLS conveniently provides a public database to search for active mortgage loan originators in Massachusetts. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
