Alaska Mortgage Broker/Lender Bond: A Comprehensive Guide

This guide provides information for insurance agents to help brokers obtain Alaska Mortgage Broker Bonds

At a Glance:

• Lowest Cost: $563 per year or $57 per month based on the broker’s credit
• Bond Amount: $75,000
• Who Needs It: All individuals and business entities seeking to obtain a mortgage broker or lender license in the State of Alaska
• Purpose: To ensure the public will receive compensation for any damages should the mortgage broker/lender fail to comply with licensing law
• Who Regulates Mortgage Brokers and Lenders in Alaska: The Alaska Division of Banking and Securities

Background

Alaska Statute 06.60 requires mortgage brokers and lenders operating in the state to obtain a license with the Division of Banking and Securities. The Alaska legislature enacted the licensing laws and regulations to ensure that mortgage brokers/lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, brokers and lenders must purchase and maintain a $75,000 mortgage broker bond to be eligible for licensure.

What is the Purpose of the Alaska Mortgage Broker/Lender Bond?

Alaska requires brokers and lenders to purchase the Mortgage Broker Bond as part of the application process to obtain a mortgage broker or lender license. The bond ensures that the public will receive compensation for financial harm if the broker fails to comply with the licensing regulations. 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 an Alaska Mortgage Broker/Lender Surety Bond?

BondExchange makes obtaining an Alaska Mortgage Broker Surety 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.

Is a Credit Check Required for the Alaska Mortgage Broker/Lender Bond?

Surety companies will run a credit check on the broker or lender to determine eligibility and pricing for the Alaska Mortgage Broker bond. Brokers with excellent credit and work experience can expect to receive the best rates. Brokers 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 broker’s credit.

How Much Does the Alaska Mortgage Broker/Lender Bond Cost?

The $75,000 Alaska Mortgage Broker surety bond can cost anywhere between $562.50 to $3,750 per year or $57 to $38 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 $75,000 bond requirement.

$75,000 Mortgage Broker Bond Cost

*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 Alaska Define “Mortgage Broker”?

To paraphrase Alaska Statute 06.60.990, a mortgage broker is any individual or business entity that assists borrowers in obtaining a home loan and arranges the issuance of the loan either directly or indirectly.

How Does Alaska Define “Mortgage Lender”?

Again, to paraphrase Alaska Statute 06.60.990, a mortgage lender is the lending institution that issues a mortgage loan to a borrower.

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 and Lenders Apply for a License in Alaska?

Businesses in Alaska must navigate several steps to secure their Mortgage Broker/Lender License. Below are the general guidelines, but businesses should refer to the Application Form for details on the process.

License Period – The Alaska Mortgage Broker/Lender License expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Obtain a Business License

All businesses operating in the State of Alaska must obtain a business license with the Alaska Department of Commerce, Community, and Economic Development. Lenders can obtain a business license here.

Step 2 – Request an NMLS Account

The Alaska Mortgage Broker/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 3 – Purchase a Surety Bond

License applicants must purchase and maintain a $75,000 surety bond to be eligible for licensure

Step 4 – Complete the Application

All mortgage broker/lender license applications can be completed online through the NMLS. Applicants must complete entire the application, including the following steps:

4.a Financial Statement – Applicants must submit an unaudited financial statement that has been prepared by a certified public accountant

4.b Business Plan – License applicants are required to submit a business plan indicating the following information:

• • Marketing strategies
  • Products
  • Target markets

4.c Affidavit – Applicants must submit a completed Mortgage Broker/Lender Affidavit with their license application

4.d Fees – Applicants must pay the following fees when submitting their license application:

• • $1,000 license fee
  • $500 application fee
  • $100 NMLS processing fee
  • $15 credit report fee per control person
  • $36.25 background check fee per person
  • $75 investigative fee (per hour)

How Do Alaska Mortgage Brokers and Lenders Renew Their License?

Mortgage brokers and lenders can renew their licenses online through the NMLS. License holders need to simply login to their account to access their renewal application. The Alaska Mortgage Broker/Lender License expires on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Alaska Mortgage Broker/Lender License?

The State of Alaska does not require mortgage brokers/lenders to obtain any form of liability insurance. Both brokers and lenders must purchase and maintain a $75,000 surety bond.

How Do Alaska Mortgage Brokers and Lenders File Their Bond?

Brokers and lenders should submit the completed bond form, including the power of attorney, electronically through the NMLS. The Mortgage Broker surety bond requires signatures from both the surety company that issues the bond and the broker or lender. The surety company should include the following information on the bond form:

• NMLS licensing system number
• Legal name of entity/individual(s) buying the bond
• Surety company’s name and state of residence
• Date the bond is signed and goes into effect

What Can Businesses Do to Avoid Claims Against the Alaska Mortgage Broker Bond?

To avoid claims on the Mortgage Broker Bond, brokers and lenders must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage, or allow representatives of the business to engage, in any acts of fraud
• Pay taxes and fees on time and in full

What Other Insurance Products Can Agents Offer Mortgage Brokers and Lenders in Alaska?

Alaska does not require mortgage brokers and lenders to obtain any form of liability insurance. 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 Alaska Mortgage Brokers and Lenders?

The NMLS conveniently provides a public database to search for active mortgage brokers and lenders in Alaska. The database can be accessed here. Contact BondExchange additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

What other Financial Service Bonds are Required in Alaska?

Alaska requires businesses to purchase specific bonds correlating with their license type. Below are all the different financial services bonds required by the State of Alaska:

• Deferred Deposit Advance License: $25,000 bond limit
• Collection Agency: $5,000 bond limit
• Money Transmitter: $25,000 bond limit plus an additional $5,000 for each branch location. The bond amount may not exceed $150,000