Delaware Mortgage Broker Bond: A Comprehensive Guide
April 19, 2021
This guide provides information for insurance agents to help mortgage brokers obtain Delaware Mortgage Broker Bonds
At a Glance:
- Average Cost: Between $188 to $1,250 per year based on the mortgage broker’s credit
- Bond Amount: $25,000
- Who Needs it: All mortgage brokers seeking to obtain a license in Delaware
- 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 Delaware: The Delaware Office of the State Bank Commissioner
Background
Delaware Statute 2102 requires all mortgage brokers operating in the state to obtain a license with the Office of the State Bank Commissioner. The Delaware legislature enacted the licensing laws and regulations to ensure that mortgage brokers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage brokers must purchase and maintain a $25,000 surety bond to be eligible for licensure.
What is the Purpose of the Delaware Mortgage Broker Bond?
Delaware 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 mortgage broker fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the mortgage broker breaks licensing laws.
How Can an Insurance Agent Obtain a Delaware Mortgage Broker Surety Bond?
BondExchange makes obtaining a Delaware 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? Enroll 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 Delaware Mortgage Broker Bond?
Surety companies will run a credit check on the owners of the mortgage brokerage company to determine eligibility and pricing for the Delaware Mortgage Broker 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 Delaware Mortgage Broker Bond Cost?
The Delaware Mortgage Broker surety bond can cost anywhere between $188 to $1,250 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 the $25,000 bond requirement.
$25,000 Mortgage Broker Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $188 |
| 650 – 699 | $250 |
| 625 – 649 | $313 |
| 600 – 624 | $470 |
| 550 – 599 | $1,000 |
| 450 – 549 | $1,250 |
*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 Delaware Define “Mortgage Broker?”
To paraphrase Delaware Statute 2101, a mortgage broker is any business who negotiates, arranges, or solicits a mortgage loan on behalf of a borrower. Brokers may also negotiate the terms of a mortgage loan on behalf of a lender, but must be acting in the capacity of an independent contractor.
How do Mortgage Brokers Apply for a License in Delaware?
Mortgage brokers in Delaware 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 Delaware Mortgage Broker License expires annually and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage brokers must purchase and maintain a $25,000 surety bond
Step 2 – Meet the Capital Requirements
Applicants for the Delaware Mortgage Broker License must first amass a minimum capital of $40,000
Step 3 – Hire a Qualifying Individual
Mortgage brokers must hire a qualifying individual capable, of managing the day to day operations of the business, for each branch location the company operates
Step 4 – Request a NMLS Account
The Delaware 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 4 – Complete the Application
All Delaware Mortgage Broker License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Unaudited financial statements signed by an executive officer
- Account information for the company’s primary bank accounts
- Employee contact information
- Business plan the company intends to employ
- Certificate of Good Standing obtained from the Delaware Division of Corporations
- Copy of the mortgage loan broker’s agreement
- Management chart showing the company hierarchy
- Organizational chart showing the company’s ownership structure
- Supervisory Assessment Disclosure
- FinCen Disclosure
Applicants for the Delaware Mortgage Broker License must pay an $850 fee when submitting their license application.
How Do Delaware 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 Delaware Mortgage Broker License expires annually and must be renewed before the expiration date.
What Are the Insurance Requirements for the Delaware Mortgage Broker License?
The State of Delaware 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 $25,000 surety bond.
How Do Delaware Mortgage Brokers File Their Bond?
Mortgage brokers 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 a representative from the mortgage brokerage 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 and address
- Date the bond is signed
What Can Delaware Mortgage Brokers Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, mortgage brokers in Delaware must ensure not to engage in any acts of fraud or misrepresentation when servicing customers.
What Other Insurance Products Can Agents Offer Mortgage Brokers in Delaware?
Delaware does not require mortgage brokers 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 Delaware Mortgage Broker Customers?
The NMLS conveniently provides a public database to search for active mortgage brokers in Delaware. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
