Nevada Covered Service Provider Bond: A Comprehensive Guide
August 2, 2021
This guide provides information for insurance agents to help their customers obtain Nevada Covered Service Provider Bonds
At a Glance:
- Average Cost: Between 0.75% to 5% of the bond amount per year based on the applicant’s credit
- Bond Amount:
- $100,000 for covered service providers with trust accounts maintaining a 6-month average balance greater than $50,000
- $75,000 for all other covered service providers
- Who Needs it: All covered service providers and foreclosure or loan modification consultants operating in Nevada
- Purpose: To ensure the public will receive compensation for any damages should the covered service provider violate licensing law
- Who Regulates Covered Service Providers in Nevada: The Nevada Division of Mortgage Lending
Background
Nevada revised statute 645F.390 requires all covered service providers and foreclosure or loan modification consultants operating in the state to obtain a license with the Division of Mortgage Lending. The Nevada legislature enacted the licensing laws and regulations to ensure that covered service providers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, covered service providers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Nevada Covered Services Provider Bond?
Nevada requires covered services providers and foreclosure or loan modification consultants 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 covered service provider fails to comply with the regulations set forth in Nevada revised statutes 645F. Specifically, the bond protects the public in the event the covered service provider 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 covered service provider breaks licensing laws.
How Can an Insurance Agent Obtain a Nevada Covered Services Surety Bond?
BondExchange makes obtaining a Nevada Covered Services Bond easy. Simply login to your account and use our keyword search to find the “covered” 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 Nevada Covered Service Provider Bond?
Surety companies will run a credit check on the owners of the consulting company to determine eligibility and pricing for the Nevada Covered Service Provider 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 Nevada Covered Service Provider Bond Cost?
The Nevada Covered Service Provider Bond can cost anywhere between 0.75% to 5% of the bond amount 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 both the $75,000 and $100,000 bond requirements.
$75,000 Covered Service Provider Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $563 |
| 650 – 699 | $750 |
| 625 -649 | $938 |
| 600 – 624 | $1,125 |
| 550 – 599 | $3,000 |
| 500 – 549 | $3,750 |
$100,000 Covered Service Provider Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $750 |
| 650 – 699 | $1,000 |
| 625 -649 | $1,250 |
| 600 – 624 | $1,500 |
| 550 – 599 | $4,000 |
| 500 – 549 | $5,000 |
Who is Required to Obtain a License?
Nevada statute 645F.300 requires all business entities who provide one or more of the following services to obtain a Loan Modification / Foreclosure Consultant License.
Covered Service Provider
- Financially counsels a homeowner
- Receives money from a debtor and disburses it to creditors
- Contacts creditors on behalf of a homeowner
- Arranges for an extension of the period a homeowner may cure a default and reinstate an obligation pursuant to a note
- Arranges for a postment of a foreclosure sale
- Assists a homeowner with filing documents for bankruptcy court
- Provides debt management and foreclosure services to homeowners
Foreclosure Consultant
Helps a homeowner prevent or postpone a foreclosure sale and assists them in exercising their right to reinstatement.
Loan Modification Consultant
Helps homeowners obtain more favorable terms for their mortgage loan than were originally agreed to.
How do Covered Service Providers Apply For a License in Nevada?
Covered service providers in Nevada must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.
License Period – The Nevada Loan Modification / Foreclosure Consultants License expires on July 1 of each year and must be renewed before the expiration date
Step 1 – Determine the License Type
Nevada requires covered service providers to obtain specific licenses that differentiate whether the applicant is a business entity or an employee or an independent contractor. Covered service providers who are a business entity must apply for the Independent License, while employees or independent contractors authorized by the covered service provider to perform covered services must obtain an Associate License.
The remaining steps focus solely on how to obtain an independent license.
Step 2 – Meet the Experience Requirements
License applicants must have a minimum of two years of industry experience prior to submitting their license application
Step 3 – Purchase a Surety Bond
Covered service providers must purchase and maintain a surety bond with the following limit:
-
- $100,000 for covered service provider with trust accounts maintaining a 6-month average balance greater than $50,000
- $75,000 for all other covered service providers
Step 4 – Complete the Education Requirements
Applicants for the Loan Modification / Foreclosure Consultant License must satisfy the following educational requirements:
-
- 25 hours of instruction if the applicant is a covered service provider
- 20 hours of instruction if the applicant is a foreclosure consultant
- 15 hours if the applicant is a loan modification consultant
Applicants must submit proof of completing the educational requirements. Information on how to register for the pre-licensure training can be found here.
Step 5 – Complete the Application
All Nevada regulatory Loan Modification / Foreclosure Consultant License applications should be mailed to the following address:
State of Nevada
Department of Business and Industry
Division of Mortgage Lending
1830 College Parkway, Suite 100
Carson City, NV 98709
Covered service providers must complete the application in its entirety, and submit the following items:
-
- Child support statements for all company owners
- Personal history and personal financial history questionnaires for all company owners with at least a 25% ownership interest
- Certificate of completion for the pre-licensure education program
- Company formation documents
- Company financial statements
- General business plan
- Credit report explanations (if applicable)
- Lease agreement for company’s principal place of business
- Documents verifying the applicant has a minimum of two years industry experience
- Certificate of Good Standing
Covered service providers must pay the following fees when submitting their license application:
-
- $750 application fee plus an additional $100 per branch office
- $500 licensing fee plus an additional $150 per branch office
How Do Nevada Covered Service Providers Renew Their License?
Covered service providers should mail their completed renewal application, including the $500 renewal fee (plus an additional $100 per branch office), to the following address:
State of Nevada
Department of Business and Industry
Division of Mortgage Lending
1830 College Parkway, Suite 100
Carson City, NV 98709
The Nevada Loan Modification / Foreclosure Consultants License expires on July 1 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Nevada Loan Modification / Foreclosure Consultants License?
Nevada does not require covered service providers to purchase any form of liability insurance as a prerequisite to obtaining a business license. Covered service providers must purchase and maintain a surety bond with the following limit:
- $100,000 for covered service provider with trust accounts maintaining a 6-month average balance greater than $50,000
- $75,000 for all other covered service providers
How Do Nevada Covered Service Providers File Their Bond?
Covered service providers should mail the completed bond form, including the power of attorney, to the following address:
State of Nevada
Department of Business and Industry
Division of Mortgage Lending
1830 College Parkway, Suite 100
Carson City, NV 98709
The covered service provider surety bond requires signatures from both the surety company that issues the bond and a representative from the consulting company. The surety company should include the following information on the bond form:
- Legal name and NAIC number of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Nevada Covered Service Providers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, covered service providers in Nevada 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
- Properly account for all funds received from consumers
What Other Insurance Products Can Agents Offer Covered Service Providers in Nevada?
Nevada does not require covered service providers 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 Nevada Covered Service Provider Customers?
The NMLS conveniently provides a public database to search for active covered service providers in Nevada. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
