Ohio Mortgage Company Bond: A Comprehensive Guide
August 6, 2021
This guide provides information for insurance agents to help their customers obtain Ohio Mortgage Company Bonds
At a Glance:
- Average Cost: Between 0.5% to 5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Between $50,000 to $150,000 (more on this later)
- Who Needs it: All mortgage companies operating in Ohio
- Purpose: To ensure the public will receive compensation for any damages should the mortgage company violate registration law
- Who Regulates Mortgage Companies In Ohio: The Ohio Division of Financial Institutions
Background
Ohio statute 1322.07 requires all mortgage companies operating in the state to register with the Division of Financial Institutions. The Ohio legislature enacted the registration laws and regulations to ensure that mortgage companies engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, mortgage companies must purchase and maintain a surety bond to be eligible for registration.
What is the Purpose of the Ohio Mortgage Company Bond?
Ohio requires mortgage companies to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the mortgage company fails to comply with the regulations set forth in Ohio statute 1322.32. Specifically, the bond protects the public in the event the mortgage company 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 mortgage company breaks registration laws.
How Can an Insurance Agent Obtain an Ohio Mortgage Company Surety Bond?
BondExchange makes obtaining an Ohio Mortgage Company 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.
How is the Bond Amount Determined?
Ohio statute 1322.32 dictates that the limit on the mortgage company bond be a minimum of $50,000 and a maximum of $150,000. The bond amount is determined based on the company’s aggregate amount of mortgage loans originated in the previous calendar year, as referenced in the table below.
| Credit Score | Bond Cost (1 year) |
|---|---|
| $0 to $10 million | $50,000 |
| $11 million to $12 million | $60,000 |
| $13 million to $14 million | $70,000 |
| $15 million to $16 million | $80,000 |
| $17 million to $18 million | $90,000 |
| $19 million to $20 million | $100,000 |
| $21 million to $22 million | $110,000 |
| $23 million to $24 million | $120,000 |
| $25 million to $26 million | $130,000 |
| $27 million to $28 million | $140,000 |
| $29 million or greater | $150,000 |
Is a Credit Check Required for the Ohio Mortgage Company Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Ohio Mortgage Company 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 Ohio Mortgage Company Bond Cost?
The Ohio Mortgage Company 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 a $50,000 bond requirement.
$50,000 Mortgage Company Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $250 |
| 650 – 699 | $500 |
| 625 – 649 | $625 |
| 600 – 624 | $940 |
| 550 – 599 | $2,000 |
| 500 – 549 | $2,500 |
How Does Ohio Define “Mortgage Company?”
Ohio statute 1322.01 defines a mortgage company as any business entity who provides one or more of the following services:
- Obtains or assists a borrower in obtaining a residential mortgage loan (mortgage broker)
- Consummates or advances funds for a residential mortgage loan applicant (mortgage lender)
- Receives funds a borrower and uses these funds to satisfy the borrower’s obligations under a mortgage loan agreement (mortgage servicer)
How do Mortgage Companies Apply For a Registration in Ohio?
Mortgage companies in Ohio must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Ohio Mortgage Company Registration expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage companies must purchase and maintain a surety bond (limits outlined above)
Step 2 – Hire a Qualifying Individual
Mortgage companies must employ at least one licensed mortgage loan originator with a minimum of three years experience. The MLO must be employed as an operations manager responsible for overseeing the day to day operations of the business.
Step 4 – Request a NMLS Account
The Ohio Mortgage Company Registration application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a registration application, applicants must first request to obtain an NMLS account.
Step 5 – Complete the Application
All Ohio Mortgage Company registration applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Company financial statements
- The following company contacts:
- Primary
- Primary consumer complaint
- Exam Billing
- Exam Delivery
- Pre-Exam Contact
- Disclosure questions
- Surety bond declaration and company resolution
- Company business plan containing the following information:
- Mortgage activity
- Marketing strategies
- Products
- Target markets
- Fee schedule
- Operating structure
- Statement disclosing whether any company owner or member, or an immediate family member of any owner or member, owns interest in an appraisal company
- Business continuity plan
- Certificate of Good Standing
- Company staffing and internal policies
- Samples of all documents used in the company’s regular course of business
- Company formation documents
- Company management and organizational charts
- The deed, lease, or sublease agreement for the company’s primary office location
Mortgage companies must pay the following fees when submitting their license application:
-
- $500 registration fee
- $100 NMLS processing fee
- $36.25 background check fee (per person)
- $15 credit report fee (per person)
How Do Ohio Mortgage Companies Renew Their Registration?
Mortgage companies can renew their registration online through the NMLS. Registration holders need to simply login to their account to access their renewal application. The Ohio Mortgage Company Registration expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Ohio Mortgage Company Registration?
Ohio requires mortgage companies to purchase workers’ compensation insurance as a prerequisite to obtaining a business registration. Mortgage companies must purchase and maintain a surety bond (limits outlined above).
How Do Ohio Mortgage Companies File Their Bond?
Mortgage companies 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 a representative from the mortgage company. The surety company should include the following information on the bond form:
- Name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Bond term
- Date the bond is signed
What Can Ohio Mortgage Companies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage companies in Ohio must ensure that they follow all registration 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
- Do not charge exorbitant fees
What Other Insurance Products Can Agents Offer Mortgage Companies in Ohio?
Ohio does not require mortgage companies 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 other types of 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 Ohio Mortgage Company Customers?
The NMLS conveniently provides a public database to search for active mortgage companies in Ohio. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
