Maine Supervised Lender Bond: A Comprehensive Guide

June 17, 2021

This guide provides information for insurance agents to help their customers obtain Maine Supervised Lender Bonds

At a Glance:

• Average Cost: Between $375 to $2,500 per year based on the applicant’s credit
• Bond Amount: $50,000
• Who Needs it: All supervised lenders operating in Maine
• Purpose: To ensure the public will receive compensation for any damages should the supervised lender fail to comply with licensing law
• Who Regulates Supervised Lenders in Maine: The Maine Bureau of Consumer Credit Protection

Background

Maine statute 2-302 requires all supervised lenders operating in the state to obtain a license with the Bureau of Consumer Credit Protection. The Maine legislature enacted the licensing laws and regulations to ensure that supervised lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, supervised lenders must purchase and maintain a $50,000 surety bond (per licensed branch location) to be eligible for licensure.

What is the Purpose of the Maine Supervised Lender Bond?

Maine requires supervised lenders 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 supervised lender fails to comply with the regulations set forth in Maine statute 2-302. Specifically, the bond protects the public in the event the lender engages in any acts of fraud or fails to honor contractual obligations made with consumers. In short, the bond is a type of insurance that protects the public if the lender breaks licensing laws.

How Can an Insurance Agent Obtain a Maine Supervised Lender Surety Bond?

BondExchange makes obtaining a Maine Supervised Lender Bond easy. Simply login to your account and use our keyword search to find the “lender” 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 Maine Supervised Lender Bond?

Surety companies will run a credit check on the owner’s of the lending company to determine eligibility and pricing for the Maine Supervised Lender 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 Maine Supervised Lender Bond Cost?

The Maine Supervised Lender bond can cost anywhere between $375 to $2,500 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 $50,000 bond requirement.

$50,000 Supervised Lender 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 Maine Define “Supervised Lender?”

Maine statute 1-301 defines a supervised lender as any business entity who issues a loan in which the rate of finance charge is greater than 12.25% per year or is secured by an interest in real estate.

How do Supervised Lenders Apply for a License in Maine?

Supervised Lenders in Maine 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 Maine Supervised Lender License expires on December 31 each year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Maine Supervised Lender License must have a company net worth (assets – liabilities) of at least $25,000. Applicants must submit an audited financial statement, prepared by a CPA, verifying their net worth when submitting their license application.

Step 2 – Purchase a Surety Bond

Supervised lenders must purchase and maintain a $50,000 surety bond for each branch location. Non-profit organizations who have an availability of $25,000 in net assets may have their bond requirement waived.

Step 3 – Hire a Qualifying Individual

All supervised lenders must employ at least one individual who is capable of managing the day to day operations of the lending business for each branch location. Qualifying individuals are equivalent to branch managers, but are described as qualifying individuals on the application form.

Step 4 – Request a NMLS Account

The Maine Supervised 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 5 – Complete the Application

All Maine Supervised Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Audited financial statement indicating a company net worth of at least $25,000
  • Primary company and consumer complaint contact information
  • Company business plan containing the following information:
    • Marketing strategies
    • Products
    • Target markets
    • Fee schedule
    • Operating structure
  • Certificate of Good Standing
  • Samples of documents used in the regular course of business (e.g. consumer disclosure forms, origination and/or loan modification forms)
  • Company formation documents
  • Management chart detailing the company’s hierarchy
  • Organizational chart detailing the company’s ownership structure
  • Trust account authorization

Supervised lenders must pay the following fees when submitting their license application:

• • $250 application fee
  • $100 processing fee

How Do Maine Supervised Lenders Renew Their License?

Supervised lenders can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Maine Supervised Lender License expires on December 31 each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Maine Supervised Lender License?

The State of Maine does not require supervised lenders to obtain any form of liability insurance as a prerequisite to obtaining a business license. Supervised lenders must purchase and maintain a $50,000 surety bond for each branch location. Non-profit organizations who have an availability of $25,000 in net assets may have their bond requirement waived.

How Do Maine Supervised Lenders File Their Bond?

Supervised lenders 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 lending company. The surety company should include the following information on the bond form:

• Legal name and address of entity/individual(s) buying the bond
• Surety company’s name and state of incorporation
• Bond amount
• Date the bond is signed

What Can Maine Supervised Lenders Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, supervised lenders in Maine 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 contractual obligations with consumers
• Pay all required taxes and fees

What Other Insurance Products Can Agents Offer Supervised Lenders in Maine?

Maine does not require supervised lenders 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 Maine Supervised Lender Customers?

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