Mississippi Mortgage Lender Bond: A Comprehensive Guide
July 8, 2021
This guide provides information for insurance agents to help their customers obtain Mississippi Mortgage Lender Bonds
At a Glance:
- Average Cost: Between $1,125 to $7,500 per year based on the applicant’s credit
- Bond Amount: $150,000
- Who Needs it: All mortgage lenders who service Mississippi consumers
- Purpose: To ensure the public will receive compensation for any damages should the mortgage lender fail to comply with licensing law
- Who Regulates Mortgage Lenders in Mississippi: The Mississippi Department of Banking and Consumer Finance
Background
Mississippi statute 81-18-7 requires all mortgage lenders operating in the state to obtain a license with the Department of Banking and Consumer Finance. The Mississippi legislature enacted the licensing laws and regulations to ensure that mortgage lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage lenders must purchase and maintain a $150,000 surety bond to be eligible for licensure.
What is the Purpose of the Mississippi Mortgage Lender Bond?
Mississippi requires mortgage 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 mortgage lender fails to comply with the regulations set forth in the MississippiMortgage Licensing Act. Specifically, the bond protects the public in the event the mortgage lender 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 lender breaks licensing laws.
How Can an Insurance Agent Obtain a Mississippi Mortgage Lender Bond?
BondExchange makes obtaining a Mississippi Mortgage Lender 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 Mississippi Mortgage Lender Bond?
Surety companies will run a credit check on the owners of the mortgage lending company to determine eligibility and pricing for the Mississippi Mortgage 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 Mississippi Mortgage Lender Bond Cost?
The Mississippi Mortgage Lender Bond can cost anywhere between $1,125 to $7,500 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 $150,000 bond requirement.
$150,000 Mortgage Lender Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $1,125 |
| 650 – 699 | $1,500 |
| 625 – 649 | $1,875 |
| 600 – 624 | $2,820 |
| 550 – 599 | $6,000 |
| 450 – 549 | $7,500 |
How Does Mississippi Define “Mortgage Lender?”
Mississippi statute 81-18-3 defines a mortgage lender as any individual or business entity who originates, makes, purchases, funds, or services a residential mortgage loan.
How do Mortgage Lenders Apply For a License in Mississippi?
Mortgage lenders in Mississippi 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 Mississippi Mortgage Lender License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage lenders must purchase and maintain a $150,000 surety bond
Step 2 – Request a NMLS Account
The Mississippi Mortgage 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 – Complete the Application
All Mississippi Mortgage Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Detailed organizational chart showing the management and ownership structures of the company
- Proof of compliance with all zoning requirements if the company’s principal place of business is located in Mississippi
- Company business plan containing the following information:
- The types of loans the lender will originate and/or fund
- If the lender will participate in the mortgage secondary market as either a seller or purchaser of loans
- Types and volume of advertising
- How residential mortgage lending and/or brokering relates to other activities of the lender
- Geographic area in which the lender will operate
- Documents outlining the following company policies and procedures:
- Regulatory Compliance Policies
- Personnel Policies
- Operations Policies
- Third Party Risk Policies
- Underwriting Policies and Training Program Policies
- Company formation documents
Mortgage lenders must pay a $1,601 fee when submitting their license application.
How Do Mississippi Mortgage Lenders Renew Their License?
Mortgage lenders can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Mississippi Mortgage Lender License expires on December 31 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for the Mississippi Mortgage Lender License?
Mississippi does not require mortgage lenders to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage lenders must purchase and maintain a $150,000 surety bond.
How Do Mississippi Mortgage Lenders File Their Bond?
Mortgage 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 mortgage company. The surety company should include the following information on the bond form:
- Name and NMLS # of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What Can Mississippi Mortgage Lenders Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage lenders in Mississippi 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
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Mortgage Lenders in Mississippi?
Mississippi does not require mortgage lenders 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 Mississippi Mortgage Lender Customers?
The NMLS conveniently provides a public database to search for active mortgage lenders in Mississippi. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
