Nevada Mortgage Company Bond: A Comprehensive Guide
August 3, 2021
This guide provides information for insurance agents to help their customers obtain Nevada Mortgage Company 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: Based on the mortgage company’s annual loan production
Table 1.1
| Annual Mortgage Servicing Volume | Bond Amount |
|---|---|
| $20 million or less | $50,000 |
| More than $20 million | $75,000 |
- Who Needs it: All mortgage companies operating in Nevada
- Purpose: To ensure the public will receive compensation for any damages should the mortgage company violate licensing law
- Who Regulates Mortgage Companies in Nevada: The Nevada Division of Mortgage Lending
Background
Nevada statute 645B.0137 requires all mortgage companies operating in the state to obtain a license with the Division of Mortgage Lending. The Nevada legislature enacted the licensing requirement and subsequent regulations to ensure that mortgage companies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage companies must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Nevada Mortgage Company Bond?
Nevada requires mortgage companies 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 company fails to comply with the regulations set forth in Nevada revised statutes 645B. 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 licensing laws.
How Can an Insurance Agent Obtain a Nevada Mortgage Company Surety Bond?
BondExchange makes obtaining a Nevada 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.
Is a Credit Check Required for the Nevada Covered Service Provider Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Nevada 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 Nevada Mortgage Company Bond Cost?
The Nevada 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 both the $50,000 and $75,000 bond requirements.
$50,000 Mortgage Company Bond Cost
Table 1.2
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $375 |
| 650 – 699 | $500 |
| 625 -649 | $625 |
| 600 – 624 | $750 |
| 550 – 599 | $2,000 |
| 500 – 549 | $2,500 |
$75,000 Mortgage Company Bond Cost
Table 1.3
| 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 |
How Does Nevada Define “Mortgage Company?”
Nevada statute 645B.0127 defines a mortgage company as any business entity who provides one or more of the following services:
- Serves as an agent to mortgage buyers
- Serves as an agent to mortgage lenders
- Makes mortgage loans
- Buys or sells notes secured by liens on real property
- Sells securities which make investments in promissory notes secured by liens on real property
How do Mortgage Companies Apply For a License in Nevada?
Mortgage companies in Nevada 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 Nevada Mortgage Company License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Mortgage companies who operate any trust or escrow accounts used to store funds received received from consumers must maintain a minimum company net worth (assets – liabilities) in the following amounts:
The net worth requirement is based on the average monthly balance of all company trust or escrow accounts
Table 1.4
| Average Monthly Balance | Minimum Net Worth |
|---|---|
| $100,000 or less | $25,000 |
| More than $100,000 to $250,000 | $50,000 |
| More than $250,000 to $500,000 | $100,000 |
| More than $500,000 to $1 million | $200,000 |
| More than $1 million | $250,000 |
Mortgage companies must submit a financial statement verifying their net worth when submitting their license application.
Step 2 – Purchase a Surety Bond
Mortgage companies must purchase and maintain a surety bond (limits outlined in Table 1.1)
State 3 – Establish a Nevada Place of Business
Mortgage companies who directly take an application for a mortgage loan or negotiate the terms of any loans must have at least one office location in Nevada
Step 4 – Hire a Qualifying Individual
Mortgage companies must employ a qualified individual who is capable of supervising the company’s day to day operations. The qualifying individual must be a licensed mortgage loan originator, have a minimum of two years industry experience, and is required to be in a management position.
Step 5 – Request a NMLS Account
The Nevada Mortgage Company 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 6 – Complete the Application
All Nevada Mortgage Company License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Financial statements indicating the company’s net worth
- Company business plan
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organizational chart detailing the company’s ownership structure
- State business license issued by the Nevada Secretary of State
- Company’s local business license
- Lease agreement for the company’s Nevada office(s)
Mortgage companies must pay a $2,600 fee when submitting their license application.
How Do Nevada Mortgage Companies Renew Their License?
Mortgage companies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Nevada Mortgage Company License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Nevada Mortgage Company License?
Nevada does not require mortgage companies to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage companies must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do Nevada 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 NMLS number of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Nevada Mortgage Companies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage companies in Nevada 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 Companies in Nevada?
Nevada 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 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 Mortgage Company Customers?
The NMLS conveniently provides a public database to search for active mortgage companies 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.
