Nevada Mortgage Servicer Bond: A Comprehensive Guide
August 2, 2021
This guide provides information for insurance agents to help their customers obtain Nevada Mortgage Servicer 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 applicant’s annual mortgage servicing volume
Table 1.1
| Annual Mortgage Servicing Volume | Bond Amount |
|---|---|
| Less than $50 million | $100,000 |
| $50 million to less than $500 million | $200,000 |
| $500 million or more | $300,000 |
- Who Needs it: All mortgage servicers operating in Nevada
- Purpose: To ensure the public will receive compensation for any damages should the mortgage servicer violate licensing law
- Who Regulates Mortgage Servicers in Nevada: The Nevada Division of Mortgage Lending
Background
Nevada statute 645F.950 requires all mortgage servicers 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 mortgage servicers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage servicers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Nevada Mortgage Servicer Bond?
Nevada requires mortgage servicers 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 servicer fails to comply with the regulations set forth in the Nevada mortgage servicing licensing statutes. Specifically, the bond protects the public in the event the mortgage servicer engages in any acts of fraud or breaches their fiduciary responsibilities. In short, the bond is a type of insurance that protects the public if the mortgage servicer breaks licensing laws.
How Can an Insurance Agent Obtain a Nevada Mortgage Servicer Bond?
BondExchange makes obtaining a Nevada Mortgage Servicer 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 Mortgage Servicer Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Nevada Mortgage Servicer 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 Servicer Bond Cost?
The Nevada Mortgage Servicer 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 $100,000 bond requirement.
$100,000 Mortgage Servicer Bond Cost
Table 1.2
| 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 |
How Does Nevada Define “Mortgage Servicer?”
To paraphrase Nevada statute 645F.940, a mortgage servicer as any business entity who provides one or more of the following services:
- Directly services a mortgage loan secured by real property in Nevada
- Interacts with a borrower or manages their mortgage loan account on a daily basis
- Enforced note and security instruments for mortgage loans
How do Mortgage Servicers Apply For a License in Nevada?
Mortgage servicers 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 Servicer License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Applicants for the Nevada Mortgage Servicer License must have a company net worth (assets – liabilities) of at least $100,000. 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
Mortgage servicers must purchase and maintain a surety bond (limits outlined in Table 1.1)
Step 3 – Hire a Qualifying Individual
Mortgage servicers must hire a qualifying individual, who is capable of handling the day to day operations of the mortgage servicing business, to manage each company branch location. All qualifying individuals must have at least 2 years of industry experience within the 5 years preceding the application date. Applicants must submit documentation verifying the experience of each qualifying individual.
Step 4 – Request a NMLS Account
The Nevada Mortgage Servicer 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 Nevada Mortgage Servicer License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Audited company financial statements indicating a net worth of at least $100,000
- The following company contacts:
- Primary
- Primary consumer complaint
- Licensing
- Exam Delivery
- Pre-Exam Contact
- Bank account information for all company trust/escrow accounts
- Disclosure questions
- Company business plan containing the following information:
- Marketing strategies
- Products
- Target markets
- Fee schedule
- Operating structure
- Description of Servicing Business
- Certificate of Good Standing
- Local business license issued by the applicant’s local municipality
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organizational chart detailing the company’s ownership structure
- Resumes for all company qualifying individuals
- Designation of Qualified Employee Form
Mortgage servicers must pay the following fees when submitting their license application:
-
- $2,500 application fee
- $100 NMLS initial processing fee
- $36.25 background check fee (per person)
- $15 credit report fee (per person)
How Do Nevada Mortgage Servicers Renew Their License?
Mortgage servicers 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 Servicer 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 Servicer License?
Nevada does not require mortgage servicers to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage servicers must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do Nevada Mortgage Servicers File Their Bond?
Nevada mortgage servicers 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 Servicers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage servicers in Nevada must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
- Perform all fiduciary obligations
What Other Insurance Products Can Agents Offer Mortgage Servicers in Nevada?
Nevada does not require mortgage servicers 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 Servicer Customers?
The NMLS conveniently provides a public database to search for active mortgage servicers 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.
