New Mexico Mortgage Loan Company Bond: A Comprehensive Guide
July 28, 2021
This guide provides information for insurance agents to help their customers obtain New Mexico Mortgage Loan 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: Based on the total annual amount of mortgage loans originated
Table 1.1
| Mortgage Loans Originated | Bond Amount |
|---|---|
| $0 – $3 million | $50,000 |
| Over $3 million but less than $10 million | $100,000 |
| Greater than $10 million | $150,000 |
- Who Needs it: All mortgage loan companies operating in New Mexico
- Purpose: To ensure the public will receive compensation for any damages should the mortgage company violate licensing law
- Who Regulates Mortgage Loan Companies in New Mexico: The New Mexico Financial Institutions Division
Background
New Mexico statute 58-21-3 requires all mortgage loan companies operating in the state to obtain a license with the Financial Institutions Division. The New Mexico legislature enacted the licensing laws and 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 New Mexico Mortgage Loan Company Bond?
New Mexico requires mortgage loan 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 the New Mexico Mortgage Loan Company Act. 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 New Mexico Mortgage Loan Company Bond?
BondExchange makes obtaining a New Mexico Mortgage Loan 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 New Mexico Mortgage Loan Company Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the New Mexico Mortgage Loan 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 New Mexico Mortgage Loan Company Bond Cost?
The New Mexico Mortgage Loan Company Bond can cost anywhere between % to % 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 Loan Company Bond Cost
Table 1.2
| 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 New Mexico Define “Mortgage Loan Company?”
New Mexico statute 58-21-2 defines a mortgage loan company as any business entity who provides one or more of the following services:
- Accepts an application for a mortgage loan; negotiates terms for a mortgage loan; or solicits, processes, originates, brokers or makes mortgage loans for others
- Closes mortgage loans that may be in the mortgage loan company’s own name with funds provided by others and that are assigned to the mortgage lenders providing the funding of such loans
How do Mortgage Loan Companies Apply For a License in New Mexico?
Mortgage loan companies in New Mexico 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 New Mexico Mortgage Loan Company License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage loan companies must purchase and maintain a surety bond (limits outlined in Table 1.1)
Step 2 – Hire a Qualifying Individual
Mortgage loan companies must employ a qualifying individual capable of handling the day to day operations of the business. The qualifying individual must have at least two years of experience in a supervisory role at a mortgage loan company and be a licensed mortgage loan originator.
Step 3 – Request a NMLS Account
The New Mexico Mortgage Loan 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 4 – Complete the Application
All New Mexico Mortgage Loan Company License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Company financial statements
- Primary company and consumer complaint contact information
- Disclosure questions
- Certificate of Good Standing
- Company flow of funds structure
- Company formation documents
- Memorandum of Tax Certification
- Personal financial statements for the company qualifying individual
- Verification of experience for the company’s qualifying individual
Mortgage loan companies must pay the following fees when submitting their license application:
-
- $1,000 license fee
- $500 application fee
- $100 NMLS processing fee
- $15 credit report fee (per person)
How Do New Mexico Mortgage Loan Companies Renew Their License?
Mortgage loan companies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The New Mexico Mortgage Loan Company License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the New Mexico Mortgage Loan Company License?
New Mexico does not require mortgage loan companies to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage loan companies must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do New Mexico Mortgage Loan Companies File Their Bond?
New Mexico mortgage loan 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 loan 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, address, and state of incorporation
- Date the bond goes into effect
- Bond amount
- Date the bond is signed
What Can New Mexico Mortgage Loan Companies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage loan companies in New Mexico 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
What Other Insurance Products Can Agents Offer Mortgage Loan Companies in New Mexico?
New Mexico does not require mortgage loan 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 New Mexico Mortgage Loan Company Customers?
The NMLS conveniently provides a public database to search for active mortgage loan companies in New Mexico. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
