South Carolina Mortgage Lender/Servicer Bond: A Comprehensive Guide
August 24, 2021
This guide provides information for insurance agents to help their customers obtain South Carolina Mortgage Lender/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 amount of mortgage loans originated in the previous calendar year
Table 1.1
| Mortgage Loans Originated | Bond Amount |
|---|---|
| Less than $50 million | $50,000 |
| $50 million to less than $250 million | $100,000 |
| $250 million or more | $150,000 |
- Who Needs it: All mortgage lenders and servicers operating in South Carolina
- Purpose: To ensure the public will receive compensation for any damages should the mortgage lender/servicer violate licensing law
- Who Regulates Mortgage Lenders/Servicers In South Carolina: The South Carolina Office of the Attorney General
Background
South Carolina statute 37-22-120 requires all mortgage lenders and servicers operating in the state to obtain a license with the State Board of Financial Institutions. The South Carolina legislature enacted the licensing laws and regulations to ensure that mortgage lenders/servicers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, mortgage lenders/servicers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the South Carolina Mortgage Lender/Servicer Bond?
South Carolina requires mortgage lenders and 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 lender/servicer fails to comply with the regulations set forth in South Carolina statute 37-22-140. Specifically, the bond protects the public in the event the mortgage lender/servicer 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/servicer breaks licensing laws.
How Can an Insurance Agent Obtain a South Carolina Mortgage Lender/Servicer Surety Bond?
BondExchange makes obtaining a South Carolina Mortgage Lender/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 South Carolina Mortgage Lender/Servicer Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the South Carolina Mortgage Lender/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 South Carolina Mortgage Lender/Servicer Bond Cost?
The South Carolina Mortgage Lender/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 $50,000 bond requirement.
$50,000 Mortgage Lender/Servicer Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $375 |
| 650 – 699 | $500 |
| 625 – 649 | $625 |
| 600 – 624 | $940 |
| 550 – 599 | $2,000 |
| 500 – 549 | $2,500 |
How Does South Carolina Define “Mortgage Lender/Servicer?”
To paraphrase South Carolina statute 37-22-110, a mortgage lender/servicer is any business entity who makes mortgage loans or receives mortgage payments.
How Do Mortgage Lenders/Servicers Apply for a License in South Carolina
Mortgage lenders/servicers in South Carolina 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 South Carolina Mortgage Lender/Servicer License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage lenders/servicers must purchase and maintain a surety bond (limits outlined in Table 1.1)
Step 2 – Hire a Qualifying Individual
South Carolina requires mortgage lender/servicer license applicants to employ a licensed mortgage loan originator who is responsible for handling the day to day operations of the business
Step 3 – Request a NMLS Account
The South Carolina Mortgage Lender/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 4 – Complete the Application
All South Carolina Mortgage Lender/Servicer License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Company business plan containing the following information (should be emailed to License@bofi.sc.gov)
- Underwriting procedures
- Approval process
- Funding procedures
- Explain any warehouse line of credit restrictions and loan servicing operations
- Loan servicing operations
- FHA approval statuses/authorizations
- Lender/Broker notification
- Organizational chart showing the company’s ownership structure
- Company formation documents
- Certificate of good standing
- Company business plan containing the following information (should be emailed to License@bofi.sc.gov)
Mortgage lenders/servicers must pay a $1,100 fee when submitting their license application.
How Do South Carolina Mortgage Lenders/Servicers Renew Their License?
Mortgage lenders/servicers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The South Carolina Mortgage Lender/Servicer License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the South Carolina Mortgage Lender/Servicer License?
South Carolina does not require mortgage lenders/servicers to purchase any form of liability insurance as a prerequisite to obtaining a business license. Mortgage lenders/servicers must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do South Carolina Mortgage Lenders/Servicers File Their Bond?
Mortgage lenders/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 of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What Can South Carolina Mortgage Lenders/Servicers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, mortgage lenders/servicers in South Carolina must ensure that they 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/Servicers in South Carolina?
South Carolina does not require mortgage lenders/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 other types of 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 South Carolina Mortgage Lender/Servicer Customers?
The NMLS conveniently provides a public database to search for active mortgage lenders/servicers in South Carolina. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
