Wisconsin Mortgage Banker Bond: A Comprehensive Guide
September 10, 2021
This guide provides information for insurance agents to help mortgage bankers obtain Wisconsin Mortgage Banker Bonds
At a Glance:
- Average Cost: Between $2,250 to $15,000 per year based on the applicant’s credit
- Bond Amount: $300,000
- Who Needs it: All mortgage bankers operating in Wisconsin
- Purpose: To ensure the public will receive compensation for any damages should the mortgage banker fail to comply with licensing law
- Who Regulates Mortgage Bankers In Wisconsin: The Wisconsin Department of Financial Institutions
Background
Wisconsin statute 224.72 requires all mortgage bankers operating in the state to obtain a license with the Department of Financial Institutions. The Wisconsin legislature enacted licensing laws and regulations to ensure that mortgage bankers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, mortgage bankers must purchase and maintain a $300,000 surety bond to be eligible for licensure.
What is the Purpose of the Wisconsin Mortgage Banker Bond?
Wisconsin requires mortgage bankers 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 banker fails to comply with the licensing regulations outlined in Wisconsin statute 224.72. Specifically, the bond protects the public in the event the banker 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 banker breaks licensing laws.
How Can an Insurance Agent Obtain a Wisconsin Mortgage Banker Bond?
BondExchange makes obtaining a Wisconsin Mortgage Banker 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 Wisconsin Mortgage Banker Bond?
Surety companies will run a credit check on the owners of the mortgage company to determine eligibility and pricing for the Wisconsin Mortgage Banker Bond. Owner’s 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 Wisconsin Mortgage Banker Bond Cost?
The Wisconsin Mortgage Banker surety bond can cost anywhere between $2,250 to $15,000 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 $300,000 bond requirement.
$300,000 Mortgage Banker Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $2,250 |
| 650 – 699 | $3,000 |
| 625 – 649 | $3,750 |
| 600 – 624 | $5,640 |
| 550 – 599 | $12,000 |
| 450 – 549 | $15,000 |
How Does Wisconsin Define “Mortgage Banker?”
To paraphrase Wisconsin statute 224.71, a mortgage banker is any business entity who originates, sells, interests, or services residential mortgage loans or provides escrow services.
How do Mortgage Bankers Apply for a License in Wisconsin?
Mortgage bankers in Wisconsin 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 Wisconsin Mortgage Banker License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Mortgage bankers must purchase and maintain a $300,000 surety bond
Step 2 – Request an NMLS Account
The Wisconsin Mortgage Banker 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 Wisconsin Mortgage Banker License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Company financial statement prepared by a CPA
- Certificate of Good Standing
- Company formation documents
Mortgage bankers must pay $1,100 when submitting their license application. Fees collected through the NMLS are not refundable.
How Do Wisconsin Mortgage Bankers Renew Their License?
Mortgage bankers can renew their licenses online through the NMLS. License holders need to simply login to their account to access their renewal application. The Wisconsin Mortgage Banker License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Wisconsin Mortgage Banker License?
Wisconsin does not require mortgage bankers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Mortgage bankers must purchase and maintain a $300,000 surety bond.
How Do Wisconsin Mortgage Bankers File Their Bond?
Mortgage bankers 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:
- The legal name of entity/individual(s) buying the bond
- Surety company’s name
- Date the bond is signed
- Date the bond goes into effect
What Can Wisconsin Mortgage Bankers Do to Avoid Claims Against Their Bond?
To avoid claims made against their bond, mortgage bankers in Wisconsin must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Do not breach any contracts made with consumers
- Do not engage in any acts of fraud
What Other Insurance Products Can Agents Offer Mortgage Bankers in Wisconsin?
Wisconsin does not require mortgage bankers to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, many 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 Wisconsin Mortgage Banker Customers?
The NMLS conveniently provides a public database to search for active mortgage bankers in Wisconsin. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.
